Airlines Remaining Relevant: How to Retain Customer Loyalty

October 2017

Airline loyalty programmes are some of the oldest and most established reward schemes in the travel market. Changing customer demands and needs, as well as technological innovations, have forced these establishments to transform their structures and embrace change, albeit at a different pace. This report reviews the developments within major airline loyalty programmes, and their implications for the end user.

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Airline loyalty programmes are embracing change, but at a slow pace in light of the numerous disruptors in the travel industry and the changing nature of ultra-connected customers

Revenue-driven strategies and costly co-branded cards, once seen as the main tool to deliver profitability, are no longer the right answer to retain and convert passengers into loyal customers. Brand engagement, rather than high breakage (ie unredeemed points), simplicity of the services, customisation and a bigger focus on the social media element, as well as experiential-based brand relationships are of essence for the success of reward schemes.

The complexities of air travel can be eliminated by fully digitalising loyalty schemes

This can in turn serve as the basis for data analytics, which can inform better customer profiling. Innovative technologies can help deliver instant real time information, feedback and response, but equally bring service that is in tune with customers’ needs.

Increasing competition from new airline players, airports and financial providers in the airline segment

This puts more emphasis on the need to differentiate. Unique and creative rewards can attract customer attention, not only repeat customers but also occasional travellers.


Key findings

Trends Shaping Airline Loyalty

Technology impacting loyalty
Customer loyalty deconstructed
“ Loyalty beyond reason” through emotional connections/experiences
Apps as a tool for more direct communication and services
M-commerce: A new driver of loyalty
Smartphone penetration going strong in key markets
Loyalty through digital wallet…
…but it is a fickle business
Co-branded cards and airline rewards
Co-branded cards and airline rewards (cont’d)
Credit card loyalty lounges: More competition in the market
Airport loyalty programmes: Friend or foe?
Influencing customer behaviour and preferences
Personalisation vital component for loyalty schemes
Loyalty rewards for the occasional traveller

Best in Class Examples

Customer service: A must for Southwest
Southwest: Rapid Rewards – The best loyalty programme in the US
American Airlines loyalty programme: Fully revenue based
American: AAdvantage revamped
Singapore Airlines: Loyalty first and foremost
Singapore Airlines: Krisflyer can help expand customer base
Singapore Airlines: Krisflyer market segments
Lufthansa: Using technology to gain competitive advantage
Lufthansa: Building partnerships
Lufthansa: Innovation all the way
Qantas: Thinking out of the box about loyalty
Qantas: Loyalty overtaking ticket sales
Qantas: Ambitious plans
Qantas: Major business focus
Enhancing customer experience
Air France-KLM: Digital transformation
IAG: Consolidating all loyalty schemes under one umbrella
IAG: Creating repeat experiences
IAG: Synergies between Avios and independent loyalty programmes
IAG’s Hangar 51 vs Lufthansa’s Innovation Hub

Future Outlook

Major takeaways

Appendix: Competitor Analytics

Competitor Analytics tool
Market Overlap
Overlap Matrices

Appendix: Industry Forecast Model

About Euromonitor International’s Industry Forecast Model
Soft drivers and the Industry Forecast Model
Growth decomposition explained
Significance and applications for growth decomposition
Key applications for Industry Forecast Models


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