About this guide
Who this guide is for and what it covers
Airlines can turn their retail operation into a miles-redemption and revenue channel by launching a branded rewards marketplace for frequent flyer members. This guide explains how to plan one, covering the member experience, the operating model, the business case, and the launch campaign plan.
It is written for airline loyalty, ancillary revenue, and ecommerce leaders who own the frequent flyer program and the airline’s retail channels. The final section explains how Xoxoday helps airlines launch and run this kind of marketplace. All numbers in the business case section are illustrative.
01 · Why airline retail lags
Why airline retail underdelivers as a loyalty lever
Most airlines already sell through four retail channels, but the digital experience behind them has not kept pace. The result is a retail business that earns little and does almost nothing for the loyalty program.
- The channels run as separate flows. Online sales, onboard sales, executive lounges, and sales offices each operate with their own processes and a thin shared front end. Members get a different experience depending on where they shop.
- Members cannot redeem miles online. In many programs, members cannot spend their miles on the airline’s own store from a browser or phone. The one place a member should naturally use miles is closed to them.
- Engagement and revenue stay small. A typical airline online store serves a few thousand monthly shoppers and a few hundred orders a month at a low average order value. Monthly GMV often stays in the low five figures in US dollars, even for programs with millions of members.
- Unredeemed miles keep piling up. Every mile issued sits on the balance sheet as a liability until it is redeemed or expires. When members see nothing worth redeeming for, miles expire unused and the program loses its pull.
These problems are connected. Without an online redemption option and a broad catalog, members have no reason to visit the store. Without visits, the retail channel cannot grow.
02 · A modern marketplace
What a modern airline rewards marketplace should offer
A rewards marketplace gives members a reason to engage with the program between flights. It also gives the airline a single retail platform that it can merchandise, measure, and market.
| Area | Typical airline store today | What a modern marketplace should offer |
|---|---|---|
| Payment | Cash only online, with miles not accepted in the store | Miles, cash, or a mix of both on every product, with no minimum redemption |
| Miles economics | Not applicable online | A miles conversion rate that the airline sets and controls |
| Assortment | A limited range of airline merchandise | Airline merchandise, local products, and global brands, with every product approved by the airline |
| Channels | Online, onboard, lounge, and sales office sales run separately | One platform across all channels, including pre-order to flight |
| Growth tools | Little merchandising or reporting | Campaign tools, personalized recommendations, and full transaction reporting |
Two of these capabilities matter most to the loyalty team. Split payment with no minimum lets members with small balances redeem, and that is where most members sit. Airline control of the miles rate lets the program protect its economics while expanding what miles can buy.
Pre-order to flight deserves a specific mention for the onboard channel. Members order before they travel and collect the item on their flight, tied to their flight number and date. This widens the range the airline can offer onboard without adding to what the crew carries.
03 · Building the catalog
How to build a catalog that members want to redeem on
The catalog decides whether members come back. A store with only logo merchandise gives members little reason to redeem, while a broad catalog gives every member segment something worth their miles. Building that range supplier by supplier takes years, so most airlines source it through a rewards marketplace partner that already aggregates brands and fulfillment.
Each category should earn its place in the store by serving a clear purpose for the program.
| Category | What it includes | Why it matters to the program |
|---|---|---|
| Airline merchandise | Logo items, cabin collections, branded apparel | Highest margin for the airline and builds brand affinity |
| Local small and medium enterprise (SMME) products | Products from local makers and national-priority categories | Supports national and community agendas and gives the store local character |
| Beauty and perfume | Core duty-free brands | Extends the strongest onboard categories to online |
| Fashion and apparel | Premium and mid-market brands | Broadens appeal across member segments |
| Electronics and gadgets | High-value devices and accessories | Lifts basket size and gives high-balance members a reason to redeem |
| Gift cards and top-ups | Brand gift cards and e-wallet top-ups | Instant fulfillment and strong margin retention among third-party items |
| Travel and experiences | Hotels, lounges, car rental, activities | Keeps redemption close to the travel use case |
| Health and wellness | Supplements, devices, personal care | Adds everyday relevance between trips |
The airline should review and approve every product before it lists. That keeps the catalog broad without giving up brand control.
04 · Home-market readiness
What the marketplace needs to work in the home market
An airline marketplace has to work in the airline’s home market from launch. Members expect to shop in their own language and currency, pay the way they usually pay, and get support from people who understand the market. Five requirements cover most of this.
- Local contracting and support. Contracts and invoices in local currency, backed by an in-country account and delivery team.
- Proven redemption operations. Experience running points-redemption programs in the market, across e-vouchers, merchandise, wallet top-ups, and travel.
- Local payment and authentication rails. Integrations with the payment gateways and authentication methods members already use, for the cash and split-payment parts of checkout.
- Local digital rewards. Top-ups for the market’s leading e-wallets and popular local gift cards, which give members an instant, practical use for small balances.
- Local language and pricing. A storefront in the local language and English, with prices in local currency.
When these elements are already proven in the market, launch is faster and less risky, because the commercial, payment, and catalog groundwork does not have to be built from scratch.
05 · Operating model
The operating model and who owns what
The most practical model splits the work into three lanes. The airline keeps brand, miles economics, and product control, and a marketplace partner runs the day-to-day operations.
The airline keeps control while a marketplace partner runs operations
Member: shops and redeems
Marketplace partner: runs operations end to end
Airline: keeps brand, miles economics, and product control
Miles earn and redemption authentication stays with the airline’s existing loyalty provider.
This split lets the airline launch a full retail operation without building its own catalog, payments, logistics, or customer service teams. Earn and redemption authentication can stay with the existing loyalty provider, the airline reviews every product before it lists, and the airline alone sets the value of a mile.
06 · Member experience
The member experience on the storefront
The storefront should look and feel like the airline’s own store, not a third-party site. Four design principles should carry through every screen.
- Airline livery throughout. Colors, typography, and imagery follow the airline’s brand guidelines.
- Miles balance visible at every step. Members always know what they can afford, which encourages them to redeem.
- Split payment on any SKU. Members can pay part in miles and part in cash on any product.
- Local language and currency. The store runs in the local language and English, with prices in local currency.
The member journey depends on three core screens.
| Screen | What the member sees | What it does for the program |
|---|---|---|
| Home and merchandising | A navigation bar for merchandise, gift cards, experiences, lounge, perks, mobile top-up, and charity, with campaign banners and curated collections | Gives the airline a space to feature campaigns, seasonal hampers, and priority categories |
| Category and product | Brand tiles with filters, sorting, and tags such as “Recommended” and “Instant”, with prices shown in miles | Makes it easy to compare options and see what a balance can buy |
| Miles and cash checkout | An order summary that shows miles applied, the remaining balance, the amount payable, and the miles the member earns on the order | Removes friction at the point of redemption and reinforces the earn and burn loop |
Digital items such as gift cards should be delivered straight to the member’s email or phone, so the most popular redemptions are fulfilled within minutes.
07 · Business case
How to build the business case
A credible business case is built on the airline’s own member and miles-balance data, not on industry benchmarks. The model has three steps: set the inputs, estimate GMV from redemption, and calculate what the airline earns on that GMV. With the illustrative assumptions below, net revenue to the airline comes to about 9.5% of GMV, before counting the value of reduced miles liability.
Step 1: Gather the inputs
| Input | What it means | Where it comes from |
|---|---|---|
| Member base | Active members in the frequent flyer program | Loyalty program data |
| Miles issued per year | Product-eligible miles generated in a year, valued in local currency | Quarterly miles issuance reports |
| Outstanding miles balance | Product-eligible miles already sitting in member accounts | Loyalty liability reports |
| Miles valuation | The airline’s internal value per mile | Finance |
| Exchange rate | Local currency to USD, if reporting in USD | Finance |
| Own-brand share of GMV | The share of sales from airline merchandise | Assumption, based on assortment plan |
Step 2: Estimate GMV from redemption
GMV comes from two sources: a share of the miles members earn during the year, and a share of the balance they already hold.
The worked example uses 12% for the share of newly issued miles redeemed on the store and 3% for the share of the outstanding balance. Treat these as starting assumptions for a first-year launch and test them against the airline’s own redemption history.
Step 3: Calculate what the airline earns
The airline earns on two streams: a margin on its own-brand merchandise and a markup on third-party goods. The worked example assumes a 50% margin on own-brand items, which make up about 10% of GMV, and a 5% markup on third-party goods. Agree the markup in the commercial terms, since it may be capped on cash items.
Worked example with illustrative numbers
| Line item | Assumption | Value (USD) |
|---|---|---|
| Value of product-eligible miles issued in the year | Input | 10,000,000 |
| GMV from newly issued miles | 12% of miles issued | 1,200,000 |
| Value of outstanding product-eligible balance | Input | 8,000,000 |
| GMV from outstanding balance | 3% of balance | 240,000 |
| Total year 1 GMV | 1,440,000 | |
| Margin on own-brand merchandise | 50% margin on 10% of GMV (144,000) | 72,000 |
| Markup on third-party goods | 5% markup on 90% of GMV (1,296,000) | 64,800 |
| Net revenue to the airline | 9.5% of GMV | 136,800 |
The value beyond cash margin
Cash margin is only part of the return. Every mile redeemed on the store is a mile discharged from the airline’s liability, so in this example USD 1.44M of miles liability is cleared in year 1. Redemption also recovers value from miles that would otherwise expire unredeemed. And members who redeem tend to stay more engaged with the program, which supports future earn on flights and partners.
08 · Go-to-market plan
The go-to-market plan that drives adoption
Reach is the biggest lever in the business case, so marketing should be planned into the program from day one rather than added after launch. A three-phase campaign calendar takes members from their first visit to repeat redemption.
Three campaign phases move members from first visit to repeat redemption
Phase 1
Awareness
Generate demand and drive the first redemption
- Pre-launch teaser
- Launch campaign
- First-redemption prompt
Phase 2
Consideration
Teach members what their miles can buy
- Category highlights
- This week on the store
- Made-in-country showcase
- Monthly top picks
- Deal of the week
Phase 3
Conversion and retention
Drive repeat redemption and win back lapsed members
- Flash miles Friday
- Birthday bonanza
- Monthly miles summary
- Seasonal and festive
- Win-back for lapsed members
- Sweepstakes
18 campaign templates mapped to an 18-month calendar
Each phase has a distinct job. Awareness gets members to the store and through their first redemption. Consideration shows members the range of what their miles can buy, including products made in the airline’s home market. Conversion and retention builds habits with recurring campaigns and brings lapsed members back.
The airline’s owned channels should carry every phase, including the onboard and lounge touchpoints that only an airline has. Mapping reusable campaign templates to an 18-month calendar keeps the program visible and saves the loyalty team from planning each campaign from scratch.
09 · Questions before launch
Questions airlines should answer before launch
The airline needs clear answers to these questions before build starts. Each one shapes the configuration, the business case, or the launch plan.
| Area | Question to answer | Why it matters |
|---|---|---|
| Miles economics | What is the internal value per mile, and will the store use the same rate as other redemptions? | Sets the miles price of every SKU and the liability impact of each redemption |
| Redemption rules | Which member tiers and which miles types can be used on the store? | Defines who can redeem and keeps the store aligned with program rules |
| Product approval | Who on the airline side approves SKUs, and how quickly? | Approval speed determines how fast the catalog grows after launch |
| Own-brand assortment | Which airline merchandise and local products will launch first? | Own-brand items carry the highest margin in the business case |
| Channel priorities | Which channels go live first, and when does pre-order to flight launch? | Sets the rollout sequence and the onboard and lounge operating changes |
| Authentication | How will the existing loyalty provider handle member login and miles debit? | Earn and redemption authentication stays with the current provider, so the integration must be scoped early |
| Marketing access | Which owned channels can the program use, and how often? | Reach is the biggest growth lever, so email, push, and onboard access drive results |
| Success metrics | Which KPIs define success in year 1? | Typical choices include active redeemers, GMV, net revenue, and miles liability discharged |
10 · How Xoxoday helps
How Xoxoday helps airlines launch and run a rewards marketplace
Xoxoday builds and operates branded retail and rewards marketplaces for loyalty programs on Plum, its rewards and commerce platform. Plum already powers loyalty programs in more than 150 countries, with 10M+ reward options from 25,000+ brands across 30+ categories.
For an airline, Xoxoday covers each requirement described in this guide.
| What the program needs | What Xoxoday provides |
|---|---|
| A branded storefront | A marketplace in the airline’s livery, typography, and palette, in the local language and English, priced in local currency |
| Flexible miles redemption | Miles, cash, or split payment on every product, with no minimum redemption and a miles rate set by the airline |
| A broad, approved catalog | Airline merchandise, local SMME products, and global brands across all core categories, with every product approved by the airline before it lists |
| One platform across channels | Online, onboard, lounge, and sales office sales on a single platform, including pre-order to flight tied to flight number and date |
| Day-to-day operations | Catalog and merchandising, the payment and miles engine, order orchestration, fulfillment, logistics, and customer service |
| Loyalty system integration | Integration with the airline’s existing loyalty provider, which keeps miles earn and redemption authentication |
| Local market readiness | Local operating entities, in-market account and delivery teams, local payment and authentication integrations, and local e-wallet top-ups already live as redemption options |
| Growth and measurement | A campaign engine, personalized recommendations, full transaction reporting, and 18 campaign templates mapped to an 18-month launch calendar |
The result is a split that works for both sides. The airline keeps control of its brand, miles economics, and product approval, and Xoxoday runs the operation that turns miles into redemptions and revenue.
With Xoxoday Plum
To see how this could work for your program, contact the Xoxoday team at cs@xoxoday.com or schedule a demo.
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