Loylogic, an independent company working with loyalty companies, recently published a white paper that stated in part: Airline frequent flyer programs earn billions by selling miles to program partners, but invest little to make redemption options attractive to program members. As a result, miles currencies have become devalued and frequent flyers have started to re-direct their affiliations towards other loyalty programs. Airlines may soon miss out on billions of dollars. It’s no news that the airline industry has accumulated a liability of more than twenty trillion frequent flyer miles (that’s 20,000,000,000,000). It’s also a fact that frequent flyers face difficulties redeeming their hard-earned miles for flight tickets. What is new is that frequent flyers are moving their card spending to credit card and hotel programs, where they find value for their currency and loyalty. This trend may be devastating at a time when leading airlines consider spinning-off their most valuable asset (i.e. their frequent flyer program) to fund airline growth. If frequent flyer programs don’t invest in reinforcing the value of their miles, they face decreasing revenues from credit cards. The airline spin-off buzz will disappear as fast as it hit the industry last year.
Loylogic suggests that attractive non-flight awards are the answer for the future growth of frequent flyer programs. To download the full study, visit http://www.insideflyer.com/link/?1185