Colloquy has an in-depth piece on Jet Airways spinning off its frequent flyer program.

Some industry insiders speculate that if not a listing, then certainly a stake sale seems to be on Jet’s agenda. “As and when negotiations with the potential knowledge partners crystallise into a concrete decision, it is proposed that some percentage of the company’s stake be offered to the knowledge partners,” Jet Airways claimed while making the announcement.

Jet Airways’ latest announce-ments, however, seem to indicate that this move is in line with the company’s intent to improve its ancillary revenues up from 3% overall to 10-15% over the next few years. At present, Jet Airways’ ancillary revenues that come from sources other than ticket sales stand at $170 million.

“The frequent flyer programme started as a cost centre but has started contributing positively. Given the focus on ancillary revenues and to strengthen the programme, it is best to let it run independently,” says Manish Dureja who is the Vice President, Marketing, Products and Merchandising at Jet Airways.

It will be instructive to watch as another program takes the pluge into become a fully separate entity. Aeroplan was the first full spinoff of a frequent flyer program, the idea is that the programs themselves are profitable but their value isn’t fully reflected in the share price of the airlines which own them. Prior to the financial crisis and Great Recession it was expected that United’s program would be spun off as well, the program was even moved into a separate entity — UAL Loyalty Services, Inc. — which is wholly owned by the airline.

Since that time the Multiplus Fidelidade program was completely spun off from TAM in Brazil.

There were other abortive attempts besides United — Qantas made moves to separate its program. And there are other separations which haven’t been pulled back from, The Mileage Company is the entity managing Avios rather than British Airways.

This is significant, in the US context, because it raises the question of whether frequent flyer programs are significant hidden assets which make it more expensive, say, for US Airways to acquire American Airlines than is commonly believed. The American AAdvantage program has at least 15 times the membership of Aeroplan, though it also faces much greater competition in the US market than Aeroplan does in the Canadian market.

The extent to which loyalty program separation has been considered isn’t fully reflected in the Colloquy piece, this passage for instance just doesn’t seem correct.

Globally, only four airlines have attempted to separate the operations of their frequent flyer programmes from their airlines—and only one of them is not owned by the founding airline. AeroMexico has a joint venture with a third party owning just 29%. Qantas separated operations in anticipation of an Initial Public Offering (IPO), but later pulled back. Virgin Australia separated their frequent flyer programme operations, yet the programme remains wholly owned by the airline. Canada-based Aeroplan, which began as a frequent flyer programme within Air Canada, is the only spin-off anywhere in the world that is not owned in whole or in part by an airline.

As I say, it leaves out United, TAM, and British Airways at the least.

Meanwhile, while Jet Airways has struggled — in part because of obstacles placed in front of it by the Indian government, such as pushback on the idea that it might join Star Alliance after Air India was snubbed by the alliance over that carrier’s inability to meet the minimum steps necessary to join — it has also gained in relative prominence compared to the state-owned Air India and the near-dead Kingfisher.

This creates opportunities for Jet to grow, to enter into greater financial relationships with its partners, to expand beyond travel and into retail. And separation of its frequent flyer program into a separate and broader loyalty program is potentially a part of that strategy.

Each successful attempt — if indeed this is ultimately successful — increases the likelihood that we’ll see something similar in the US market, especially as greater time passes from the financial market meltdown of four years ago and there’s a greater appetite for innovative moves and easier access to capital.

But before a US program moves, we’re likely to see more foreign programs seek to take the plunge. One that has been rumored for a possible spinoff in late 2013 is Gol’s SMILES program. Delta has a financial stake there and will certainly watch that one closely.