Airlines’ Shifting Strategies in Frequent Flyer Programs
Loyalty programs in the airline industry have long been pivotal in enticing passengers to stick with a particular carrier. However, the landscape is ever-evolving, with airlines continually refining their approaches to meet the changing needs and expectations of travelers. In recent years, the focus has shifted from rewarding distance flown to incentivizing spending, reflecting a broader trend across various industries.
“When you reward people based on spend, it reflects the value that they are bringing you versus rewarding them on distance,” remarked Jonathan Kletzel, transportation and logistics practice leader at PwC.
The multi-billion dollar business of airline loyalty programs is exemplified by giants like American Airlines’ AAdvantage program and United Airlines’ MileagePlus program, valued at $24 billion and $22 billion, respectively.
With the easing of pandemic-era status requirements, airlines are revamping their loyalty tiers. Many are reverting to pre-pandemic structures to address overcrowded lounges and the surge in travelers reaching elite status.
American Airlines has maintained a relatively stable approach to its AAdvantage loyalty program. Observers speculate that the carrier may capitalize on minimal changes to attract disaffected passengers from rival airlines.
Delta Airlines led a wave of changes with its SkyMiles program, emphasizing spending thresholds for status attainment. While initially met with resistance, adjustments were made following backlash from frequent fliers. The modifications reflect a broader trend of aligning benefits with consumer spending.
United Airlines refrained from altering its MileagePlus program significantly in 2024. However, it enhanced perks for credit cardholders, aligning with the industry trend of integrating co-branded credit cards with loyalty programs to drive engagement.
Southwest Rapid Rewards
Southwest Airlines opted for a more lenient approach, reducing requirements for status attainment in 2024. The move underscores the airline’s commitment to customer-centric strategies amidst industry changes.
Alaska Mileage Plan
Alaska Airlines stands out with its mileage-based loyalty program, emphasizing flexibility and partnership benefits. Removing segment requirements and fostering partnerships highlight a consumer-friendly approach.
Frontier Miles Program
Frontier Airlines adopted a customer-centric approach, making it easier for travelers to earn and retain status through spending. The introduction of new tiers and enhanced earning potential signal a shift towards rewarding customer loyalty.
As airlines navigate the evolving landscape of loyalty programs, the emphasis on spending-based rewards underscores a broader trend towards personalized and consumer-centric strategies. By aligning incentives with customer behavior and preferences, airlines aim to cultivate lasting relationships and drive loyalty in an increasingly competitive market.
20 Dec 2023 - Travel