Modifying Airline Loyalty Programs

American Airlines recently announced new changes are coming to its AAdvantage loyalty program. The airline will now be rewarding customers with frequent flier miles based on how much they spend, instead of on how far they travel. When airlines first came out with loyalty programs, the prices of flights were based on distance. Now consumers can save on airfare by buying tickets way ahead of time, or by travelling during the off season. Flights of the same distance can also cost the same amount depending on how popular the destination is. The new program will reward those who fly on expensive tickets, like those who fly first class for corporate events, but it won’t reward people who fly internationally in economy seats. American Airlines will be including base fare plus carrier fees when calculating dollars spent. Changes to the program will start at different times in 2016, and will try to give frequent fliers what they want. The loyalty program is divided by tiers, and members will get different benefits. According to the Chicago Tribune, “Regular AAdvantage program members get 5 miles for each dollar spent, while gold members get 7 miles, platinum get 8 and executive platinum get 11.” The company says that some award redemption levels will decrease by as much as 40%, and the rewards can be used on any day. Before, customers had to worry about Black Out dates, and their miles expiring. American Airlines says that after certain times, award redemption levels to popular places will be reduced. For instance, award redemption levels for places in the Caribbean will decrease after March since they are popular destinations during that time. Cheaper domestic flights will also be redeemable at a lower level for a one way flight. Because of changing market prices and demands, international flights to Europe and Asia will increase.

Earlier this year, the US News & World Report said that American Airlines had the second best airline loyalty reward program. In the same list, United Airlines’ MileagePlus program and Delta’s SkyMiles program were ranked among the worst airline loyalty programs. According to the report, these two programs performed poorly because it was difficult for customers to earn rewards, or find a flight that they could use their flier miles towards. Customer’s judge loyalty programs based on how easy it is to sign up for and use rewards. United Airlines and Delta both changed their loyalty programs earlier in 2015 to reward fliers based on how much they spent, rather than how far they traveled.

Due to changing customer needs, airlines have been restructuring their loyalty programs. Customers are more likely to sign up for a loyalty program if it is easy to use. Airline carriers can use card scanners to help their customers sign up for a reward program. A card scanner would let ticketing agents sign customers up for a loyalty reward program when the customer comes to the front desk to check into their flight. Ticketing agents can use a card scanner to gather information from the customer’s driver’s license or passport. The data can be auto-populated into a form, making the sign up process a quick step for both the customer and the airline. With card scanning technology, airlines can easily add more customers to their loyalty programs.