Airline loyalty programs have come a long way from rewarding passengers with plaques and promotional material to giving them special fares and upgrades. In recent years, airlines have partnered with other channels such as hotels and banks, giving customers the opportunity to redeem their points through other channels. All of this should make loyalty programs more appealing to customers while also providing impetus to airline traffic and revenue. But accumulation and delayed fulfillment of unused points means liability getting accrued on an airline’s balance sheet. To assess the impact of airline loyalty programs on airline traffic, revenue, and sales and marketing expenses, WNS DecisionPoint™ conducted a study of 75 global airlines. To uncover the challenges that customers faced and to understand their opinion about prevailing loyalty programs, WNS DecisionPoint™ conducted a worldwide survey among airline loyalty card holders. The study showed that airlines with high potential customer appeal of loyalty programs experienced better airline traffic and revenue. The survey revealed that customers found their current programs to be unrewarding, confusing and incompatible with their needs. Based on the study and survey results, and discussions with senior executives in the airline industry, WNS DecisionPoint stitched together a comprehensive roadmap that can help airlines improve their loyalty programs while maintaining a healthy operating margin. Some value propositions include: Developing a loyalty program segmentation model that identifies profitable customers on a continuous basis and suggests loyalty reward allocation based on the behavior trends of the segments Devising an improved airline partnership management model that can make the customer experience more seamless Designing loyalty programs specifically for an often-neglected travel segment — leisure travelers — to ensure a high wallet share Streamline workflows and processes with automation and invest in analytics solutions to improve operating efficiency To study the analysis of the impact of airline loyalty programs on traffic, revenue and sales and marketing expenses in both mature and emerging markets, read the full report at:

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wnsdecisionpoint.com
Fixing Airline Loyalty Programs
Rethink, Revise, Reward

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Airline loyalty programs with high potential customer appeal help in
propelling airline traffic and revenue*
Loyalty programs and implications on airline traffic – a snapshot
Loyalty programs and implications on airline traffic – a snapshot
For detailed analysis of airline loyalty programs and its impact on
operational and financial parameters, please download the full report
* WNS DecisionPoint™ examined the potential customer appeal
of loyalty programs for airlines by interviewing and conducting
research on 75 airlines across the globe
In the developed markets, airlines with high potential
customer appeal of loyalty programs have fared
better consistently with the highest median revenue
growth among legacy carriers over 2010-14
In 2014, airline loyalty programs with high potential
customer appeal in the developed markets saw the
maximum decline in sales and marketing expenses as
percentage of revenue (median ~ -0.41pp) compared to
those with medium and low potential customer appeal
Low Cost Carriers (LCCs) in developing markets are
performing better because a large portion of the
market is extremely price sensitive and a significant
percentage are first time flyers

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Major changes to loyalty/rewards programs are required as airlines strive to
attain a delicate balance between business needs and passenger satisfaction
 59% of survey respondents
criticized the insignificant
number of points that travel
costs and miles translated into
 43% of the respondents
complained about points
translating to meager rewards
 Nearly a third of respondents, of
which 84% have held a loyalty
card for more than 5 years, claim
that benefits of loyalty programs
are diluted
 Of respondents having trouble
redeeming their loyalty points,
58% said they are unlikely to
speak highly of the airlines’
loyalty program to
friends/family/colleagues
*WNS DecisionPoint™ administered a worldwide survey
among airline loyalty card holders to uncover the
challenges they face with respect to loyalty programs
To read the findings of the survey, please download the full report
Voice of Customer
Be more loyal to
travelers who are
loyal. Be more
user-friendly
Render less
restrictions at the
time of redeeming
points. It is quite
difficult to get
airline of one’s
choice even
months in advance!
I don't think airlines value
their customers - the rewards
are ridiculously low especially
when considering offers from
competitive airlines
For points redemption, be more user
friendly and less restrictive. Add more
options of travel destinations one can
choose from and do not charge
exorbitantly for points/miles redemption
Make the
T&Cs clearer
and easier to
understand

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Dynamic, customer-centric loyalty programs become essential as the
aviation market in developed economies mature further
But how can airlines
make their loyalty
programs dynamic and
customer-centric?
To read more about the details of loyalty program strategies, please download the full report
By identifying profitable customers by forecasting
future revenue and participation frequency in loyalty
programs and allocating segment specific rewards?
By promoting simpler and effective operating
environment for airlines, their partners and customers?
By catering to underserved segments like leisure
travelers by adopting a differentiated approach to loyalty
program management?
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Email: perspectives@wnsdecisionpoint.com
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@WNSDecisionPt
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