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Customer loyalty in the airline industry is an ongoing challenge and, in recent years, many airlines implemented fundamental shifts of their loyalty programs, basing them on ticket price, rather than distance flown.
For many frequent fliers of any airline, the major shift to a points-per-dollar system means that customers will accumulate points based on the price of a ticket, regardless of the flight’s distance.
Brian Karimzad, founder and director of MileCards.com, compiled a report of more than 1,000 active frequent flier program members to see how those loyalty program changes have impacted the customer experience.
Here are some key takeaways:
United and Delta are losing more loyalty than they gain; 24 percent of fliers surveyed would consider Delta or United less often because of the changes, and just 9 percent more often
Just 13 percent of high spenders ($10,000+ a year) plan to choose Delta or United more often because of the changes, though, that is 44 percent more likely than the overall population at 9 percent
22 percent of high spenders plan to choose Delta or United less often, in line with the overall flying population
United fliers are less loyal than Delta fliers; 26 percent of United fliers plan to choose it less often because of the change, while just 11 percent plan to choose it more often. By comparison, 23 percent of Delta fliers plan to choose it less often, while 16 percent plan to choose Delta more often. Just 8 percent of American fliers said they plan to choose United or Delta more often because of the change
71 percent of fliers are unaware of the changes. This is despite clear disclosure of the change to Delta and United members; 68 percent of fliers say the change doesn’t impact their flying preference, and among those aware of the change before the survey; 61 percent don’t think the change matters to them
59 percent of those with an airline credit card say they earn more miles on the ground than in the air. This may be one reason many fliers are indifferent to the change in earning, as the number of miles earned via card spending is not changing.
Fliers already aware of the changes are 2x more likely to prefer Delta or United than those who are unaware. Yet the percentage who plan to fly Delta or United less often is about the same, at 24 percent vs. 22 percent for those unaware of the change. This implies Delta and United should more aggressively communicate the higher earning benefits for high dollar fliers to shore up loyalty.
Karimzad, a former banker turned consumer advocate and founder of MileCards.com and MagnifyMoney.com, is a loyalty analyst for MileCards who authored the report.
“Airlines like Southwest and Delta are doing a better job of serving infrequent fliers or low spenders who don’t have big mileage balances,” Karimzad told Loyalty360. “The challenge is accomplishing this without alienating longtime loyal members who have saved up big balances to splurge on an aspirational reward like a business class ticket to Europe.”
Karimzad said the biggest takeaway he sees in the study is that fliers need to pick a program based on where they want to fly with miles.
“Delta has shifted to being much friendlier to members who want domestic awards and book in advance while becoming less attractive to members who want aspirational international awards,” he said.
“How big the pricing differential is between the lowest and highest priced days of the week,” Karimzad added.
What are the best U.S. Airline value programs and why?
“For frequent spenders who aren’t frequent fliers, Southwest and Delta offer the best value for domestic flights,” he said. “Alaska is an interesting alternative for frequent fliers who don’t book the highest fare classes because it still rewards miles based on the distance you fly rather than the dollars you spend on airfare. United, which has good saver level award availability, offers some of the best value in situations where airfare is high like last-minute tickets. It’s also well-suited to fliers who want international awards.”
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