Can Travel Loyalty Programs Avoid A Midlife Crisis?

By Jeff Fromm, Forbes

More than 40 years ago in 1979, Texas International Airlines introduced the first modern frequent flyer program, “Payola Passes,” to thank its customers who were “heavy” travelers. Fast forward a couple of years to when it was overtaken by American Airlines’ AAdvantage in 1981, and the world of airline loyalty programs has been flying high for over forty years.

But after four decades of changes, evolving rewards, and advancements in technology, airline loyalty programs have hit a standstill – what some would consider a midlife crisis.

According to Lars Parmekar, Director at Capillary Technologies, “The AAdvantage program was created to capitalize on excess seat capacity in 1981.” Lars elaborated that excess seat capacity is no longer an industry issue.

“Airline loyalty programs offer exclusive benefits to top-tier travelers – privileges such as faster check-ins, lounge access, upgrades, and generally more seamless travel experience,” said Sean Claessen, Partner/Chief Strategy Officer at Bond Brand Loyalty. “However, the growing issue of ‘top-tier turbulence’ is threatening the foundation of these programs. With the number of top-tier members swelling beyond what was originally intended, the concept of exclusivity, which is central to loyalty, gets eroded.”

To get back to their roots, airline loyalty programs need to understand what’s causing the oversaturation and how to keep their passengers happy...

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