Despite airline exuberance over the broad success of loyalty programs, a new survey contends that the programs are not embraced by younger generations of travelers and may suffer declines as a result.

“Younger travelers show less interest in traditional loyalty programs,” said a report on the survey by OAG, a London-based travel data company. The survey found “brand loyalty low among younger travelers.

“Different generations have differing outlooks on flyer loyalty programs,” said the survey, which found Generation Z and millennials “not flying with the same brand and not being enrolled in traditional airline rewards programs.

“Traditional airline rewards programs don’t resonate with Generation Z and millennials, who “enroll less in airline frequent flyer programs compared to older generations,” the survey said.

OAG said its survey, conducted in April, involved 2,000 North Americans who had flown in the preceding year and who were users of OAG’s flight tracking app.

The survey controverts the airline industry’s widely held belief that loyalty programs provide an increasingly important revenue source. One common aphorism holds that today’s airlines are largely just credit card companies with fleets of aircraft.

Younger generations eschew airline brand loyalty, OAG said.

“Frequent flyer programs are popular among all travelers, with 82% enrolled,” the survey said. But “When you dive deeper, an interesting trend emerges: Younger travelers are less likely to be enrolled than their older peers. Only 65% of Gen Z and 70% of millennials report being enrolled in airline frequent flyer programs. This represents a big drop from baby boomers (89%) and Gen X (80%).

“Will traditional loyalty programs slowly fade as younger consumers make up a larger share of the traveling population? The data implies that the answer is yes. The number one barrier to joining these programs, according to Gen Z (61%) and millennial (49%) travelers surveyed, is lack of consistent travel with a single carrier or brand, followed by it taking too long to redeem rewards, at 14% and 19% respectively. And 8% of Gen Z would rather have rewards that are specific to their travel preferences and booking patterns.

“Additionally, 8% of both Gen Z and millennials don’t want airlines to have access to their data, a close second to baby boomers at 10%, compared to only 5% of Gen X,” the report said.

Generation Z is generally defined as people born between 1997 and 2012, while millennials are generally viewed as the generation born between 1981 and 1996. The combined groups would range in age from around 12 to around 43.

The OAG report, entitled “Beyond the Ticket: Winning Traveler Loyalty with Rewards & Ancillary Services,” said the best way to improve brand loyalty would be to allow points to be used for other travel purchases including hotel accommodations, car rentals and vacation rentals.

Airlines repeatedly tout their loyalty programs on their earnings calls.

In opening remarks on the Delta call in April, CEO Ed Bastian declared, “Loyalty to our brand has never been stronger. We continue to set new records with our remuneration from American Express, our most important commercial relationship, and are well on our way to our long-term target of $10 billion.”

In the first quarter, loyalty revenue grew 12% to a record quarterly total of $1.7 billion, “on continued strength in the American Express co-brand portfolio, said President Glen Hauenstein. “Following the refreshed co-brand benefits, we saw card applications reach new records,” he said.

At the JP Morgan investor conference this month, Bastian said “Delta is investing in loyalty like no one before. And whether it’s the actual credit card and the work we do there or just the experience that we deliver onboard the planes, that all goes into loyalty.

“Our consumers are spending at a higher clip and asking for Delta miles as their principal form of currency on their personal cards,” he said.

Meanwhile, United CFO Mike Leskinen called Mileage Plus “a crown jewel in the assets we have here at United Airlines.” On the April earnings call, Leskinen said, “It was a critical source of collateral during the pandemic.” However, he said, “The dream is that it is recognized the value of that asset, the value of that business, especially as we grow it, is recognized in our equity market cap. It’s not there today.” He said United intends to provide investors with more details on the program in an effort to enhance its share price.

On the American call, CEO Robert Isom said, “Our revenue growth is increasingly fueled by AAAdvantage customers, who continue to acquire our co-branded credit cards at historically high levels.”

Article source: https://airlines.einnews.com/article/717157976/O6pjozmkkabPnKms?ref=rss&ecode=vaZAu9rk30b8KC5H

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