Disrupting Airline Loyalty – Billion Dollar Risk Airlines Are Taking
Globally, airline loyalty programs generate billions of dollars in sales every year. They are the pinnacle of all loyalty programs, and they’re what every company dreams their loyalty program could be like- scalable, highly profitable, technology-driven, and with access to one of the most highly desirable rewards on the planet – free airline seats.
With stable profit margins up to 45%, FFPs sell the dream that everyone can fly to luxury destinations for free, and best yet – airline loyalty programs sell something which physically doesn’t exist – airline miles.
The metrics are so good, that in many cases – airline loyalty programs can be worth more than the actual airline itself.
Airline loyalty programs fundamentally exist to serve a single purpose – to generate airline ticket sales and drive revenue back to the airline.
When people get hooked on airline loyalty schemes, they do crazy things.
- They spend more
- They book directly with the airline website
- They consolidate travels into a single airline/alliance
- They are more likely to take inconvenient connections/stopovers
- In extreme cases – taking extra discretionary flights to ensure they retain elite status.
Airline Loyalty Programs sell THE DREAM – whether it’s connecting loved ones, or taking that aspirational holiday to Hawaii, Paris or the South Pacific.
The ability for airline loyalty programs to sell THE DREAM, and in the process make their points currency irresistibly desirable – is nothing short of magic.
In fact, for the better part of 20 years, airline loyalty programs have collectively enjoyed a near ‘industry monopoly’ on loyalty program success.
Think about it – it’s a highly attractive currency, there are the glamour and romance of business and first class cabins in the sky — rewards that no other loyalty program can match. Airline programs sell the dream perfectly.
Delivering value to loyalty program members
Airline loyalty programs fundamentally deliver value to their members in a way which non-airline programs cannot. Even the latest Uber loyalty program doesn’t offer the type of value which airline loyalty can. The secret sauce is that airline points/miles allow members to aspire to a trip that they otherwise would never be able to afford or contemplate – such as flying First Class between New York and London.