TNMT’s latest newsletter shines a spotlight on the challenges inherent in the industry’s approach to loyalty.
The comprehensive edition reimagines loyalty, mapping out areas the industry must innovate and adapt in order to maintain meaningful relationships with travellers. Various suggested changes include a shifted business model from transactional to relational, drawing on inspiration from super apps, and a look at the “(n)ownership spectrum.”
The piece, “From transactional to relational” is chapter four in TNMT’s The Great Inversion series which explores the travel and mobility industry’s transition towards a “consumer-driven value chain logic.” Previous chapters include “Communities define demand,” “Advanced Means,” and “Embedded Travel.”
Recognising the industry’s relative stagnation in contrast to the evolving loyalty landscape, this chapter states simply:
“Loyalty programmes, fundamentally designed to incentivise customers to consistently opt for the same provider, aren’t yielding the desired outcomes.”
Here are three of the key takeaways from TNMT’s article on the state of loyalty programmes and why they aren’t working.
1. Declining participation in FFPs
Citing a 2023 survey by Airport Dimension which showed a decline in participation in airline frequent flyer programs, the article highlights that only 52 per cent of travellers were participating in airline FFPs, a decrease from 66 per cent in 2019. This report, amongst others, highlights the concerning decline in passenger interaction with airline loyalty programmes.
2. A generational dimension to loyalty
Essentially suggesting a divergence between airline loyalty and the modern traveller’s expectations, one of the standout points in the article is how acute the issue of loyalty is in younger generations.
Millennials “present a distinct challenge given their innate reluctance toward brand commitments.” This is particularly alarming as these individual will soon form the majority of travellers and therefore represent a segment that the industry must cater to as the loyalty offering evolves.
3. Current failure to meet customer preferences and desires
“The modern traveller seeks enhanced flexibility and desires personalised rewards that diverge from the standard offerings typically found in mileage programmes.” PwC’s 2023 Customer Loyalty Executive Survey showed passengers predominantly value flexibility in rewards and a BNPL analysis pointed towards travellers appreciating flexibility in payment options too. There is a void between what modern passengers value and how loyalty programmes currently deliver which is contributing to the declining engagement with airline loyalty.
Ultimately TNMT calls for the:
“Ongoing transformation [to] reimagine loyalty concepts, crafting products that captivate attention across various customer touchpoints and intertwine seamlessly with everyday activities, even those seemingly disparate from the conventional travel trajectory.”
If effectively combined with genuine personalisation and flexibility, airline loyalty can nurture meaningful connections with passengers and become reintegrated with the modern day passengers’ travel experience. However, innovation and agility must be at the centre of this evolution.
Read the full TNMT article here.
For more like this see:
- Loyalty, gamification, and NFTs: Lufthansa Innovation Hub
- In-Flight Connectivity. A Lucrative, Loyalty Building Opportunity
- Qatar Airways’ innovative world first loyalty initiative
