Airline loyalty programs are big business. The four biggest U.S. airlines generate more than $20 billion in combined revenue just from those programs. Loyalty miles have become a sort of currency the airlines mint, sell, distribute, and redeem.
But, do they keep customers loyal to the brand? A new study from OAG shows that fewer younger flyers are enrolling in loyalty programs than older flyers. OAG, a global travel data provider and air travel intelligence company, surveyed 2,000 North American travelers in April 2024. The topics included airline services, ticket inclusions, and rewards programs.
A Third Of Gen Z Flyers Aren’t In Any Program
If you fly, enrolling in the frequent flyer programs of the airlines you use seems like a no-brainer. The programs are free, and the miles accrued can be used for free flights. Even small amounts can be redeemed for merchandise. Despite this, the number of un-enrolled flyers is growing.
Gen Z and Millennials are less likely to enroll in airline loyalty programs than older generations. Only 65% of Gen Z and 70% of Millennials are loyalty program members, compared to 89% of Baby Boomers and 80% of Gen X.
Why Don’t People Enroll In Airline Loyalty Programs?
The top reasons younger travelers avoid these programs, according to the study, are lack of consistent travel with a single airline and slow reward redemption. Some Gen Z travelers also want more personalized rewards tailored to their travel patterns.
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Privacy is an issue for a small but significant number of flyers. Eight percent of both Gen Z and Millennials are reluctant to share data with airlines, as are 10% of Boomers.
Some of the blame has to be placed on the airlines. In recent years, the actual mileage flown has become mostly irrelevant to accumulating loyalty points.
Instead, the ticket price is what counts. This makes the program feel more transactional. And, the airlines often devalue the miles flyers have accumulated, requiring more for the same flights.
Tiers Of Disappointment
All this is particularly discouraging for younger flyers who are likely to seek out lower priced flights. The number of trips need to collect enough miles for a free flight can be daunting and seem hardly worth the effort. Shopping flights from all airlines for cost and convenience makes more sense than staying loyal to just one.
Chasing status levels is particularly challenging. While there are benefits to each tier of loyalty status - better seat selection, free bags, the possibility of cabin upgrades, early boarding, etc. - only heavy spenders can qualify for the higher tiers. And, one has to re-qualify annually. A casual leisure traveler who flies economy has little chance of success, so most won’t bother trying.
A Simpler Explanation
There’s one other possible explanation for a smaller number of Gen Z flyers than Boomers being in a program: years spent flying.
Once you join an airline loyalty program, you are usually in it for life. Gen Z flyers may not have had a situation that motivated them to join a program. But, as soon as one has a job with a lot of air travel or decides to vacation overseas, the benefits of being in a loyalty program jump.
Over time, the percentage of Gen Z flyers in loyalty programs will rise. Participation by the Gen Alpha cohort of flyers, meanwhile, will more closely resemble the current Gen Z group.
Can Airlines Accelerate Loyalty Program Signups?
Rather than waiting for Gen Z and Millenial flyers to “age into” loyalty programs, the OAG study offers some clues as to what younger flyers want.
Gen Z and Millennials are interested in rewards that align with their travel preferences and booking habits. They want the flexibility to redeem points for experiences beyond flights, such as hotel stays (73%), rental cars (53%), and vacation rentals (50% of Gen Z, 49% of Millennials).
To entice younger flyers to sign up for airline credit cards, perks like free checked bags (63%), sign-up bonuses (56%), and lounge access (43%) are key.
Credit Cards Are A Gateway
Road warriors use airline branded credit cards to increase their miles/points. This helps them get free flights more quickly and can contribute to a higher tier of status.
Less frequent travelers, including younger flyers, can use branded credit cards to gain benefits their mileage alone wouldn’t give them: free bags, earlier boarding, even club access for some cards. Signing up a younger flyer for one of these cards is the first step on the path of building a longer term preference for the airline.
And, airline loyalty is like a flywheel that gains momentum. The higher your tier, the better the benefits are. And, the more you appreciate and use the benefits, the more likely you are to stay with the airline offering the better experience.
