Singapore Airlines is a well-regarded airline worldwide known for its top-notch flying experience. KrisFlyer is its premium frequent flyer programme that has been prospering alongside the prestigious branding of the airline. They complement each other.
Like any frequent flyer programme, you clock KrisFlyer (KF) miles by flying with Singapore Airlines. You can use your KF miles to redeem future flight tickets when you’re flying with them.
When you enter the PPS Club (an exclusive club for those who purchased Business/First class tickets), the level of personalised attention you receive can be out of this world. I mean, especially when you’re in the skies.
But as Singapore’s air travel scene comes to a quiet standstill, the airline is now stuck with hoards KF miles waiting to be burned by members who cannot fly. These are huge liabilities burdening their already bottoming out bottom-lines. Should they choose to expire the miles, they can expect angry members with their pitchforks coming at them. The last thing businesses want to do is to disappoint their loyal customers, especially the entitled ones.
So the airline has been hunting for ways to get rid of the KF miles of their members.
But what started out as an escape plan from the pitchforks may have been a blessing in disguise.
Or has it always been their plan?
Before Covid: KrisPay, the miles burner
Back in 2018 before Covid happened, Singapore Airlines created KrisPay.
KrisPay is basically a burn platform for KF miles. It converts KF miles into KrisPay miles. KrisPay miles can then be used to offset your shopping purchases with the few merchants that KrisPay partners with.
1 KF mile = 1 KrisPay mile.
Even though the ratio is 1:1, the value of a KF mile is different from KrisPay mile.
Even though KrisPay was branded as a digital wallet, it wasn’t strictly a payment service provider. It doesn’t touch cash. Unlike Google Pay and Apple Pay which provide contactless payment options using credit cards stored on your phones, KrisPay simply burns your KrisPay Miles.
When you scan a QR code at the store and enter the payment amount, KrisPay tells you how many KrisPay miles you will be deducting for this purchase. In the process, you earn KrisPay miles which you can accumulate to offset more purchases in the future. KrisPay earns from transaction fees with the merchants.
To be honest, KrisPay hasn’t been very successful.
Mainly because it has poor conversion rates. MainlyMiles analyses that 1 KF mile on average is worth ~S$0.019, based on the conversion rate you get when you redeem your KF miles for an average plane ticket. In comparison, 1 KrisPay mile is worth ~S$0.0067. That’s almost 3x dilution!
When you have a choice between using KF miles to offset a Business Class ticket, converting them to KrisPay miles for shopping, few in the right mind would do the latter.
In the year of global borders shutdown that is 2020, when all of their members are stuck at home and forced to contend with their expiring KF miles, Singapore Airlines was desperate to create a better burn platform.
Hence, they rebranded KrisPay to…
During Covid: Kris+, the same thing as KrisPay but with more partners
In Oct 2020, KrisPay has been rebranded to Kris+, a “lifestyle app”. Most “lifestyle apps” just mean that you earn points for buying many things — food, shopping, services, instead of a niche category, like purchasing plane tickets.
Nothing much has changed. It is still a wallet to burn your KF miles, but this time, with a lot more partner merchants.
Yes a lot more partners and deals
Before Covid, when the airline was busy flying people around the world, there wasn’t an urgency to build this platform. After all, they love that their members are using the miles to buy more tickets.
But now that all eyes are on the liabilities, it makes sense to dedicate teams and infrastructure to build this well.
With this renewed focus, Kris+ has been very aggressive in getting brands in Singapore to provide discounts for their members, in return for some advertisement space on their assets. It leverages on its huge worldwide membership database, all of whom are affluent frequent travellers.
This is great because the value of KF miles lies in the attractiveness of its burn platform. What’s the use of accumulating a lot of cash if you can’t spend it anywhere? You have to make sure that the currency is liquid.
With more attractive partners, there will be more redemption activity on Kris+ by its members, which in turn attracts more partners to come on board. And so the flywheel spins.
Accompanied by a desperate pool of members trying to burn their expiring miles
Furthermore, since members cannot buy a flight ticket now (or wouldn’t want to), most of them may be desperate enough to burn their miles on KrisPay. At such a time, it doesn’t matter that the conversion rate from KF miles to KrisPay miles still suck.
And since the airline has factored the value of KF miles in their original ticket prices (aka inflated ticket prices), the burning of KrisPay miles at poor conversion rates also mean that there’s some cost savings for the airline too.
In all, the crisis has reallocated resources to be put into rebranding and rethinking of KrisPay, and pushed for aggressive onboarding of partner merchants to provide non-flight related privileges for members. Despite its poor conversion rate, members are indirectly forced to burn their miles on the platform, which spurs activity and more partnership opportunities.
As a result, Kris+ helps the company reduce its liabilities, enjoys cost savings from burning undervalued miles, and provides some extra cash from transaction fees. Furthermore, it elevates the liquidity of the burn platform that makes KF programme a lot more attractive for non-flyers in the future.
If that’s the only goal of Singapore Airlines, it’s a good end to the story.
Kris+ is not for Singapore
But if Kris+ has plans to dominate the Singapore market, it would probably fail.
A general lifestyle app needs be used by the masses. This generally means lower-price, higher-frequency activities such as ride hailing or food deliveries. Hence, an everyday company like Grab would compete better in a game of numbers than Kris+, which requires purchases of more premium services or products.
Even in the premium market space, Kris+ would be competing with credit card companies and private banking clubs who also attempt to be “lifestyle apps” one way or another. Kris+ is already late into the game.
But who knows? Maybe Kris+ is so successful in its partnerships that it could exceed all its competitors’ years of hard work.
Even then, the market in Singapore for premium services is limited.
Kris+ should set its sights on the worldwide premium industry, inviting high-end lifestyle services onboard its platform. This could be top salons, premium fashion branding, hotels, or exclusive gym membership worldwide. After all, it has a huge worldwide membership base of affluent members who are interested in these services (for whose who have been unscathed by the pandemic). I am already seeing some of these overseas brands on the app, but the numbers are still small.
Once people are accustomed to using KrisPay as a platform to check out deals with their favourite merchants, or redeeming promotions unique to KF members, it could really become a global elite programme.
But the plane still needs to fly
The rebranding of KrisPay to Kris+ was a great marketing shoutout to their members that they’re doing something for them, to the brands that this is a great partner to work with. The pandemic has accelerated the work put into developing a better burn platform, which is an essential component in creating a sustainable loyalty programme.
If successful, this could be the force that they needed to kickstart KF’s major level-up from just an airline loyalty to a worldwide premium services loyalty programme. How’s that for an upgrade?
But when members finished burning their miles and have put down their pitchforks, I will be surprised if any of them will continue looking at the KrisPay platform.
As a frequent flyer programme, the primary miles generation activity comes not from shopping, but from buying a plane ticket on Singapore Airlines.
Given the competition and choices, i’m skeptical of how long the miles game can sustain relying on just the premium shopping and dining space.
As long as the airlines’ aircrafts remain grounded, I think Kris+ is but a brilliant burn platform to get rid of miles and earn some quick cash.
But once that is done, it’s done.
