Jan 11, 2022
Loyalty programmes truly showed their worth during COVID-19 as a viable, stable revenue source. In April 2020, many airlines collateralised their loyalty programmes pulling back the curtain on the significant cash flow value these hold for airlines. In many cases, the programmes were more valuable than the airlines themselves.
Customers responded to the crisis of not being able to travel by air, by spending their loyalty points with airlines on ancillaries like car rental. This shift in behaviour showed the significant opportunity that non-air revenue presents to airlines, demonstrating how airlines should be aspiring to be part of customer’s lifestyles, rather than one-off spends.
At the World Aviation Festival in London in December 2021, a host of loyalty experts from CarTrawler, Spirit Airlines, Virgin Atlantic Airways, Finnair and Envolved GmbH discussed the importance of non-air loyalty initiatives for airlines in a post-pandemic world. Each of the panellists also touched on differences in generational preferences, the next level of coalition loyalty, partnership ecosystems and sustainability awareness.
“Customers rather than passengers” was how the panel of loyalty experts described a future in which loyalty programmes are more lifestyle-oriented. The challenge for the future will be to make the transition away from a simple transaction when flying with an airline, to a broader, more compelling offering. It is difficult to engage customers when not flying, and this was seen most prominently during COVID-19 when air traffic ground to a standstill.
It was particularly difficult for Singapore Airlines who had no domestic market to work off when international travel stopped. This demonstrated how viewing passengers as customers going forward is an important distinction as it broadens the scope of the loyalty program and creates opportunities outside of the traditional travel ecosystem.
Each of the panellists spoke of the need to focus on the elusive Millennial and Gen Z market, in a different way to previous generations like Baby Boomers and Gen X who are very loyal to loyalty programmes.
Millennials have demonstrated their preference for personalisation and are more than willing to trade their personal information in exchange for a more personalised, unique experience. 81% of millennials and Generation Z consumers said they were open to having data about their behaviour collected in exchange for more personalised rewards and brand engagements.
Each of the panellists spoke about how both the younger Gen Z and Millennial generations tend to be purpose-driven customers who need to really connect with the loyalty proposition. Grant McCarthy, Director of Loyalty at CarTrawler, spoke of how the Gen X generations tend to be apathetic about loyalty programmes and stay forever, while in contrast the Gen Z and Millennial generations are less likely to engage with mass email marketing, and respond to more personalised approaches.
Grant also spoke about the importance of incentivising loyalty within the booking flow and how essential it is in seamlessly moving customers out of just the frequent flyer space, to an all-encompassing lifestyle programme. This is in line with the expectations of the millennial generation who seek a more personalised approach that suits their lifestyle. He spoke of how important CarTrawler is to facilitate a best-in-class customer experience that offer the right service to partners and customers that will ultimately improve conversions.
Each of the panellists noted that sustainability is a major part of the loyalty play, as it has become a core concern for all travel customers over the last few years. Carbon offset at the point of purchase has become an essential way for consumers to make a difference during their travels. This has been reflected in the travel industry at large, with Hertz’s recent high profile purchase of over 100,000 Tesla’s, indicating the sustainable transition the wider industry will need to make to ensure customers stay loyal.
Sustainability is increasing as a need for younger generations, and they are far more satisfied when presented with a sustainable solution. The challenge is to make engaging with sustainable options seamless and easy to do. Customers don’t necessarily want to part with their money for a sustainable cause unless they are rewarded, but they are also more likely to expect the company to offset on their behalf.
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