As concerns about climate change rightly increase and people understand that their actions do collectively contribute to meaningful impact, there is a call for airlines to support customers to make responsible choices when flying as well as sustainable decisions elsewhere. Brands are realising that, increasingly, the stance towards their direct and related impact on climate change really matters to consumers’ choice and behaviour.
It is only right then that loyalty managers look at the role their frequent flyer programmes need to play in all this. How can airline loyalty programmes adapt while still fulfilling their mission to drive revenue and preference?
It’s important to recognise that frequent flyer programmes have long become a misnomer (and this is why activists target FFPs as a bad actor). Airline loyalty programmes don’t encourage flying per se; they are designed to make members select one airline over another when the decision to fly has already been made.
Furthermore, most well-run programmes have gone way beyond that narrow objective: It’s now all about engagement with the customer across all areas of their daily lives. Cue terms like ‘lifestyle’ and ‘everyday spend’. Flying becomes the focal output, but no longer the sole input to the loyalty equation.
Let’s look at what actions airline loyalty programmes might consider to underpin sustainability. At its simplest, programmes could move to only, or additionally, rewarding for flight miles that have been offset by the customer. For mileage balance redemptions, airlines could offer additional proactive carbon offsetting after each flight.
For redemptions beyond direct flight offset, airline loyalty programmes should bias their marketplace towards sustainable brands, maybe offering a better redemption rate for those. However, the biggest and most exposed area are flight rewards: Airlines must manage reward flight availability with an objective of filling up every flight, as this has the strongest impact on emissions per passenger. Offering elite members late availability discounts on reward flights would achieve this and is a win-win.
On the miles earning side, programmes should up weight their partner network with demonstrably sustainable or ’green’ brands and incentivise their customers with more favourable earning rates. Going one step further, Etihad Guest recently announced the launch of the new range of sustainable initiatives – Conscious Choices, which will reward customers with benefits including earning Tier Miles and other perks (details yet to be confirmed), for demonstrating sustainable behaviour in a number of areas.
A note on so-called status runs (where members take a flight just to get status points to re-qualify for an elite tier). Although only a marginal activity, in light of collective global consciousness around climate change, programme designs must change to stop this behaviour.
Options include personalised tier point purchase offers, a paid status tier or creating a stronger link with overall commercial engagement, as American Airlines have done by counting total spend across the AAdvantage programme towards tier qualification.
Fundamentally, people engage with brands if they like them, are genuine and represent their own values. A McKinsey study highlights that one out of four consumers say they plan to focus more on environmental issues and pay more attention to social aspects in their shopping behaviour.
Product quality or price alone will not be the deciding factor for the next decade’s consumer, but a brand’s dedication to sustainable, environmental action. This implies that there is a consumer appetite for sustainability-driven features in airline loyalty also.
In a world of conscious consumers, airlines must reward loyalty and sustainability at the same time. Airlines that keep sustainable action at the heart of their business and build effective, mission-driven loyalty programmes will thrive. Every brand action impacts current and future customers, how they perceive you and their intent to be loyal.
Peter Gerstle, group head of travel products at Collinson
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