What Norwegian’s loyalty program “pause” means for you
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Norwegian Airlines — once one of Europe’s most popular low-cost carriers — has “paused” its loyalty program until further notice.
A note on the airline’s website states that Norwegian Reward members can no longer earn or redeem CashPoints on “Norwegian’s products or services” like flights or baggage fees. Members can, however, earn CashPoints with the airline’s partners.
Norwegian claims that this pause is in effect while the airline restructures. Later in the statement, the airline also reserved the right to limit CashPoint redemption after restructuring until “the ongoing pandemic is under control and Norwegian’s commercial activities can return to a new normal.”
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What this means for you
The good news is that Norwegian promised not to devalue the CashPoints program as a whole. One CashPoint will continue to equal 1 Norwegian Krone towards flights and other services once redemptions restart.
That said, one might say that suspending the Norwegian Reward program for the foreseeable future is a huge devaluation in its own right.
The airline also said it would give Norwegian Rewards members with expiring points the opportunity to extend them in the near future. It’s unclear what members will have to do to keep their points active, although we hope these points are automatically extended.
In the meantime, Norwegian Reward members will have to sit tight and see what happens to their CashPoints over the coming months.
Why did Norwegian pause its loyalty program?
Norwegian likely paused the Norwegian Reward program to retain cash flow and limit the effect of the program’s liabilities on its balance sheet in the near-term. That said, I think this is a short-sighted decision on the airline’s part.
Pausing Norwegian Rewards will make many travelers nervous about earning CashPoints in the future — especially frequent flyers with large points balances. These members will be hesitant to trust Norwegian after the restructuring process and may opt for a different airline in the future.
This is even more of an issue when you consider that Norwegian Reward members were offered CashPoints (with a 20% bonus) in lieu of a refund on canceled flights in 2020. To many consumers, this looks like a classic example of bait-and-switch.
On the other hand, there probably aren’t many Norwegian Rewards members redeeming their CashPoints for flights right now. The airline is operating a limited route network and most of Europe is still locked down in response to the coronavirus pandemic.
As discussed by View From The Wing, pausing this loyalty program actually limits auxiliary revenue that the airline can earn through the pandemic. You can still earn CashPoints with the airline’s partners, but members will be hesitant to do so while an airline is both bankrupt and has paused its loyalty program.
This is in stark contrast to what U.S. airlines have done with their loyalty programs during the pandemic.
We’ve seen airlines offer more ways to earn miles both on and off the plane, with enhanced mileage-earning opportunities and better-than-ever cobrand credit card offers. U.S. airlines have even used loyalty programs as collateral for federal loans.
It’s sad to see the bad news surrounding Norwegian Airlines continue to roll in.
The airline fought hard to keep itself afloat during the coronavirus pandemic but filed for bankruptcy last November after failing to secure additional funding. The airline then permanently cut all long-haul flights in mid-January.
This came after years of massive growth for the airline. Before the pandemic, the airline beefed up its U.S. presence by offering low-cost transatlantic flights from major U.S. cities to its numerous European gateways. Its route network once comprised of premier routes like Los Angeles (LAX) and New York-JFK to London-Gatwick (LGW). The airline even launched a U.S. cobranded credit card in early 2020.
Regardless of Norwegian’s financial situation, I don’t think pausing its loyalty program was the right move. It will give the airline a poor public image post-pandemic and limits the amount of revenue it can generate with the program until further notice.
Feature photo by Ryan Patterson / TPG
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