Passengers at the check-in at Terminal 2 at Heathrow Airport in London. Photo: Neil Hall/Reuters

Beset by low air fares and relentless competition, airlines around the world are waking up to the value of their frequent flyer programmes and realising they can boost profits as well as brand profile.

A multitude of global carriers – preserved by complex cross-border ownership rules that curb dealmaking – means that simply selling tickets is no longer lucrative. Industry body IATA predicts a 3.5 per cent drop in fares this year and for airlines’ net profit margins to reach just 2.4 per cent.

As airlines dig around for new ways to make money, many of them are finding it buried deep in their marketing departments.

Dating back to American Airlines’ launch of AAdvantage in 1981, FFPs were originally used to encourage a customer to spend their money with just one carrier by offering free flights as rewards once enough miles had been collected.

Nowadays, however, the programmes, with their rich customer data, have become a currency of their own as airlines realise their value to companies such as credit card providers, hire car companies and hotels. An example: Delta commanded $675 million from American Express for its Skymiles in 2011-2013, according to Euromonitor analyst Nadejda Popova.

Those are not the only kind of deals to which airlines have turned, increasingly inventive as profits nosedive. In 2012 Germany’s ailing Air Berlin sold a 70 per cent stake in its Topbonus programme to Etihad for €185 million, more than the market value of the German company as a whole at the time. In 2013, an IPO of Smiles helped Brazil’s Gol bring down net debt.

Now industry watchers expect more such deals, spin-offs and stock market listings as airlines try to unlock more value from these businesses – and in turn drive more new revenues.

Brazil’s Valor Economico newspaper reported recently that the country’s third-largest airline Azul Linhas Aereas could follow in the steps of rivals Tam and Gol by floating its TudoAzul frequent flyer programme as a way of raising funds in the capital market, citing the programme’s director.

Given that airlines often don’t report separate figures, it’s hard to say precisely what FFPs are worth. But the figures that are available show how richly valued they are.

When Air Canada spun off 12.5 per cent of its frequent flyer programme in 2005 it was valued at C$2 billion (€1.4 billion), or around 20 times its then annual profit of C$99 million. More recently, analysts have put a value of up to $2.5 billion on the loyalty division of Qantas almost 10 times the unit’s annual profit – as Qantas prepares to float or sell part of it under a restructuring.

There are benefits for those airlines that do make money too. Deutsche Lufthansa’s new chief executive Carsten Spohr said last month that giving its frequent flyer programme Miles & More an independent profile would lift the entire group’s profitability and provide money needed for new planes. It’s no surprise that investors are interested in FFPs for their data. What makes FFPs particularly sexy is the detail in that data: not just a rich seam of customers, but a rich seam of rich customers.

“It’s extremely powerful data, especially as it tends to be slanted towards the premium segment,” said Marc Allsop, senior vice president and Head of Global Business Development at Aimia, which has stakes in a number of FFPs and runs other loyalty schemes including the Nectar supermarket plan in the UK and Italy.