Frontier Airlines recently became the latest carrier to change its loyalty program to a revenue-based model. This means flyers earn miles based on spend rather than just distance travelled, which is then reflected in the redemption options in the respective airline’s Loyalty Marketplace.
Other major airlines have made the switch too, including United Airlines (MileagePlus) and our client, Delta Air Lines (SkyMiles). For the airlines, a revenue focus allows better rewarding of big spenders over mileage runners pursuing status via cheap fares.
Could a Marketplace help maintain better value for both airlines and travellers?
Maintaining member value
The shift acknowledges business realities – premium travellers generate an oversized portion of airline profits. Tying rewards to revenue steers the loyalty budget towards premium traveller (high-margin) segments.
For the economy Loyalty Member, consumer-friendly perks remain key. Frontier’s new tiers still enable economy travellers to reach elite status with a reasonable annual spend. Points for perks like complimentary bags, legroom seats, and fee waivers provide genuine value.
Enabling the transition
Understanding changing airline economics, Commerce Dynamics’ Marketplace model aligns with a focus on premium members without losing sight of the economy segment. The Marketplace becomes a central place for points redemption/rewards; some options include high-end experiences, lounge passes, contests, donation options, tiered offers, etc.
For airlines navigating industry transformations, next-generation loyalty marketplace technology bridges the gap – meeting revenue goals while keeping premium and economy members delighted.
