easyJet to launch loyalty scheme, looks at feeder flights

(Adds CEO comments, details, background,)

By Sarah Young

LONDON, Nov 10 (Reuters) - Budget airline easyJet plans to launch a loyalty scheme for its frequent fliers from next year and is in talks to provide long-haul carriers with feeder flights.

easyJet set out its plans at an event to mark 20 years since its first flight. This also coincided with the airline's efforts to bring home thousands of tourists stranded in Egypt after the British government suspended flights there last week due to security issues.

Chief executive Carolyn McCall said: "When the government says that they believe Sharm (al-Sheikh) airport is safe to operate to, we would unsuspend our operations there."

Regarding airport security after a Russian plane crashed shortly after take-off from Sharm al-Sheikh on Oct (HKSE: 3366-OL.HK - news) . 31, McCall said easyJet would follow government recommendations.

"If any airport needs to tighten their security it will be governments that decide that that is the case," she said.

easyJet, Europe's second biggest low-cost carrier and larger rival Ryanair have grown to dominate travel in Europe over the last decade, putting pressure on carriers such as British Airways, Air France-KLM (Other OTC: AFLYY - news) and Lufthansa on shorter routes.

Its plan for a loyalty scheme, which will add to pressure on the major carriers, will reward customers who fly with it more than 20 times a year with free flight ticket changes among other perks.

Budget airlines have historically shunned loyalty schemes because of their higher costs, but easyJet said its scheme would be simple and cost-efficient to run and that hundreds of thousands of passengers would benefit.

The loyalty scheme follows easyJet's move in 2012 to introduce allocated seating on flights, something which was also formerly only available on full-service carriers.

TRANSFER TRAFFIC

easyJet also said it hoped to strike a deal with the long-haul carriers to provide transfer connections for their customers, a process known as interlining, a plan which Ryanair is also working on.

"We've been looking at it in for some time and we are obviously in discussions with other airlines about this," McCall told a news conference, declining to comment on whether Lufthansa would be a preferred partner for easyJet.

She (Munich: SOQ.MU - news) said easyJet would only be interested in feeding flights for long-haul airlines if it could find a way of doing it which did not complicate its low-cost business model.

"They (legacy carriers) are losing a lot of money on short-haul Europe which is why they are very interested in talking to us and others about how they get feed. There should be a way in future," she said.

She said that easyJet was not considering flying any long-haul routes itself in the medium term as there was enough opportunity for it to grow in short-haul travel.

easyJet, which reports results on Nov. 17, said it was too soon to say what the cost of the Egypt situation would be.

(Reporting by Sarah Young; editing by Kate Holton and Jane Merriman)