Until the time comes when airlines need to compete for customers again, passenger sentiment many not matter.
Loyalty programs in the airline industry have evolved dramatically over the last few years to favor high-spend customers and trim budget travelers from the ranks — after all, with the sector booming, who needs to incentivize new customers?
The course has slimmed down loyalty programs and aggravated some budget travelers, but until recently, most of the negative sentiment has been only recorded on the fringes of social media, where it’s tough to draw quantitative trends.
Now, a new study from Travel Data Daily has been able to look at aggregate data across social channels to predict how unhappy loyalty program members can be and when they’re at risk of taking business to other carriers.
The study used Cathay Pacific’s Marco Polo program, which made major changes in 2015, as a case study. By analyzing the social feeds of over 13,000 elite program members, the study determined the points at which customers became unhappy with the program and the subsequent moment when they switched carriers.
“..When loyalty members who consistently talk about their home airline suddenly begin talking about another airline in a positive manner or asking questions related to another airline, our research suggests the propensity for this individual to book a flight or switch loyalty programs significantly increases,” the study concluded.
In total, the study hypothesized that about 1,200 elite members in the test group — just under 10% — likely defected from Cathay Pacific after the loyalty program changes were made.
Though the study stops at analyzing Cathay Pacific, it’s easy to see how similar movement may be afoot across legacy U.S. carriers. American Airlines, in particular, has taken a heavy dose of criticism from its customers this year thanks to not only new spend-based elite status requirements but also a lack of award space available for those that do end up earning any miles. On top of that, many regular travelers on the airline bemoan the service now delivered by the recently merged carrier, which is still bringing two service and flight teams together to the same standard.
Basic Economy, which is now in place at all three legacy carriers, has also exacerbated passenger unease and no doubt by extension, loyalty churn. As more passengers learn about lack of benefits and elite status that comes along with basic economy fares, more are losing their faith in loyalty programs.
Were Travel Data Daily to run a similar study on the American legacy carriers, it might find record levels of passenger dissatisfaction with loyalty programs. By design, spend-based loyalty programs are made to award high-spend customers and shrink the pool of participants. The question isn’t how unhappy passengers are, however, it’s whether the loyalty programs care.
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Tags: business of loyalty
Photo credit: A new study on loyalty looked at members of Cathay Pacific’s frequent flier program. Cathay Pacific