Ancillary earnings are driving up airline loyalty satisfaction levels, but redemption woes remain a headache

17 November, 2017

Airline loyalty rewards programme benefits that extend beyond airline services and ticket fees have a significant effect on customer satisfaction, according to the recently published J D Power 2017 Airline Loyalty Program Satisfaction Study.

The findings of its investigation into member satisfaction with airline rewards and loyalty programmes shows overall satisfaction is considerably higher among programme members earning rewards in restaurants, product purchases, and car rentals than among those just earning airline flights alone.

However, the study, based on 3,387 responses from rewards programme members in September 2017, does highlight that nearly half of frequent flyer programme members do not fully understand how to redeem awards from their loyalty scheme, with just 52% of respondents saying they fully understand their respective programme’s redemption process.

It is clear that airlines that understand customer experiences are better positioned to develop targeted initiatives that can increase overall customer satisfaction, brand loyalty, and advocacy, as well as maximise sales. For years, airline loyalty programmes have proven to be effective methods to maintaining regular customers and avoiding them switching to rivals, but frequent flyer programmes are now having to be reinvented to meet changing consumer habits and needs.

The J D Power study measures member satisfaction with airline loyalty and rewards programmes based on four factors (in order of importance): earning and redeeming rewards; programme benefits; account management; and member communication. Overall satisfaction is measured on a 1,000-point scale.

Some of the key findings of the study include:

  • Frequent fliers want more than miles: Overall satisfaction increases by 77 points when airline loyalty members earn rewards in restaurants. Rewards for product purchases result in a satisfaction increase of 68 points and car rentals result in an increase of 69 points. Earning airline flights only adds 2 points, on average, to loyalty members’ overall satisfaction with a programme.
  • Favourite benefits: When it comes to reaping the rewards of membership, “lowest price guarantee” accounts for a 109-point increase in customer satisfaction and “waiving a same-day change fee” based on loyalty status adds 104 points to overall customer satisfaction.
  • Status members are more satisfied than general members: The average overall satisfaction score among airline loyalty rewards members who have a status above general membership is 814. That compares with an overall satisfaction score of 744 among those with general membership. Status members are also more likely to be brand advocates, with 59% of status members classified as “promoters” vs. 49% of general members.
  • Minimise problems and offer extra bonus rewards: Basics matter. Overall satisfaction is 99 points higher among customers who have not experienced any problems with their loyalty rewards programmes than among those who have. Likewise, when customers are offered extra points or bonus rewards miles, satisfaction increases by 52 points.
  • Explain the process and recognise preferences: Simply understanding how to redeem awards has a 52-point positive effect on overall satisfaction, yet just 52% of program members say they fully understand the redemption process. Similarly, when an airline consistently recognises a rewards member’s stated preferences, satisfaction scores jump by 48 points. However, just 26% of program members find their airline delivering on this performance metric.

J D Power’s findings highlight the importance for airlines to look beyond ‘free’ flights as rewards and the critical role that ancillary benefits that fall outside the airline industry can play in keeping customers loyal. “Flexibility in how miles are redeemed is valued by members,” explains Michael Taylor, travel practice lead at J D Power. “After all, if you win a pie-eating contest, you may want to be rewarded with something besides another pie.”

Interestingly, none of the US majors make it into the podium places in terms of overall member satisfaction among US airline loyalty schemes. The study ranks JetBlue Airways’ TrueBlue programme the highest with a score of 800 out of 1,000. Alaska Airlines’ Mileage Plan comes a close second with a score of 796, while Southwest Airlines’ Rapid Rewards is ranked third with a 793 score.