1. A Study investigating airline loyalty programs'
effectiveness and how it affects revenue.
By
May 1, 2023

2. Airline Loyalty Programs............................................................................................................ 3
Points/Miles System................................................................................................................ 3
Tier System..............................................................................................................................4
Fee for VIP Benefits.................................................................................................................4
Multi-Company All Inclusive Programs....................................................................................5
Goals of Loyalty Programs for Airlines.....................................................................................5
Customer Loyalty.....................................................................................................................6
Customer Retention.................................................................................................................6
Increased Revenue..................................................................................................................6
Pros and Cons of Loyalty Programs..........................................................................................7
Pros......................................................................................................................................... 7
Cash Back, Points, and Miles............................................................................................ 7
Extra Benefits.....................................................................................................................8
Sign up Bonus....................................................................................................................8
Support Existing Spending.................................................................................................9
Cons........................................................................................................................................ 9
Black Out Dates.................................................................................................................9
Destination Limits...............................................................................................................9
Annual Fees.....................................................................................................................10
High APRs....................................................................................................................... 10
Credit Score Requirements..............................................................................................10
Customer Motivations............................................................................................................... 11
Customer Retention...................................................................................................................11
Customer Demographics.......................................................................................................... 11
Customer's Ratings of Benefits............................................................................................... 12
Impact on Airline Revenue........................................................................................................12
Conclusion................................................................................................................................. 13
Recommendations.....................................................................................................................14
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3. At Prince of Travel, we conducted a study investigating airline loyalty programs' effectiveness.
This study aimed to understand how travelers and consumers perceive these programs, how
they use them, and their impact on customer retention.
The survey received 266 responses, providing valuable insights into travelers' motivations when
selecting a loyalty program, the impact of loyalty programs on revenue, and other helpful
information.
The study revealed what most motivates customers to join such programs, what benefits and
rewards members value above others, how loyalty programs affect customer retention and the
impact that membership has on the frequency of travel. Some programs offered more value to
customers, while others were more complicated to use.
Overall, the insights gained from this study can be useful for airlines and customers. Airlines can
benefit from designing and improving their loyalty programs to better meet the needs and
expectations of their customers. Travelers can use the information gained to inform themselves
of the different memberships when selecting an airline loyalty program to join.
Airline Loyalty Programs
Recently, airlines have become heavily reliant on the revenue generated from their loyalty
programs, leading to heightened competition among airlines. Originally designed to fill seats and
based on distance traveled, these programs have evolved into complex programs that make it
difficult for travelers to earn miles, mainly on economy-class tickets. Mileage-based programs
were the original type of loyalty program offered by airlines and were designed to incentivize
customers to fly more frequently. However, airlines have become more focused on generating
revenue, so many have shifted towards revenue-based programs. These programs reward
customers who spend more money on tickets rather than those who fly more often.
While revenue-based programs may be more lucrative for airlines, they can also make it more
difficult for travelers to earn and redeem miles. This is because the number of miles earned is
based on the price of the ticket rather than the distance flown. As a result, customers who
purchase economy-class tickets may find it challenging to earn enough miles to redeem
rewards [1].
The COVID-19 pandemic has also had a significant impact on airline loyalty programs. Many
airlines have reduced flights and routes, making it more challenging for customers to redeem
their miles. The pandemic has led to changes in travel behavior, with many customers opting for
road trips and other forms of travel instead of flying.
Overall, the airline loyalty program landscape is constantly evolving, and airlines must continue
to adapt to remain competitive and meet the needs of their customers. This may involve offering
more flexible redemption options, providing more opportunities to earn miles outside of flights,
and simplifying the redemption process [1].
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4. Before diving into the results of the survey, we must first talk about the different types of airline
loyalty programs.
Points/Miles System
An airline loyalty program based on points or miles is the most popular type of program offered
by airlines today. The program rewards customers for their loyalty by awarding them points or
miles based on their travel with the airline or purchases made using a loyalty credit card.
They can redeem points or miles earned for various benefits, including discounts or coupons at
partnered businesses, such as restaurants or retail establishments. These redemptions provide
customers additional value and encourage them to continue using the airline and its partners.
In addition, points or miles earned can be applied towards travel-related rewards, such as free
flights or upgrades to business class seating. Many loyalty programs also offer members access
to exclusive airport lounges, which can provide a more comfortable and relaxing travel
experience.
Some credit cards affiliated with airline loyalty programs also offer cash-back redemptions,
allowing members to use their earned points or miles to receive a cash refund or statement
credit.
Overall, points or mile-based airline loyalty programs provide customers with plenty of ways to
earn and redeem rewards, making them an attractive option for frequent travelers.
Tier System
A tiered airline loyalty program is a system that rewards customers based on their level of
loyalty to the airline. This type of program is designed to incentivize customers to continue using
the airline's services by offering increasingly valuable rewards as they move up the loyalty
ladder.
At the base level of the program, customers can expect to receive small rewards, such as free
checked bags or priority boarding. As customers continue to make purchases with the airline or
its partners or use a linked credit card, they can earn more points and move up to higher tiers in
the program. Customers can access more valuable rewards at each level, such as free flights or
upgrades to premium seating.
The primary difference between point-based programs and tiered systems is that customers can
extract long-term value from a tiered loyalty program. With a tiered system, customers are
incentivized to continue using the airline's services over time to access increasingly valuable
rewards. This encourages long-term loyalty to the airline and can lead to a stronger customer
relationship.
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5. Tiered loyalty programs also allow airlines to offer personalized rewards and experiences to
their most loyal customers. By segmenting customers into different tiers based on their level of
loyalty, airlines can tailor their rewards and offers to meet each tier's specific needs and
preferences.
Fee for VIP Benefits
A fee-based airline loyalty program is a loyalty program that charges customers a one-time or
annual fee for VIP benefits. This type of program is particularly well-suited for businesses that
rely on recurrent purchases, such as corporations with many employees who travel frequently.
Benefits under a VIP program may include priority check-in, access to exclusive airport lounges,
additional baggage allowance, and other perks that can make travel more comfortable and
convenient.
The fee-based loyalty program benefits the airline by providing a reliable revenue stream not
dependent on travel volume or other external factors.
Multi-Company All Inclusive Programs
A multi-company airline loyalty program is a strategic partnership between airlines and other
participating companies to provide customers with rewards for their loyalty. This type of program
allows customers to earn rewards points or miles that can be redeemed for discounts or free
items across multiple companies.
For example, an airline may partner with a hotel chain, rental car company, or credit card
provider to offer customers discounts, free stays, or rewards points. These partnerships can
create a network effect, expanding the reach of the loyalty program and creating opportunities
for increased customer engagement and commitment.
By partnering with other companies, airlines can offer customers a more comprehensive range
of rewards and benefits, encouraging customers to remain loyal and continue using the airline's
services. For example, a customer who earns points through their airline loyalty program may
be able to redeem those points for a free hotel stay or rental car, providing additional value and
incentivizing them to continue using the airline's services.
The multi-company airline loyalty program can also benefit the partner companies, allowing
them to expand their customer base and reach new customers who may not have previously
used their services.
Overall, the multi-company airline loyalty program is a win-win for the airline and its partners. It
provides customers with a broader range of rewards and benefits while creating increased
customer engagement and commitment opportunities.
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6. According to a recent study published in the Harvard Business Review, over 50% of airline miles
are earned through non-flight means. This trend will grow as airlines expand their co-branding
initiatives beyond traditional travel. One such example is the integration of e-commerce rewards
platforms, which offer customers the ability to redeem points for popular brands and services,
providing a more diverse range of options for members to earn and redeem rewards. By
investing in such opportunities, airlines can not only differentiate themselves in a competitive
market but also enhance the value proposition of their loyalty programs, ultimately driving
greater customer satisfaction and loyalty[2].
Goals of Loyalty Programs for Airlines
An airline loyalty program has multiple goals, with three of the most common being customer
loyalty, customer retention and increased revenue. By offering attractive rewards and benefits,
an airline can incentivize customers to remain loyal, thus increasing its revenue and market
share. Let's take a closer look at each of these specific goals, and what they entail.
Customer Loyalty
When it comes to airline loyalty programs, customer loyalty refers to the customer's willingness
to choose a particular airline over other options repeatedly. It results from a positive experience
with the airline, including the benefits and rewards earned through the loyalty program. A loyal
customer will prefer to fly with the airline with which they have a loyalty program membership,
even if other options are available. They will seek out the airline for their travel needs and
recommend it to others, thus contributing to the airline's growth and success.
Cultivating strong customer loyalty is essential for airlines to create a reliable revenue stream,
increase market share, and maintain a competitive edge in the industry. By creating a positive
travel experience and offering valuable rewards through their loyalty program, airlines can
incentivize customers to remain loyal and continue using their services.
Loyal customers are also more likely to spend more money with the airline, paying a premium
for the convenience and benefits of flying with their preferred airline. Overall, customer loyalty is
a crucial aspect of airline loyalty programs, as it drives repeat business, customer engagement,
and revenue growth.
Customer Retention
When it comes to airline loyalty programs, customer retention is critical. Keeping an existing
customer is much more cost-effective than acquiring a new one.
Customer retention is vital for several reasons beyond cost-effectiveness. One of the primary
reasons is that loyal customers spend more money with a brand over time. As they establish
trust and familiarity with the airline's products or services, they become more likely to choose
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7. the airline for their travel needs. This increased spending can lead to a significant boost in
revenue for airlines.
Long-term customers can provide valuable feedback and insights to help the airline improve its
products or services. Another benefit of customer retention is that it can build a strong brand
reputation. Loyal customers will likely share positive experiences with others and promote the
brand through word-of-mouth.
In addition to the perks of their airline loyalty programs, airlines can increase customer retention
by creating a seamless and convenient travel experience. This includes offering mobile
check-in, easy booking, and other features that make the travel experience less stressful and
enjoyable. By creating a positive travel experience, airlines can keep customers returning for
more and build a thriving business in a competitive industry.
Increased Revenue
Airlines with loyalty programs can see a significant increase in revenue, with some analysts
arguing that loyalty programs are the most profitable part of the airline industry[3]. Studies have
shown that increasing customer loyalty by just 7% can result in a remarkable 85% boost in
lifetime profits per customer[4].
Loyalty program members tend to spend more on ancillary services such as upgrades, seat
selection, and in-flight purchases, which can further boost revenue. By offering exclusive
benefits and personalized offers to loyalty program members, airlines can also encourage
members to book higher-priced fares. Ultimately, a comprehensive and well-executed loyalty
program can be a powerful tool for increasing airline revenue by incentivizing loyalty, boosting
higher spending, and driving customer acquisition.
According to Forbes, throughout 2019 and early 2020, American Airlines incurred losses on its
passenger operations, with operating costs exceeding passenger revenue in most quarters
leading up to the pandemic. However, despite this, American Airlines was able to leverage its
loyalty program to drive profits[5].
By offering customers attractive rewards and benefits for their continued patronage, the
AAdvantage program helped the airline build and maintain a loyal customer base, generating
significant revenue from membership fees, co-brand partnerships, and other non-flight means.
This revenue stream was a crucial factor in helping the airline remain profitable even during
periods of operational losses[5].
Pros and Cons of Loyalty Programs
Airline loyalty programs can be an excellent way for customers to earn rewards and benefits for
their continued patronage. At the same time, loyalty programs can have potential drawbacks
that customers should know before signing up. Understanding the program's rules and
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8. restrictions is critical to maximizing the rewards and benefits offered. Let's explore the pros and
cons of airline loyalty programs.
Pros
Whether you are a frequent flyer or an occasional traveler, understanding the advantages of
airline loyalty programs can help you decide whether to enroll in one. These programs offer a
variety of benefits, ranging from free flights and upgrades to exclusive access to airport lounges
and other perks. So let's explore the benefits that make these programs so appealing to many
people.
Cash Back, Points, and Miles
Cashback, points, and miles rewards are the most popular rewards among loyalty program
members. Cashback rewards may appeal more to customers who prefer flexibility and
immediate savings. In contrast, points and miles rewards may be more attractive to customers
who travel frequently and value the opportunity to earn travel-related benefits. Ultimately, the
most appealing reward depends on the customer's priorities and lifestyle.
Cashback rewards provide customers with a percentage of their purchase amount as cash or
credit, which can be applied to future purchases.
Points rewards offer customers specific points for each purchase, which can be redeemed for
various items such as free flights, upgrades, or merchandise.
For frequent travel customers, miles rewards can be a desirable option. Miles rewards are
earned based on the distance traveled on a flight rather than the purchase amount. These miles
are then redeemable for flights or other rewards, making them an excellent choice for customers
who prioritize travel-related benefits.
Extra Benefits
Extra benefits can add significant value to loyalty memberships. These benefits go beyond the
traditional rewards of points and miles, including travel insurance, companion tickets, free
checked bags, and annual travel credits.
Travel insurance is one of airline loyalty programs' most valuable extra benefits. It provides
customers coverage for trip cancellations, delays, or other unforeseen circumstances. This
benefit can offer customers peace of mind and financial protection, particularly for those who
travel frequently or to destinations with higher risk factors.
Companion tickets are another favored extra benefit. They allow customers to bring a friend or
family member on a flight for free or at a discounted rate. This benefit can be appealing for
those who travel with a companion frequently, as it can help reduce the overall cost of travel.
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9. Free checked bags can be a game-changer for those who travel with heavy or bulky items. This
benefit can save customers money on baggage fees and eliminate the hassle of carrying
luggage onto the plane.
Annual travel credits are a relatively new extra benefit some airline loyalty programs offer. They
give customers a set amount for travel-related expenses such as flights, hotels, or car rentals.
This benefit can be useful for those who travel frequently or those looking to take a high-end trip
without breaking the bank.
Sign up Bonus
Many airline loyalty programs offer sign-up bonuses to new members, which can be a significant
incentive for customers to join and participate in the program.
These bonuses can come as points, miles, or cash-back rewards upfront for completing a
specific action, such as making a qualifying purchase or opening a new credit card account. The
value of these sign-up bonuses can vary widely, with some offering only a few thousand points
or miles while others may offer tens of thousands of points or miles.
The requirements for earning these bonuses can also vary, with some requiring customers to
make a qualifying purchase within a specific timeframe. In contrast, others may only require
customers to sign up for the program.
Sign-up bonuses provide a significant reward for joining the program and getting started with
earning rewards. These bonuses can help customers earn rewards more quickly, allowing them
to take advantage of the benefits of the loyalty program sooner. Sign-up bonuses can
significantly boost rewards earnings and offer a valuable incentive to try out a loyalty program.
Support Existing Spending
By selecting a loyalty card that aligns with your spending habits, you can earn rewards for
purchases you would already make, which can provide significant value over time. For example,
a loyalty card that rewards flights and travel-related expenses can be highly beneficial if you
frequently travel for business or pleasure.
Similarly, if you spend a lot of money on everyday purchases such as groceries or gas, a card
that offers cash back or points for those purchases can help you earn rewards faster. According
to Ricky Zhang, the CEO of Prince of Travel, “By adopting smarter spending habits and
mastering efficient point redemption strategies, you can transform your regular expenses into
remarkable experiences. You can unlock lavish getaways encompassing high-end amenities,
luxury travel, and first-class accommodations.” Choosing the right airline loyalty card can help
you maximize your rewards and support your spending habits, ultimately leading to increased
customer satisfaction and loyalty.
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10. Cons
While there are undoubtedly many benefits to joining an airline loyalty program, it's essential to
consider the potential drawbacks. While these programs can provide customers with valuable
rewards and benefits, they can also have potential downsides that may not be immediately
apparent. Let's explore some cons of airline loyalty programs so that you can decide whether
these programs are right for you.
Black Out Dates
During blackout dates, loyalty program members cannot redeem their rewards or use their miles
to book flights. These dates typically coincide with peak travel periods, such as holidays or
significant events, when airlines expect high ticket demand.
Blackout dates can limit the number of rewards seats available on flights during these peak
periods, as airlines want to sell as many seats as possible at full price. This means that loyalty
program members may be unable to use their rewards during these periods, even if they have
accumulated many miles. This can frustrate customers hoping to use rewards to save money on
holiday travel or other high-demand periods.
Destination Limits
Destination limits restrict airline loyalty program members when redeeming rewards or using
miles to book flights to specific destinations. Airlines may limit the number of reward seats
available on particular routes because of high demand or operational constraints.
For example, for international travel, some airlines may have partnerships with specific
international airlines or alliances, which may affect reward availability and options. If a loyalty
program member wants to use their miles to book a flight on a partner airline, they may need to
follow different rules and regulations than they would for flights on their home airline.
Annual Fees
Annual fees are a common feature of many airline loyalty programs, particularly those that offer
credit cards or other membership options with enhanced benefits. These fees can range from a
few hundred dollars to several thousand dollars, depending on the program and the level of
benefits offered.
While some loyalty programs may offer no-fee options or waive annual fees for certain levels of
spending or account activity, it's important to note that the cards with the best benefits usually
have annual fees. It's up to each loyalty program member to weigh the costs and benefits of
paying a yearly fee and determine whether the rewards and benefits offered are worth the
investment.
High APRs
9

11. High APRs, or annual percentage rates, are another factor to consider when evaluating airline
loyalty programs that offer credit cards or other financial products. These APRs can range from
moderate to very high, depending on the program and the benefits offered. Paying interest on
these credit cards can quickly negate the value of rewards earned.
While some programs may offer introductory 0% APRs or other promotional offers, reading the
fine print and understanding the terms and conditions associated with these offers is essential.
Credit Score Requirements
To take full advantage of these membership programs, customers must first meet the credit
score requirements for the associated credit cards. The best rewards credit cards typically
require good or better credit, with mid-to-high 600s or above credit scores.
Some programs may offer credit-building products or secured credit cards for those with lower
credit scores. However, these may provide different rewards and benefits than the top-tier cards,
making it essential for customers to carefully consider their options before signing up.
Applying for multiple credit cards or other financial products can hurt credit scores. Every time a
customer applies for credit, a hard inquiry is made on their credit report, which can temporarily
lower their score. As such, it's essential to be strategic and selective when choosing airline
loyalty programs and credit cards.
Some programs may have annual fees, high-interest rates, or other costs that can eat into the
rewards earned. Understanding the program's rules and restrictions is essential to avoid
unexpected fees or penalties. It's also crucial for customers to understand the terms and
conditions of the credit card and loyalty program they choose.
By being strategic and selective, customers can take full advantage of the rewards and benefits
offered by airline loyalty programs without damaging their credit scores.
Customer Motivations
Customer motivation is an important factor in evaluating airline loyalty programs. According to
the survey we conducted, 70% of people prefer a points or miles redemption as their primary
motivation for participating in loyalty programs. This means that for the majority of loyalty
program members, the ability to earn and redeem rewards is the most important benefit of
membership.
18% of survey respondents indicated they were motivated by the elite status of the loyalty
program, which may offer perks such as priority boarding, lounge access, and other exclusive
benefits.
7% of respondents preferred upgrades as their primary motivation for participating in loyalty
programs.
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12. 5% of people preferred other reasons for motivation, which may vary depending on individual
needs and preferences.
Regarding which loyalty programs work best for different customer motivations, the survey
found personalized offers influenced 50% of respondents. This finding suggests that loyalty
programs that offer targeted and customized rewards and benefits may be more effective in
motivating members to sign up for an airline loyalty program.
Customer Retention
Customer retention is a key factor when evaluating the effectiveness of airline loyalty programs.
According to our survey, 53% of respondents indicated they are still with their loyalty program,
suggesting that these programs effectively keep members engaged and loyal. However, 18% of
respondents reported leaving their loyalty program because they found a better program.
This highlights the importance of regularly evaluating and updating loyalty programs to ensure
they remain competitive and offer valuable rewards and benefits to members. Overall, customer
retention is a crucial metric for assessing the success of airline loyalty programs and should be
carefully monitored to maximize the value of these programs for both airlines and members.
Customer Demographics
According to the International Air Transport Association's (IATA) Global Passenger Survey, the
age group that travels the most includes Gen Y, Millennials, and Gen X. Among these,
Millennials, who are in the age range of 35 to 44 years old, are the most frequent flyers, whether
domestically or internationally. We could attribute this trend to various factors, such as being at
the peak of their careers and having higher disposable incomes than younger generations[6].
IATA's research highlights a significant gender imbalance in travel, with males accounting for
41.27% more trips than females. Over the last five years, the data reveals that men have
traveled three times more frequently than women. However, the gap is slowly narrowing as
more women take on influential roles in their respective fields[6].
Other studies have found similar discrepancies between gender and travel. For example, a
survey conducted by Medium in 2018 found that women predominantly handled travel
arrangements. Other noteworthy findings from this survey include women prefer to travel solo
and often take the lead in booking their travel plans. A study by Gutsy in 2019 found that women
make around 80% of all travel decisions.
Customer's Ratings of Benefits
Our survey asked participants how frequently they flew with the airline where they held a loyalty
membership. The findings revealed that almost 90% of loyalty program members flew at least
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13. once a year, showing that airlines have successfully established loyal customers. Among those
who flew, 35.7% flew once or twice a year, while 30.5% flew between three and five times
annually. A notable 22.9% of respondents flew over five times in a year, showcasing a
significant number of frequent flyers.
One way to measure if customers are satisfied with their loyalty program is in referral behavior.
59% of respondents had referred others to their airline loyalty program.
When asked in our survey about their biggest dislikes with their airline loyalty program, 7% of
respondents reported having a bad customer experience with their airline loyalty program, which
may include poor customer service or difficulty redeeming rewards. Additionally, 8% of
respondents said that their loyalty program did not offer flights to their desired destinations,
which can frustrate those looking to maximize their rewards. Finally, canceled or delayed flights
were another common dislike reported by loyalty program members. These issues can disrupt
travel plans and make using rewards or earning miles difficult.
Impact on Airline Revenue
According to the survey, airline loyalty programs significantly impact airlines' customer retention
and revenue generation. The study found that all loyalty programs positively affect customer
retention. The most substantial revenue impact comes from Miles & Points programs, followed
by Tier system rewards such as silver, gold, and platinum levels. The weakest effect was found
for non-monetary programs, such as affiliated company offers.
Delta recently said that it is expected to bring in as much as $7 billion in revenue by 2023
because of its long term deal with American express[7].
One way in which airline loyalty programs impact revenue is through word-of-mouth marketing.
Loyalty program members who are satisfied with their experience are more likely to refer others
to the program, which can help to attract new customers and increase revenue.
Loyalty programs help to keep customer loyalty high among members, with competitors
considered less often when making travel arrangements. The survey also found that specific
loyalty programs attract higher spending flyers, reinforcing the importance of having a mix of
loyalty programs to appeal to different customers.
Credit card sign-ups are also extremely important for airline revenue; loyalty programs can
encourage this if the experience is positive. Branded credit cards, in particular, have become
increasingly lucrative for airlines as they offer a way to generate revenue from loyalty program
members through annual fees and other charges.
Airlines that make "affiliate" offers to loyalty programs can also see additional revenue streams,
as these offers can attract new customers and generate additional sales.
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14. Overall, airline loyalty programs are essential for generating revenue and building customer
loyalty in the highly competitive airline industry.
Conclusion
The most successful airline loyalty programs allow customers to earn points or miles that can be
redeemed for rewards, such as free flights, upgrades, or other exclusive benefits.
According to ValuePenguin, a consumer research website, the top five U.S. airline loyalty
programs ended 2020 with a combined balance of $27.5 billion in unused loyalty program miles,
up $2.9 billion from 2019 [8]. This suggests that customers highly value earning rewards
through their loyalty program participation.
With more people wanting to travel, keeping customers satisfied has become increasingly
important for airlines. A successful loyalty program can play a significant role in achieving this by
providing customers with a sense of recognition and appreciation for their business and
exclusive benefits and personalized offers that cater to their individual needs and preferences.
Airlines should offer a diverse range of attractive loyalty programs to serve a broad range of
customers and lifestyles. This can include tiered programs that reward customers for their
loyalty with increasing benefits as they move up the loyalty ladder, fee-based programs that
offer VIP benefits for a one-time or annual fee, and multi-company programs that allow
customers to earn and redeem rewards across multiple airlines and partner companies.
Customers highly value a successful airline loyalty program that provides tangible benefits and
rewards that align with their needs and preferences. By offering diverse and attractive loyalty
programs, airlines can increase customer satisfaction, retention, and loyalty, ultimately
increasing revenue and profitability.
Recommendations
The design of an airline loyalty program that aligns with customers' flying habits and lifestyle is
crucial for creating loyal customers and maintaining their loyalty for a lifetime. According to
survey results, several key recommendations can help marketers achieve this goal.
1. Marketers should continue to use customer loyalty programs, as they significantly impact
keeping customers. Loyalty programs effectively encourage repeat business and
customer retention and increase revenue and profitability for the airline.
2. Marketers must continuously seek new and innovative tools to differentiate their loyalty
programs, attract new customers, and increase the spending of existing ones. This
involves staying up-to-date with current trends and incorporating new technologies to
enhance the customer experience.
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15. 3. Marketers must evaluate the cost-revenue balance of each loyalty program to ensure
that the program is economically achievable for the business. The cost of the loyalty
program should be justified by the benefits it provides to the airline and its customers.
4. Loyalty programs should be segmented according to the characteristics and preferences
of the target customers. Airlines can offer personalized benefits and rewards that cater to
their specific interests by understanding their customers' needs and preferences.
5. Loyalty programs must have an easy points and benefits redemption system to help
members convert their points into merchandise, discounts, and services. This makes it
easier for customers to redeem rewards, encouraging participation and engagement in
the program.
6. Retaining customers is less expensive than acquiring new ones, so marketers should
focus on keeping customers to benefit from their positive word-of-mouth
recommendations.
7. Diversifying loyalty programs to attract customers with different demographic
characteristics and maintain their loyalty over time is essential. This involves offering a
range of rewards and benefits that appeal to a broad customer base.
8. Customers should be informed about all available loyalty programs and how to use
them. They can achieve this through marketing campaigns and promotions that educate
customers on the program's benefits.
9. A transparent feedback system should be developed to listen to customer views and
suggestions regarding available loyalty programs. This can help airlines identify
improvement areas and make changes that align with their customer's needs and
preferences.
In summary, by following these recommendations, marketers can design effective and
successful loyalty programs that align with their customer's needs and preferences, ultimately
leading to increased customer loyalty and retention.
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16. References:
1.
https://www.cbsnews.com/news/airline-loyalty-programs-getting-harder-to-redeem-frequ
ent-flyer-miles/
2. https://hbr.org/2021/04/how-loyalty-programs-are-saving-airlines
3. https://skift.com/2018/08/13/u-s-airlines-report-sky-high-profit-from-frequent-flyer-progra
ms/
4. https://www.ebbo.com/insights/blog/how-premium-loyalty-can-generate-revenue-for-you-i
n-2021/
5. https://www.forbes.com/advisor/credit-cards/travel-rewards/aadvantage-elite-earning/?ref
=blog.xoxoday.com
6. International Air Transport Association's Global Passenger Survey
7. https://www.axios.com/2022/02/28/airlines-going-overboard-win-loyalty-programs
8. https://www.cbsnews.com/news/airline-loyalty-programs-getting-harder-to-redeem-frequ
ent-flyer-miles/
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