Econ One collaborated with a leading Ultra Low-Cost Carrier (ULCC) in the US to accurately predict redemptions of its loyalty program points, crucial for regulatory compliance and financial reporting. The ULCC recognized the pivotal role of its loyalty program in fostering customer engagement and loyalty, undergoing a significant transformation in 2021 to enhance member benefits and streamline points accrual and redemption processes. In January 2021, ULCC launched a new structure of their loyalty program allowing users to earn points based on dollars spent on a flight ticket, thus extending program benefits to short distance and/or infrequent travelers. Dr Amarita Natt (an expert in using sophisticated statistical and machine learning techniques to help inform business decisions and regulatory compliance) and her team were retained by the ULCC to help them assess the impact of the drastic change in the program structure on the accrual and redemption activity of its users.

Econ One conducted a comprehensive analysis of breakage rates associated with miles issued through the frequent flyer program. Leveraging innovative modelling techniques, the team aimed to accurately predict redemptions. They employed creative modelling techniques, integrating factors such as changes in program structure and member behavior, to provide insightful predictions regarding accrual and redemption activities. Rigorous checks and assessments were conducted to evaluate the impact of program changes on member behavior and loyalty point utilization.

Through collaborative efforts, Econ One delivered actionable insights to the ULCC. The predictive models provided precise forecasts of redemption of the loyalty points,, enabling the airline to comply with regulatory standards and facilitate accurate financial reporting. Insights derived from the analysis empowered the ULCC to make informed decisions regarding program enhancements and optimization, ultimately fostering stronger customer relationships and driving business growth.