Change in air rewards models will hit leisure travellers
Revenue focus may alienate non-business users
The recent change of many frequent flyer programmes to revenue-based models could alienate leisure travellers from using schemes, a new report from PwC warns.
Several airlines – including United MileagePlus and Delta SkyMiles in the US and South African Airways Voyager – have moved to the new model that rewards money spent on tickets rather than the distance flown.
The 47% of US programme members who are leisure travellers would be those most likely to lose out as a result of the switch to the revenue-based model.
PwC says that if the 11 biggest US carriers switch, 45% of domestic fliers would earn fewer points under the spend-based model, about 40% would gain and 15% would see no difference.
The report says that around 39% of passengers (those who travel on last-minute fares or business fares) are likely to benefit the most from a loyalty programme based on spending. This is because they are less concerned with price as getting to their destination is a necessity. Only a small percentage of those travellers will gain from earning 500 or more points in a spend-based programme.
“Airlines are adjusting their loyalty programs to better fit their business models,” said report co-author and PwC transportation and logistics analyst Jonathan Kletzel. “Leisure travellers are the ones who stand to lose the most, while business travellers will fare the best.”
The biggest winners under a revenue-based programme are most likely to be business travellers flying mainline carriers and on shorter routes.
Because many leisure travellers are booking fares well in advance and often in search of deals, they are poised to earn fewer reward points under a program based on spending.
Nearly a quarter of air travellers (24%) will experience a reward earnings decline of 500 or more points.