That’s probably not an airline’s favorite word, but it’s the one that best describes the state of many airline loyalty programs today. It’s also a topic my colleague, Martin Tongue, SVP of Business Development will be discussing at the Loyalty Americas conference in Chicago this week. He’ll be moderating a discussion between United Airlines’ David Oppenheim and Ian Di Tullio, Director of Loyalty Marketing at Air Canada, about airline loyalty program developments in the last 12 months.
Here’s why: Earlier in the year, several major airlines announced changes to their loyalty programs’ structures impacting how they retain members and customers. Delta Air Lines added minimum levels of dollars spent and minimum miles flown for members to reach “elite” status while United Airlines shifted its program’s best perks to the highest spenders.
Not surprisingly, such actions have resulted in loyalty program allegiance, in the words of Deloitte’s recent airline loyalty study as being “dangerously low.” Only 44% of all travelers fly at least three quarters of their air miles with a preferred brand.
In other words, their loyalty is up for grabs.
But there is some encouraging news: JetBlue’s TrueBlue loyalty program ended expiring points. And, there’s also growing indications the likely AA-US Airways merger (despite DOJ pushback) will have no effect on those airlines’ frequent flyer programs.
So what’s the takeaway? Airline industry turbulence doesn’t mean disaster. Despite intense media scrutiny, airline loyalty programs have come through the last year relatively unscathed – and retaining customers. That same conclusion applies to market consolidation (airline mergers) in both North America and South America. And look at the increased participation in loyalty programs and the actual dollar value that is represented, not only in travelers’ miles and points in their accounts, but in terms of the miles and points being issued every year.
Smooth Skies, Seamless Loyalty
From Points’ perspective, there are plenty of reasons for optimism. For starters, our Loyalty Commerce Platform is in great shape as we already have relationships with many of the players that are being consolidated. And there are far more loyalty programs being created than are disappearing through consolidation.
The bottom line: Consolidation isn’t just an airline phenomenon, it’s happening everywhere. Loyalty programs are converging in coalition models, mobile wallets are merging multiple currencies and smartphones have become the ultimate digital Swiss Army knives. We’re seeing large populations of consumers eager to maximize their earned points and miles in ways that don’t intrude in their daily lives. Consumers want the flexibility to earn points in one loyalty program and then seamlessly exchange, trade or redeem those points with another. Likewise, big box brands have a major opportunity to retain customers by leveraging existing airline loyalty programs, providing members with even more rewards.
Whether it’s receiving restaurant reviews from friends, travel suggestions, or shopping through social media, consumers increasingly expect their smartphones to be loyalty program tools as well. Not just with on-the-go points and status updates, but with actual loyalty program engagement.
The last 12 months may have been turbulent for the airline industry, but they’ve also been very exciting. So how will airline loyalty programs fare over the coming 12 months?
I’m optimistic that more airlines will embrace the opportunity to re-engage travelers with flexible rewards and programs that let their members do more. As for what the rest of the airline industry thinks, I’ll defer to my colleague Martin Tongue when he reports back from the Loyalty Americas conference.