An inside look at Emirates Skywards as told by the program's president

Emirates is doubling down on the relevance of its loyalty program in the U.S.

Even though the Dubai-based carrier offers just a handful of routes to the U.S., the Skywards frequent flyer program has already made significant inroads in the country, and it's planning to keep growing next year.

In fact, the program's nearly 3 million U.S. members comprise the second-largest segment of Skywards accounts worldwide, second to the U.K., which has 3.5 million members.

Dr. Nejib Ben-Khedher, divisional senior vice president, Emirates Skywards, recently spoke with TPG at the airline's Dubai headquarters in a wide-ranging interview about the program.

His hope is to continue the upward trajectory in the program's U.S. membership base. To accomplish that, Ben-Khedher outlined many of his plans for 2022, as well as some significant milestones that the program has already hit this year.

Let's recap some of the highlights.

Cash+miles is the conversion king

In recent years, the most popular Skywards redemption options haven't been flight rewards or upgrades. Instead, it's been applying miles towards the cost of a cash ticket using the program's "Cash+Miles" feature.

According to Ben-Khedher, the introduction of "Cash+Miles" has democratized the loyalty program. Before this new feature, "the program used to cater to the top 3% of members," he explained, saying that only the top earners had accumulated enough points for a reward seat or upgrade.

"Cash+Miles" has also driven increased engagement and loyalty with the Skywards program. In fact, according to Ben-Khedher, 20% of members who used "Cash+Miles" have been inactive in the program for more than a year, and the entire program accounts for about 10% of the airline's entire online sales. On average, most members cover about 10% of their ticket with miles, he added.

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In the U.S., both Delta and United offer a similar "Cash+Miles" program with a fixed redemption rate that's usually less attractive than redeeming miles for a saver-level award.

Meanwhile, at Emirates, Ben-Khedher says he's proud that the program has built personalization and promotions into the offering, which he believes has moved customer behavior. "There is a base rate and we do a lot of promotions to bring the rate up and incentivize people on certain flights. So the promotions are very targeted. In some cases the promotions are even personalized," he said.

Skywards feels the need to make "Cash+Miles" more attractive because many of its flyers, especially those based in the U.S, don't frequently travel with the airline.

"There is a virtuous cycle of loyalty actually coming from 'Cash+Miles' even more than anything else simply because people feel that the miles have value for them. They don't have to go and accumulate 50,000 miles [for an upgrade award]... They see value in that first trip that they're taking that could next time become a discount against their next ticket," said Ben-Khedher.

Premium economy is a work in progress

My interview with Ben-Khedher happened just 12 hours after I landed in Dubai on the carrier's latest Airbus A380 equipped with the new premium economy cabin.

Naturally, my experience was top-of-mind, and interestingly Ben-Khedher said he has also been thinking a lot about the airline's premium economy offering.

"You have only seen the seats, you have to wait to see the service," he said. "It's not truly premium economy today. It's just the seat. If you think the seat is a differentiator, I would say the service is going to also be a major differentiator," he added.

In my comprehensive review, I noted that Emirates' premium economy is well on its way to becoming the world's best, with a "hard product" that's one of the nicest and most comfortable in the sky.

However, the airline hasn't yet unveiled a specialized service for premium economy. For now, economy passengers can purchase a premium economy seat and enjoy the additional space, but still get served the same meals as in coach.

Ben-Khedher talked about the considerations that Emirates is thinking about when crafting the service experience.

"What we don't want is for people who are used to flying business class to actually like the product in premium economy so much that they will downgrade... We need to keep that point of differentiation both with economy and with business class, we just need to find that fourth cabin," he said.

Along with Ben-Khedher's role as divisional senior vice president of Skywards, he's also the interim chief technology officer (CTO) for the airline. He explained that as CTO, he's overseen the premium economy roll-out from a systems perspective.

"People wonder why we haven't launched the product itself yet. One of the things is that we don't have all the aircraft yet... But just from a system perspective, it takes us nearly six months to get the systems, both the operations systems and the reservation systems upgraded to take on the fourth cabin," he explained.

So far, the airline has "already received good feedback" on the new cabin, and "we're waiting for more feedback to come from our Skywards members" to help evolve the product over time.

From a loyalty perspective, one thing that Ben-Khedher is actively working on is adding the ability to use "Cash+Miles" on ancillaries, such as a premium economy upgrade.

Partners, partners, partners

To boost its relevance in the U.S., Skywards has historically relied on partnerships to raise awareness for the program.

Ben-Khedher is especially proud that "we now have six conversion partners... we are probably the program that has most partners working with us. Chase, Capital One, HSBC, Brex, American Express... and now Bilt."

For savvy travelers who aren't actively earning Skywards miles, the ability to transfer credit card points from all four major issuers into Emirates miles is a nice perk. For many readers and TPG staffers, transferring Amex or Chase points to book Emirates' legendary first class has historically been the holy grail of mileage redemptions.

Ben-Khedher also touted the program's partnership with JetBlue, which now includes reciprocal mileage redemptions both for economy and Mint, as a driver of engagement.

More partners may be coming, Ben-Khedher noted. "In North America, we would love to see who else, and we've been in discussions in terms of who would be next," he said.

A soft launch for a new cobranded card

In the midst of the pandemic in 2020, Emirates launched a new credit card lineup for U.S. residents. In partnership with Barclays, the airline launched two cobranded cards that might appeal to fans of the Dubai-based carrier, with perks aplenty.

The move to launch a cobranded card in the U.S. was about "how can we be relevant to the U.S. market," he said. After all, with nearly 3 million members, the U.S. accounts for the second-largest segment of Skywards members.

Of course, launching in the midst of the pandemic wasn't ideal for Emirates, but "we're reaching close to 5,000 numbers now on both cards... we're seeing good traction," he said.

Just 5,000 members — or roughly 0.17% of its U.S. membership base — might not sound like much, but it's a success for the program's loyalty chief.

"I would say because of COVID it's a success because in the middle of COVID we still had people... In the last campaign, we brought in close to 650 members within just a few weeks," he said, referencing the elevated sign-up bonuses and additional perks that the cards offered earlier this year.

More than anything, the cobranded card has already brought in some incredibly engaged travelers. Nearly 56% of cardholders have already flown with Emirates since they opened the card, and 50% of them have flown in either first or business class, according to Ben-Khedher.

"It just tells you the quality of people we're bringing into this. So we're not going mass, we're going towards really bringing the right numbers," Ben-Khedher added.

Rethinking the audit process

There've been recent reports from some Skywards members saying that their accounts have been audited (and sometimes closed) due to fraudulent activity.

When I asked Ben-Khedher about his top priorities for 2022, data integrity made the cut. "We're really now spending a lot of time on what we call Skywards integrity, data integrity, which is mostly how do we protect our members from any hacking or intrusions, et cetera," he said.

Asked about the recent spike in account closures, Ben-Khedher noted that "we have gone a bit to the extreme on things because we wanted to really crack down on certain behavior. People find loopholes and then try to use them against the terms and conditions of the Skywards program... But no, we are here to really be of value to the members, not to crack down on them."

Going forward, Skywards will shift away from account audits and instead be more proactive about canceling transactions that it suspects might be fraudulent. "We're working with third parties, we've implemented the tools, we're doing more forensics around transactions. And of course, all of this needs to be automated," he explained as one of the big priorities for Skywards next year.

Bottom line

Emirates Skywards might not be the biggest loyalty program in the U.S., but it's certainly trying to remain top-of-mind for travelers headed to the Middle East and beyond.

Whether it's through "Cash+Miles," the new cobranded credit card or a plethora of partners, Skywards members have plenty of ways to engage with the program.

There's lots coming in 2022 and beyond, likely starting with a revamped premium economy offering (possibly bookable with miles) and an expansion of the carrier's "Cash+Miles" program to ancillary services, like seat assignments and bag charges.

And yes, everyone's favorite redemption — first class — will still be there as well.