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Trends Shaping Airline Loyalty

November 11th, 2017

Airline loyalty programmes are embracing change, but at a slow pace in light of the numerous disruptors in the travel industry and the changing nature of ultra-connected customers. Revenue-driven strategies and costly co-branded cards, once seen as the main tool to deliver profitability, are no longer the right answer to retain and convert passengers into loyal customers. Brand engagement, rather than high breakage (ie unredeemed points), simplicity of the services, customisation and a bigger focus on the social media element, as well as experiential-based brand relationships are of essence for the success of reward schemes.

Increasing competition from new airline players, airports and financial providers in the airline segment puts more emphasis on the need to differentiate. Unique and creative rewards can attract customer attention, not only repeat customers but also occasional travellers.

Technology impacting loyalty

Customer loyalty has been changing over the years, impacted by the shift towards online distribution, growing e-commerce, social media and the increasing importance of wearable technologies. The use of customer feedback to help build better personalisation strategies and improved customer service is needed to cement passenger loyalty and trust. Personalisation can help build an emotional connection between consumers and travel brands, in a competitive environment for travel bookings where brands are aiming to increase customer loyalty. Loyalty programmes where commercial interest is the solely focus of operation are no longer adequate in the battle to retain customer loyalty. It has also translated into the mushrooming of more cobranded company credit cards and the purchase of air miles, which has seen “transactional” loyalty emerging within this business environment.

Apps as a tool for more direct communication and services

Mobile phone apps have become a critical way for airlines to engage with consumers, especially as smartphone ownership has been increasing globally. Both Ryanair and easyJet launched loyalty programmes, relatively recently, in 2016 and 2015, respectively, with the aim of establishing a more personalised loyalty scheme profile for each individual passenger. Free seat reservation, priority boarding, an extra bag in addition to a free return flight are some of the perks these programmes offer.  Delta and American Airlines allow passengers to store boarding passes electronically within the Apple Wallet on iPhones, as well as within Android devices. Other apps provide instant updates regarding flight status, amongst other information.

 

Rank of Airline Apps

airlines app ranking monthly users

Loyalty through a digital wallet

The use of digital wallets as part of airline loyalty programmes is gradually expanding, despite rather slow initial uptake by customers. That said, the degree of mobile payments adoption differs among different airlines, mainly due to lack of technology standardisation and security issues. The increasing use of mobile devices with built-in payment solutions as part of travel itineraries is, however, boosting the need to facilitate the earning, redemption and exchanges of points and miles between loyalty programmes from one device at various locations and in different currencies.

This is enhancing customer engagement and retention of on-the-go passengers, such as tech savvy millennials, and supports omnichannel purchases. Among the airlines adopting digital wallets are Jetblue and Southwest Airlines.

 

Estimated Value of Airline Loyalty Programmes

estimated value of airline loyalty programmes in 2017

Major takeaways

With the increasing number of price comparison and review websites, many travellers are more bargain hunters than loyal clients. Attracting the attention of these consumers with immediate rewards on all parts of the trip, improved accessibility to these schemes and one-to-one relationship with the individual customer can help build emotional connection between the loyalty member and the airline brand.

Connected consumers demand connected loyalty, which in turn can allow them to access goods and services in a way that fits their individual preferences and tastes.

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Nadejda Popova

Nadejda Popova is senior analyst for the travel industry at Euromonitor International, which she joined in September 2008. In her current post, Nadejda is specialised and in charge of the airlines segment. Nadejda has a degree in Finance (BA), and PhD in Management (University of London).

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