Project:
Building India’s First Airport-Led Loyalty Ecosystem – Strategy, Structuring, and Impact
🧩 Problem Statement
Despite a customer base of over 70 million annual passengers and interactions across 400+ concessionaires, DIAL lacked a unified platform to capture, engage, and monetize its passenger data.
Initial implementation of the loyalty platform (in partnership with Rewards360) lacked:
- Clarity on commercial viability
- Defined product architecture
- Technology integrations
- Scalable monetization strategy
GMR needed strategic support to:
- Redesign the loyalty program and financial model
- Define the customer value proposition (CVP)
- Create a scalable fintech roadmap
- Benchmark against super app strategies (e.g., Adani One, Tata Neu)
🧭 Our Approach
1. Program Restructuring & Product Strategy
- Redesigned the Aeroknots loyalty program as a multi-tier model with both free and paid memberships
- Proposed a full-stack solution to Acquire, Engage, Reward, and Re-engage airport passengers
- Recommended integration with DIAL’s existing Hoi App and EPOS systems to ensure seamless onboarding
- Defined core CVP with aspirational benefits:
- Express security lanes
- Limousine transfers
- Airline seat upgrades
- Points usable for airline tickets and in-flight services
2. Financial Model & Scenario Planning
- Developed a robust business plan (B-Plan) with granular P&L projections
- Ran sensitivities on:
- Points issuance (1%, 1.5%, 2%)
- Marketing revenue realization (30% to 100%)
- Customer acquisition cost (INR 0 to 90)
- Breakage rate (expired loyalty points converted to revenue)
- Structured paid memberships to operate via a commission model, avoiding dilution of Aeroknots margins due to DIAL revenue-share obligations
3. Technology & Ecosystem Design
- Proposed integration with Omni-Channel Payment Solutions (OCPS) and digital onboarding via EPOS terminals
- Created roadmap for loyalty-led commerce platform with booking, ordering, upselling, and rewards
- Benchmarked loyalty economics with global programs (Changi Rewards, Heathrow Rewards, Tata Neu)
4. JV & Structuring Support
- Evaluated alternative structure under a new vehicle – GMR Loyalty Company (GLC):
- Mint and manage GMR Points across airports and products
- Centralize data analytics and loyalty liability management
- Outsource tech/marketing operations to Aeroknots
💡 Key Impact Delivered
| Dimension | Outcome |
|---|---|
| Market Opportunity Sized | Projected $300M+ upside from loyalty + fintech plays |
| Program Economics | 5-year revenue: ₹98 Cr; EBITDA: ₹23 Cr; 15-year NPV: ₹29 Cr |
| GLC Scenario | Uplifted NPV to ₹220 Cr; market valuation potential of ₹500–800 Cr |
| System Revenue Impact | Estimated 5% boost to airport system revenues via loyalty |
| User Base | Projected ~3 Mn active LP members by year 5 |
| CVP Definition | High-value services mapped to each membership tier |
| Merchant Engagement | Mitigated merchant resistance through DIAL-funded points model |
🧠 Strategic Insights
- Fund the Points to De-Risk Merchants: Merchant participation surged when DIAL committed to fund points issuance, reducing friction.
- Breakage Drives Profitability: Like airline loyalty programs, revenue from expired points (breakage) became a core margin driver.
- One App > Two Apps: A single integrated platform ensures better UX, reduces CAC, and aligns with global digital behavior trends.
- Paid Tiers Must Be Aspirational: Security fast-track, lounge access, and concierge benefits drive subscriber uptake.
- Loyalty = Infrastructure for Fintech: The loyalty program acts as the base layer to build future fintech products (UPI, cards, lending).
Sample work:
- Program Construct & Structure:
Program Construct: Whenever customer shops at Airport, they will earn some loyalty points and exclusive offers, which they can redeem on their next transaction at terminals or outside the terminal on the partner’s platform. Passenger can also earn points outside the terminal while shopping with registered partners and can redeem their points at GMR Airports terminals.
Schematics on money flow in a sample transaction: Consider a transaction of INR 500, where the customer already has 50 points in his wallet and redeems all of it. For every point, during earn, Aeroknots must account for a deferred liability in the program account and the same must be paid to the merchants in INR equivalent during burn. The flow of money is depicted at a high level in the schematics below:
Program Economics: Economics for both earn & burn scenarios is detailed out in the table below:
So, Merchant must bear extra cost of funding the points/earn-burn commission ranging from 1.1% – 10.0% of transaction value for the free-tier of membership. It will be even higher for paid-tier membership, where points issued is 2%/3%.
- Aeroknots Success Factors:
Many factors that determine the program’s overall success; listed below are some of the critical factors that would determine the success.
- LP Member Enrollment Rate:
It is defined as % of unique transacting passengers (Individuals) who will join the loyalty program. Enrollment rate depends on several factors – Program branding (Awareness), the utility value of rewards, User Interface (UI of the app & User Experience at the merchant location at the time of enrolment), Ease of redemption, joining fee & CVP (in case of a paid subscription) and lastly on the merchant’s willingness to promote the enrolment in the program, etc.
- Merchant Participation: % of concessionaires (Retail, F&B, and Duty-Free) joining the Loyalty Program. Merchant participation is highly dependent on the funding arrangement of the points (Higher if DIAL funds 100% of the points)
- Activity:
- Accrual Activity Rate: % of LP members transacting in a year. (Heavily dependent on travel pattern)
- Redemption Activity Rate: % of transacting LP members redeeming the points before the expiry date.
- Breakage: Points expired without redemption to be accounted as revenue for Aeroknots. It will depend on the Redemption Activity Rate. Breakage is one of the most crucial factors for the success of any Loyalty & rewards program. This critical key input was absent in the information from R360, so we assumed the expiry of points to be activity linked at 12 months; hence, months the LP member’s active points would expire at the end of 12 months.
- Marketing Revenue: Revenue from the marketing activities via channels like website/app, social media, targeted e-mails, etc. R360 has committed a marketing revenue of ~100 Cr on Airport & Aerocity (to calculate MMG) in its financial model. The profitability of Aeroknots is highly dependent on the realization of this. We haven’t done any further analysis or due diligence on this aspect.
- Aeroknots Waterfall: (5 yrs. EBITDA & NPV) vs. Success Factors
Note: The waterfall charts made for the change in 5-yr EBITDA/15-yr NPV as we move from a conservative scenario to an optimistic scenario (details in Section 4)