Magazine article CRM Magazine

Airline Loyalty Programs in Flux: Consumers and Airlines Rethink Their Commitments to Each Other

Magazine article CRM Magazine

Airline Loyalty Programs in Flux: Consumers and Airlines Rethink Their Commitments to Each Other

Article excerpt

Recently, Delta Airlines announced changes to its SkyMiles program that would reward consumers for dollars spent, not miles flown. A $500 round-trip flight from New York to Los Angeles that would have previously netted an economy Delta flyer 4,950 miles will now earn him just 2,500 miles. But a business traveler booking a last-minute flight from New York to Atlanta, also costing $500, would earn 2,500 miles instead of just 1,250.

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Southwest and JetBlue, which market their companies as value airlines, also reward customers based on overall purchases, showing that the math for loyalty programs is changing.

No one likes change, and the sweeping recalculations of mileage have prompted many frequent fliers to evaluate their loyalties. Half of high-frequency business travelers would switch to another loyalty program, even after achieving the highest status level, according to the Deloitte Survey "Rising Above the Clouds: Charting a Course for Renewed Airline Consumer Loyalty."

What's more, high-frequency business travelers, defined as those who fly more than 50,000 miles for their jobs per year, rated loyalty programs as the secondmost important attribute (the network of routes serviced ranked highest). Overall, business and leisure travelers ranked loyalty programs near the bottom, in 18th or 19th place, a dramatic difference.

While Delta might have targeted its SkyMiles program toward those spending the most money, such as high-frequency business travelers, the changes incited negative discussion among them. Online guru Brian Kelly, who runs the Web site The Points Guy, was one of many who criticized the changes. In a video to his viewers, which include many savvy business travelers, he said, "I think [Delta has this] whole concept that there's this one business traveler type that doesn't care about price and will just book full-fare tickets. Well, why are you going to cater your loyalty program to them if they don't care anyway?" He urged consumers to rethink their loyalty. "I think Delta's really missing the boat here with consumers.. .that want to see value back."

Yet the model for purchase-based loyalty is already well-established in other areas. "The hotels shifted to this a long time ago," states Lori Ward, a principal with Deloitte's Travel, Hospitality & Leisure practice. …

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