Norwegian has shut down its transatlantic operations. Several subsidiaries are in bankruptcy reorganization. They plan to focus only on domestic and intra-European flying, with another subsidy from the government of Norway.

Last week I wrote about a honeymoon couple stuck with $4000 worth of Norwegian CashPoints. I thought – and I’m usually a stickler for program rules – they should try to sell these at a discount to someone in Europe who might use them. Others thought they should just do a lot of flying around Europe someday.

Well, they – and every other member – are currently unable to redeem their points for travel. Norwegian has suspended its frequent flyer program.

• There’s no earning points for flying Norwegian and no way to redeem points for travel on Norwegian.

• When this temporary restriction lifts they may impose limits on the ability to spend CashPoints, even though it’s a revenue-based program where points are supposed to be like money. They want new revenue, not to honor past obligations.

• They’re going to be giving members an opportunity to extend points that expire this year, but that’s not something that’s even automatic. Seriously?

Copyright william87 / 123RF Stock Photo

Customer loyalty is more important than ever when an airline is in trouble. Rewarding new purchases makes all the sense in the world – it encourages the behavior that’s going to save the airline, and failure to do this encourages those same customers to book away. Moreover redemptions aren’t going to be taking away seats the airline could sell. There aren’t going to be many sold out flights for awhile.

In the U.S. in contrast the three largest carriers have been able to raise $23 billion by mortgaging their loyalty programs, which are the only really profitable pieces of their businesses. By suspending its program Norwegian will likely walk away from future co-brand card revenue it would have earned and that’s likely to be greater than any short-term savings they might achieve.

(HT: Steve E)