Just over BRL 4.7 billion. This is the market value that Smiles, Gol‘s subsidiary responsible for the Brazilian company’s loyalty program, reached earlier this week following a new takeover proposal by the airline. After seven years apart from Gol, Smiles will once again be part of the company, in a move that seeks more synergy between the two operations. And the move is not isolated, but part of a worldwide trend of (re) incorporation of the programs by airlines–shares in Smiles surged more than 20% after the announcement, which added BRL 777.2 million to its value, showing how much investors appreciate the deal.
Also in January 2019, Air Canada completed the acquisition of its Aeroplan loyalty program. For some years now Aeromexico has also been looking to buy the remaining 49% stake to control the Club Premier program.
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In late 2018, Latam, the second largest player in the Brazilian market, invested around $300 million (BRL 1,248 billion) to repurchase shares of the loyalty firm Multiplus and unify Multiplus and Latam Fidelidade, the company’s loyalty program, operations, launching the new Latam Pass program in October this year.
“Latin America’s high investment, Gol’s concern with Smiles and Azul’s devotion for its loyalty program TudoAzul provides a dimension of the importance of (loyalty) operations (to the industry),” points out Ativa Investimentos analyst Ilan Arbetman, who closely follows the main players of the Brazilian domestic aviation market.
Combining these operations creates efficiencies for airlines, who now have more freedom to manage reservations and pricing for seats purchased with miles, for example. The re-incorporation of loyalty programs will also enable the development and delivery of new products, services and personalized experiences for loyalty passengers and customers.
This is the case with Smiles, which recently partnered with Nubank Rewards, the Brazilian fintech’s loyalty program. Available since late September, the option allows fintech customers who subscribe to the program to redeem credit card accumulated points for Smiles miles. In addition to having no minimum exchange value, Nubank Rewards points do not expire–allowing the consumer to make an exchange when they actually want to use the benefit.
With the program’s new format, Latam aimed at facilitating the process for users, who until then accumulated points in Latam Fidelidade and redeemed them using Multiplus. After the merge, the process became simpler.
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“Both the loyalty program issue and the merge with Delta put Latam on another level in Latin America. Even though Gol beats Latam in market share in Brazil for some time, Multiplus keeps the lead in loyalty programs and without a doubt, reincorporating Multiplus gave Latam the flexibility that the program needed to better serve customers,” says Arbetman. Latam Pass is available in other Latin American countries and has 23 million customers in Brazil alone.
Loyalty programs: against macro indicators
Not surprisingly, the frequent-flyer industry is picking up pace at a time when some macroeconomic indicators in the country do not favor consumption. From this perspective, Arbetman points out that miles can play a complementary role in the composition of Brazilians’ income–and this is not something exactly new.
“Even seeing some macroeconomic advances, the qualitative data still point a great way to be overcome by the country.” One of these data is the mismatch generated by a forecast of income growth below the projected inflation growth in the country–which leads Brazilians to resort to alternative sources of income and available credit lines.
“Having the option of choosing a product with and without benefits, the likelihood that Brazilians will get the most benefits is interesting. And for the loyalty program companies, card operations are critical as they provide a larger spread than the ticket sale itself–another reason for the companies to be absorbing frequent-flyer program companies,” explains the expert. “The country’s macroeconomic context still embraces the relevance of obtaining alternative sources of income and in this, credit cards stand out”, he adds.
Aware of this context and targeting a consumer who, whether by culture or economic outlook, is price sensitive, the MaxMilhas marketplace emerged in 2013 to fill the gap between those looking for cheaper tickets and those who wanted to sell their miles.
“We transformed the market and made more than 4 million trips possible with over 40 billion miles traded. This means savings and also extra income for Brazilians who could monetize their miles,” says Tahiana D’Egmont, CMO of the company, in an interview with LABS.

Tahiana D’Egmont, MaxMilhas CMO. “We have multiplied the possibilities of making airline tickets more accessible to more people”. Photo: MaxMilhas/Courtesy.
According to a survey conducted with the marketplace customers, 37% of respondents said they would not travel by plane if not for the price found on the platform. “This is a sample from overall consumption. According to a survey by MindMiners, the domestic tourist uses more cars and buses (72% traveled by road), instead of plane (27%), to get around the country,” explains Tahiana.
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In front of players like MaxMilhas, moves such as the incorporation of Smiles by Gol or the merge of Latam programs promote a fiercer competition.
“Before, there was not much to look at industry opportunities, and these companies with alternative solutions like MaxMilhas stressed for airlines the need to look more closely at the issue of fidelity,” says Arbetman. For him, the trend is that this upgrade of frequent-flyer programs will also make them target a market that until then was only supplied by companies such as MaxMilhas.
Being responsible for highlighting the importance of the miles market for areas, in Tahiana’s view, is a plus. “Having companies in the same segment we created shows that in six years of work, we have been able to consolidate this market. In addition, we have multiplied the possibilities of making airline tickets more accessible to more people. And, of course, it is another consistent way of using miles, which until then had been restricted to product or ticket exchange,” says MaxMilhas’ CMO.
But with the highest level of competition in the industry, large airlines will spare no effort to capitalize on their frequent-flyer programs, making them more comprehensive and competitive.
“I believe programs are now moving to a stage where base growth is important but more than that, the focus is on monetizing that base,” projects Arbetman. “In this sense, the fact that they are under the ownership of the airline companies is fortuitous and may reduce the gap that existed between the program’s objectives and what the airlines wanted them to offer.”
Brazil has untapped potential in miles market
Although on the rise, the fact is that the frequent-flyer segment has a long growth horizon ahead. Unlike other more developed markets in Brazil, in a broad context, these program’s penetration is still low. And this is not a problem, but an opportunity.
“In general terms, currently just over 10% of the accumulated miles are through flights and 77% of their use is for tickets. Passengers are still learning that flying is a way of earning miles as well”, explains Arbetman. “The market is new and has a positive correlation with the movement of falling interest rates and boosting the economy that has been a federal key agenda.”
Due to the segment’s relatively recent nature in the country, the growth potential of this market is evident and even greater than that of ticket sales. “For comparison, passenger traffic in global aviation advanced 3.4% in October (YoY compared to October 2018). Smiles total gross revenues increased 7.7% in the same period.”
It is this untapped potential for growth that makes MaxMilhas not consider the moment to take its focus off Brazil when it comes to international expansion. “Internationalization is part of our plans. We see Latin America as a very strong possibility of expansion. However, the moment is to expand our possibilities of acting in the Brazilian market”, Tahiana justifies.
Translated by Jennifer Ann Koppe