- Design industry shaping loyalty programs
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July 13, 2022
Do you know Hawaiian Airlines’ loyalty program as of 2022 offered 24.78 USD/100 USD spent to its frequent flyers? Also, Alaska Airlines reserves its second spot by offering 24.65USD to its frequent flyers. And this brings them brand loyalty like no one’s watching. Now, let us reveal the true story here. Hawaiian Airlines is successfully running its airline business, contributing 1.7% of the domestic market share to US airlines as of December 2021, even post-pandemic.
In 2002, when United Airlines filed for bankruptcy, its Frequent flyer program (FFP) was the only money-making business it had. Frequent Flyer Programs (FFPs) helped United Airlines make a whopping revenue of $5.3 billion revenues in 2019! Now imagine if a core airline loyalty program – FFP is capable of making the airline business survive, think of the revenue it can generate for airlines in today’s AI/ML world. In this blog, we will cover everything about airline loyalty – starting from its definition, the need, the challenges, some of the reigning airline loyalty programs and why now is the best time for airlines to venture into a loyalty program.
Aviation loyalty talks about the loyalty programs run by airlines to transform their existing customers into loyal customers. Just like discounts offered to shoppers in any shop, airlines provide benefits to their regular flyers for choosing them over other airlines. However, aviation loyalty is more than just rewards; at Capillary, we call it creating memorable experiences for flyers.
From searching for a flight to booking, boarding, traveling, landing, and, reaching the final destination – it’s the entire customer journey that offers different touchpoints for aviation brands to interact with the customers. Since no two passengers are similar, a common approach of making every customer engaged wouldn’t work in the longer run. Instead, you need to understand the choices of your flyers & address their needs distinctly. Even when hundreds of passengers are going on each flight regularly, engaging with them on a personal basis needs time and thorough planning for which brands must have a robust marketing strategy.
The tradition of making your flyers loyal to the airline brand was started by United Airlines in 1972 with the name ‘Frequent Flyer Program (FFP). Further, in 1979, Texas International Airlines adopted FFP full-fledged by using actual mileage tracking of passengers & rewarding them based on the miles covered in the air. This legacy of FFP was further followed by many airlines including Western Airlines, American Airlines, Delta, Continental Airlines, Air Canada, and many others. FFPs were designed to reward frequent flying customers. It was based on the simple math; more customers fly, more points they will get & higher conversion rates the airlines will have. The core airline loyalty program – FFP, was based on an earn & burn scheme. Greater will be the distance or miles covered; greater will be a counter of points, and customers can burn them on the next flight to earn more.
With the growing customer demand, airlines further partnered with associated businesses like cab services, restaurants, lounges, etc., to create unmatchable experiences for their customers throughout their air journey. The earned rewards & offers from FFP programs could now be used to shop food items at airports, book car rentals, and take flight tickets using exclusive travel credit cards. Ancillary services benefited airlines & associated partners largely in creating a profitable & comforting ecosystem for travelers. Do you know that Frequent Flyer Programs have dedicatedly gained so much popularity in the airline industry that the term then and even today is interchangeably used for airline loyalty programs?
Though FFPs gained much fame in the airline industry, aviation loyalty programs are much more than FFPs. Since FFPs can benefit the company as long as they offer flying services, the recent COVID-19 pandemic was an eye-opener for the aviation industry to factor in a situation where airlines had to stop flying services for some time. This was the situation of existential crisis for the aviation industry. And that’s the time when airlines figured out the need to widen their scope of the customer loyalty business. Besides contingencies like the pandemic, there are other reasons that have now made airlines shift away from the routine FFP approach & refurbish airline loyalty programs. Let’s take a look at the three callouts:
Mark it as a fact. The low-frequency travelers often overlook loyalty programs as they continually seek cheaper flights from any airline. Even if they signed up for a loyalty program, they must be opting for 3-4 programs at a time & they keep switching between them. High-frequency business travelers rank loyalty programs as the second factor when choosing flights over safety & punctuality. That’s why core FFPs alone can’t bring larger outcomes to airlines.
Every user’s journey is unique right from the purpose of traveling to surfing flights, budgeting, booking patterns, choosing preferences, and thinking of travel ideas. So, even if you mark an ideal customer journey with your flyers, you can miss plenty of touch points with just a single earn and redeem loyalty program. Some of your flyers may prefer a complimentary spa session before a late-night flight, while other ones may like to have warm food instead. Existing airline loyalty programs miserably fail to engage with this massive variety of customer preferences. Hence, the need for personalization in the loyalty programs that traditional FFPs won’t offer.
Your regular flyers can be the best tool to put your airline marketing in shape. It is vital to conduct timed surveys to ask your customers if they prefer to be your brand advocates & share their experiences with others. Airlines often sign celebrities as brand ambassadors to build credibility but in today’s social media age, counting on testimonials from regular flyers can work wonders for your aviation brand.
When people choose to travel with your airlines, they trust you. More than ever before, in the post-covid era, you need to ensure safety for your passengers. When your customers know they are traveling safely with all precautionary measures & treated as per their individual preferences, they won’t be skeptical about choosing your flight next time. Free goodies are still widely preferred by people as they often rake up points in their cart to claim free coffee, complimentary spa lounge services, & even free flights. Though different airlines have different mile reward & redeem systems based on their brand rules, these perks are capable of engaging flyers.
If your airlines widen the scope of airline loyalty programs from FFPs to partner bundling, points to cash conversion options & give personalized promotions – you can grow your customer engagement rate. Your flyers may need to shop something from the airport, play games to kill boredom, or upgrade their seats – the reasons could be many but as an aviation brand, you must factor in all these requests in advance integrating real-time information and airline services, you can help your customers find the solution to the ongoing situation. Recently, Deloitte conducted a proprietary survey of 2572 air travelers who took at least 1 flight in a year with their most preferred airlines. And, here’s what figures tell –
Flyers often travel for business or leisure purposes. Hence, they are looking for comforting experiences in either of the cases. Loyalty programs are meant to make this journey convenient & hassle-free for flyers unlocking access to an exclusive airline experience. Here, partnering with travel & hospitality businesses and enabling your customers to use their loyalty points to access these VIP services can help you find an edge. You can also add perks of traveling with your flight rather than your competitors.
Besides the COVID-19 pandemic, the environmental & climatic change that we’ve witnessed in the late 2020s worldwide has made businesses and travelers mindful of their choices & preferences for that need. As a result, industry leaders, business owners, and individuals are discussing sustainability goals and taking action in support. Shai Weiss – CEO at Virgin Atlantic, shares the vision of aviation with sustainability in his TED talk that how their airlines is paving the way to fulfill the pledge of net-zero emissions by 2050. Your brand too can take a step towards airline sustainability or any other cause you support. Futuristic loyalty programs & loyal flyers often prefer airlines that not only support global causes but also work towards them. All the aviation businesses sooner or later adopt these trends to offer personalized experiences to their flyers. However, given that the trends keep changing and the technology is constantly evolving, airlines must open new dimensions to stand out in this competitive world.
Clearly, customer loyalty has become the lifeline for the aviation industry.
Even if an individual travels only once a year, using the partner programs, co-branded credits, digital wallets & marketplace shopping – aviation brands can stay connected with their flyers throughout the year. The profits of investing in airline loyalty can bring to your business is no longer a debatable topic – Capillary’s value-driven loyalty framework enables brands to measure how much topline revenue can a loyalty program generate for your brand in a particular stage. This novel approach to airline loyalty programs, upcoming trends & access to insightful customer data can drive more flyers to your business. If you would like to relook at your existing airline loyalty programs, connect with our loyalty and engagement experts to revive your FFPs & transform them into the most engaging aviation loyalty programs.
April 06, 2022 |