Airline customers love to earn miles. According to research, 82% state they enjoy airline loyalty programs, while 81% cherish their rewards. Showing care about your consumers is the best way to gain their trust.
It’s no wonder major airlines like United Airlines encourage customers to join their loyalty programs. They invite both occasional and business travelers to collect miles and earn points with a promise of rewards like access to special airport lounges.
However, launching your airline loyalty program can be time-consuming and costly. A custom loyalty app can take your IT team months to develop. They then need to test the app, fix issues, launch it and ensure it runs smoothly daily.
In this article, we will discuss airline loyalty programs, help you improve travelers’ experience, and explain how to use PassKit instead of building a custom loyalty app.
What are airline loyalty programs or frequent flier programs?
Image source: MBA Aviation
Airline loyalty programs, also known as frequent flier programs (FFPs), are marketing tools that reward customers and foster their loyalty.
Customers join a loyalty program to collect points and miles. They must fly with the airline to do so. Of course, the more travelers fly, the more incentives they get.
Initially, customers could only collect points when they bought a ticket. Today, however, the best frequent flyer programs allow customers to use their airline partners’ services to earn points.
For instance, let’s say your airline collaborates with hotel chains, car rentals, or restaurants. You can strike a deal to ensure your frequent flyers benefit when they pay for their services.
What are the goals of airline loyalty programs?
Airline loyalty programs produce substantial revenue for companies such as Delta Air Lines. According to Statista, the Delta Air Lines SkyMiles program generated $2.8 billion in 2020. The American Airlines AAdvantage, in comparison, generated $2.9 billion.
The best frequent flyer programs leverage rewards to attract customers and increase sales. One research shows that 43% of consumers spend more on products or services when they have a loyalty card.
Being a member of an airline loyalty program gives customers the most desirable reward—free flights.
With airline loyalty programs, you can
- Award occasional and business travelers
- Foster and increase customer loyalty
- Sell airline miles, which is a currency that doesn’t physically exist
- Increase ticket sales
- Encourage customers to spend more
Although airline rewards programs exist for the customer, they are also valuable for companies. Let’s see why they are essential in the post-COVID era.
Why are airline loyalty programs significant in the post-COVID era?
Image source: Freepik
The coronavirus pandemic affected all aspects of our lives. The whole world was in lockdown, which led to the decline of air travel.
Many airlines faced declining sales and loss of customers. According to research, air travel fell by 60% in 2020. It cost the industry $370 billion.
Looking at this data, it’s evident that the airline industry has much catching up to do. It must create innovative strategies to gain and nurture customer loyalty. Loyalty programs are an effective solution.
The Financial Times looked at the Delta Air Lines, American Airlines, and United Airlines airline loyalty programs. It estimated the value of their loyalty programs at $26 billion, $24 billion, and $20 billion, respectively.
To compare, Delta Air Lines is worth $20 billion—less than its airline loyalty program.
It shows that airline loyalty programs have a greater value than airlines in the post-COVID era. They help companies generate revenue they had previously lost.
You must understand how a frequent flyer program works as well.
How does a frequent flyer program work?
Most frequent flyer programs have the same methods. Let’s go over them below.
1. Miles flown
Your airline rewards program should award miles for each customer’s flight with your company depending on different factors such as
- Dollars spent
- Membership level
- Fare type (first class and business class passengers get bonus miles)
Spending points enables customers to get discounted prices or other rewards.
2. Membership levels
You should create membership levels for your frequent flyer program to beat other airlines. Each tier must have benefits that appeal to customers.
You must make it clear to customers what each membership level entails. You can also explain how they can upgrade to a higher level.
3. Partner airlines
Think about collaborating with different airlines to help your customers earn loyalty points. Travelers should be able to earn and redeem miles with your partner airlines.
For instance, American Airlines works with Etihad Airways. Customers who fly with Etihad Airways can still earn points for the American Airlines loyalty program.
4. Partner credit cards
Your frequent flyer program can also allow customers to collect points when they spend on a co-branded credit card.
You can create co-branded credit cards with a card network like American Express. Customers can use them as loyalty cards for businesses to receive rewards for every dollar spent.
Setting up a frequent flyer program takes time, dedication, and effort. You can speed up the process by leveraging PassKit—your go-to digital loyalty solution.
PassKit lets you set up flights and boarding passes for Apple Wallet and Google Pay. Customers only need to open their mobile wallets to skip check-in counters and go to the boarding gate.
Our platform comes with advanced analytics and helps you track redemption rates. You’ll know how many people enrolled in your loyalty program, the percentage of issued points, and more.
Sign up for our 45-day free trial to create the best frequent flyer program!
How do travelers redeem their points?
Travelers can redeem their points in different ways:
- Redeem miles for flights – most customers use their points to receive a free flight. They can also use the miles to lower the price.
- Use points for a car rental, hotel, or other – customers can utilize an airline rewards program to pay for other companies’ services. For instance, American Airlines allows travelers to use flight miles to pay for selected hotels globally.
- Earn miles to shop – allow customers to redeem their airline miles when they purchase gift cards, merchandise, etc. They’ll be thankful for your gesture and keep returning.
Let’s now mention what the frequent flyer programs bring to the table.
5 benefits of creating airline loyalty programs
The best airline should look for a chance to improve customer experience. Your company should introduce a frequent flyer program because of these benefits:
- Rewarding existing customers – airline loyalty programs reward consumers for their loyalty and trust. Customers are more likely to purchase if they get points for every dollar spent.
- Standing out from the competition – travelers can’t transfer frequent flyer miles to another company. It makes switching to another airline more costly.
- Attracting new travelers – customers want a company that puts them first. Ensure your loyalty program comes with discounts and rewards to show that you care about newcomers.
- Increasing sales – has your ticket sale stalled? Launch your frequent flyer program with PassKit to show customers buying your services is worth their time. Consumers are likely to purchase more when they’re something in for them.
- Getting valuable data – Digital loyalty platforms like PassKit collect customer data. It gives you a clear understanding of who your customers are, what they expect from you, and how you can improve their experience.
Airline loyalty programs also come with certain drawbacks.
3 drawbacks of airline loyalty programs
Here are some drawbacks you can experience with your frequent flyer program:
- Facing market saturation – from Delta Air Lines to American Airlines, companies rush to develop the best frequent flyer programs. The issue is that these programs may have similar features. We suggest you analyze your competitors to prepare an airline loyalty program that differs and offers something new.
- Making a custom loyalty app is expensive – developing an app from scratch is lengthy and costly. You have to maintain and regularly update the app. Avoid this by leveraging budget-friendly solutions like PassKit.
- Requiring consistent effort– you must devote time to make your loyalty program work. The job doesn’t stop when you launch it—that’s just the beginning. Ensure you have enough time and resources to improve your frequent flyer program.
Although there are some drawbacks, the advantages of airline loyalty programs outweigh them.
Airline loyalty programs and partnerships
You should also introduce partnerships in your airline loyalty program. It can help you attract and retain your customers.
Loyalty programs like Alaska Airlines Mileage Plan collaborate with businesses and partner airlines to increase the worth of their frequent flyer program. Customers can spend points or rewards elsewhere.
How do partnerships work?
It’s simple! Businesses like hotels, retail shops, or car rentals might purchase points from your airline. They can then give these points to their customers to award them for their loyalty.
You support each other throughout the process. It might help you expand your customer base. If someone hasn’t flown with you before, they might decide to do so because of the points.
It’s obvious why frequent flyer programs are valuable. You can sell virtual points for real money and transactions.
12 Tips to improve your frequent travelers’ experience
The best frequent flyer programs owe everything to planning. We’ve prepared 12 tips to help you plan your perfect loyalty program.
1. Reinvent your current loyalty program
Customers’ needs and wants have changed significantly over the years. They now expect much more from your company and frequent flyer program than they did before.
Therefore, go over your current loyalty program. See what you can leave out and what you must absolutely keep.
2. Create a digital-first loyalty program
According to research, people spend almost five hours on their mobile phones daily. Why don’t you use this and create a digital-first loyalty program?
Make your loyalty card available on mobile wallets such as Google Pay and Apple Wallet with PassKit. Not only will you launch a digital-first loyalty program, but you’ll also establish a multichannel distribution system that benefits all.
3. Onboard new members with a small welcome gift
New members are more likely to return if they get a special incentive. Prepare a welcome gift when customers join your airline loyalty program.
For instance, they might get bonus miles or a discount they can use at a hotel or other businesses.
4. Use data to determine your most valuable customers
Digital loyalty platforms like PassKit collect customer data to help you make informed choices. We suggest you analyze the data if you want to single out your most valuable customers.
The following metrics can help you:
- Average order value (ORV) to identify those who spend the most
- Customer lifetime value to see how much your relationship with a specific customer is worth
- Purchase frequency to determine who purchases most often
5. Leverage data to increase engagement and loyalty
You can view the data from your go-to digital loyalty solution. See what motivates your customers to engage with your brand. Is it a special offer, location-based marketing, or something else?
Determine what the answer is to increase engagement and loyalty.
6. Reduce travel costs for frequent flyers
The best frequent flyer program is the one that awards its returning customers. They are the backbone of your business.
Whether they fly business class or coach, you must thank them for their loyalty. You can send them a discount code for their next ticket. Make sure it applies to international destinations as well.
A happy frequent flyer might share their experience online, attracting new customers to your airline.
7. Add new perks while maintaining the old ones
Never change or remove something that works. This is true for perks that your travelers keep using repeatedly.
We suggest maintaining old perks, especially if they’re popular among customers. They might get angry and start looking for other airlines if you remove them.
Instead, expand your list of benefits. Add new incentives that might attract someone to your airline loyalty program.
8. Automate point collection and redemption processes
Leverage technology to automate the process of point collection and redemption. You can start using PassKit for this purpose.
We keep track of points and rewards instead of you. When a customer collects enough points, they receive rewards automatically. The customer can redeem a gift with a single tap on their mobile device.
9. Let passengers earn and redeem miles based on their travel behavior
Every passenger exhibits a different travel behavior. You must personalize their experience with digital loyalty solutions such as PassKit. We collect customer data to help you understand and get to know your audience.
Depending on their behavior, allow customers to
- Buy free tickets
- Purchase for first-class upgrades
- Gain access to airport lounges
- Get a chance to take extra baggage with them
10. Ensure travelers are aware of the benefits
The best frequent flyer program is transparent and straightforward. Your customers should always know the membership benefits and how to use them.
11. Offer exclusive benefits to elite members only
Most loyalty programs have membership tiers. That’s how they differentiate between different customer groups.
Each tier comes with specific benefits. Customers with an elite status get better incentives than those new to your airline. For instance, your airline staff might escort them to a private airport lounge before a flight.
Achieving elite status, therefore, would be a top priority for most customers.
12. Partner with other travel companies
Your passengers will have more chances to collect points if you partner with other travel companies. They can get rewards by using the services of those businesses.
You can take a cue from major airline companies like United Airlines, which allows customers to increase the number of miles by interacting with its partner companies.
Customers research loyalty programs before they choose their favorite company. Make sure to improve your frequent flyer program with the above steps if you want to retain consumers.
Let’s see how PassKit can help you create your airline loyalty program.
How to use PassKit to avoid building a custom loyalty app
Some companies start developing custom loyalty apps only to realize how much effort and time this takes. You can avoid this by using PassKit to power your airline loyalty program.
What is PassKit and how does it work?
PassKit is a digital loyalty platform that helps companies avoid building a custom loyalty app and create loyalty programs and digital boarding passes.
We help you bring your loyalty program straight to your customers’ mobile phones. They need a smartphone with Google Pay or Apple Wallet to scan their cards.
A quick scan will give them the correct number of miles and show digital boarding passes or flight details. Whether they travel in a business class or visit international destinations, we’re there to improve their travel experience.
Sign up now to test PassKit during a 45-day free trial!
PassKit and multichannel distribution
You can create digital loyalty cards or membership cards and distribute them on multiple channels. You can choose the ones your customers use the most.
Some of the channels PassKit supports:
PassKit enables you to develop a multichannel distribution system quickly and easily and provide a connected customer experience.
How to track redemption rates with PassKit
PassKit knows how crucial data is for improving your frequent travelers’ program. That’s why we collect customer data to help you understand their needs and preferences.
You can track redemption rates with our advanced analytics. PassKit provides loyalty program data on enrolled members, installed or uninstalled loyalty cards, and deleted members.
You can track loyalty program performance weekly, monthly, or yearly, understand what mobile wallets your customers use the most, and track which distribution channels bring you new loyalty program members.
PassKit is cost-effective
PassKit is an excellent solution if you have a limited budget. You don’t have to develop an app, which would require huge costs. We’ve got everything covered for you.
Your job is to create an account, design your loyalty program and promote it to customers. PassKit does everything else.
You don’t need coding or design skills
You don’t need to be tech-savvy or a graphic designer to use PassKit. You can work on your design with the help of our platform and go over different settings to optimize your membership cards for iOS or Android platforms.
Our loyalty card template aligns with Google Pay and Apple Wallet guidelines.
PassKit integrates with mobile wallets
Customers have begun to trust mobile wallets. These services allow them to experience contactless shopping and pay with their smartphones.
PassKit wants to leverage customers’ familiarity with Google Pay and Apple Wallet. Show them physical loyalty cards are in the past and embrace the future.
PassKit eliminates development costs
You must be aware of every aspect of app development before you begin. Software engineers and graphic designers will depend on you, expecting your input on everything.
If a misunderstanding arises, you might decide to stop developing the app. It means you’ve wasted your time and budget.
Avoid this by using PassKit, and forget about development costs!
PassKit helps you boost engagement, retention and growth
PassKit ensures you develop a more seamless traveling experience for your customers. You can increase engagement and retention by providing personalized services on your customers’ favorite devices. Using PassKit, you can remind customers about your company daily by sending highly targeted messages and push notifications.
Airline loyalty programs: The bottom line
Keeping customers happy is a top priority in any industry, airline included. Your company should launch an airline loyalty program to bring consumers closer and make their year with rewards and points.
Don’t waste your time building a custom loyalty app. PassKit lets you design loyalty cards and flight and boarding pass in just a few clicks. Our team has thought of everything, so you can relax and watch how your profit increases.
Sign up for our 45-day free trial and start growing your company with PassKit!
FAQ: Airline loyalty programs
We’ve got answers to some of the most asked questions about airline loyalty programs.
Why are airline loyalty programs so successful?
They are successful because of the incentives they offer to customers. Travelers get a chance to buy a discounted ticket, fly for free, access airport lounges, and so much more.
Do airlines make money off points?
Every point a customer receives goes back to an airline. The customer must spend their points or rewards with the company, which increases its revenue.
How do airlines gain customer loyalty?
Airlines gain customer loyalty through loyalty programs. They invite customers to collect points if they want to receive rewards such as free flights or bonus miles.
Is there brand loyalty in the airline industry?
Customers’ perceptions constantly change. But you can maintain their loyalty and gain their trust through airline loyalty programs like the ones PassKit can help you create in just a few minutes.