Varig says 2.5 million passengers are registered on its Smiles scheme, up from 1 million two years ago, and aims to reach 3 million by the end of 2000. TAM's Fidelity scheme is a third of the size but claims to be more generous.
Fidelity uses a simple points system similar to US low-cost carrier Southwest Airlines. It became the first Brazilian mileage programme when it was launched in 1993 and reached 200,000 members a year or so later. By the start of 1998 it had topped 550,000.
Passengers earn one point per domestic journey irrespective of distance. On reaching 20 points they are rewarded with a free round-trip ticket on any domestic route. "The Fidelity programme was created for people who believe that accumulating journeys is better than accumulating miles," says TAM's marketing director, José Magro.
An international flight from Sao Paulo to Miami or Paris on one of the airline's new long-haul routes is also enough to earn a free domestic flight. TAM passengers can also claim rewards on partner American Airlines using a conversion chart to switch their TAM points into American miles.
Varig has invested $28 million in Smiles, which started up in July 1994 when the airline was allied to Delta. Famously described by one company director at the outset as "a necessary evil", Smiles was given little attention in its early years and was bureaucratic, obliging passengers to send in their boarding pass and ticket for every journey undertaken.
Smiles has taken off since the airline joined the Star Alliance. It allows members to pick up points when flying on other Star carriers. Varig is striving to improve customer relations and the airline has set up a call centre and Internet page for members.
To compete with TAM, it has reduced the number of miles needed for its smallest reward - a return flight between any two points in South America served by Varig - from 25,000 to 20,000. "We have discovered that the cost of keeping customers is much less than the cost of finding new ones," says Smiles manager Amauri Cabral.
VASP and Transbrasil have also ventured into mileage territory. Transbrasil's Transpass, designed by US-based Lacek, began in April 1999 and has reached 100,000 members in its first six months - just 20,000 short of the target Lacek says is needed to make it viable. Transbrasil has also launched 15- and 30-day air passes on its Rio de Janeiro-Sao Paulo shuttle in another attempt to drum up business from frequent business travellers.
Mileage has become popular elsewhere in Latin America, the biggest programme being the Latin pass, a joint effort by a number of airlines in the north of the region. The programme is administered in Miami and includes Aces and Avianca (Colombia), the Taca group airlines, Copa (Panama), Aeropostal (Venezuela) and Saeta (Ecuador).
Source: Airline Business
