Airlines are about to downgrade the elite status of 25 million frequent flyers, according to Mark Ross-Smith of StatusMatch.com and former head of a oneworld frequent flyer program.
At the start of the pandemic loyalty programs extended elite status. Customers who earned their status in 2019 weren’t flying. Borders were closed, businesses weren’t sending people on the road. So programs largely had two reasons to let them keep their status.
- They weren’t getting to use the benefits they’d just earned, so letting them ‘use those benefits later’ was the right thing to do. Anything else would have bred resentment as well.
- They were likely going to be great customers again once the pandemic passed, so why reset their status and make them free agents? Keep them attached to the brand.
Remember “two weeks to flatten the curve?” Some programs took a wait and see approach to status extensions, they didn’t want to extend right away in case travel disruptions were brief. They wanted their elite programs to still work to incentive travel choices. But the pandemic dragged on, as was almost inevitable in hindsight. And loyalty programs generally extended status again so that the status held at the end of 2019 would still be valid thoughout 2022.
We’ve seen two years of status extensions. In some cases much more liberal status-earning criteria. American Airlines totally revamped how status is earned so that ‘most activity counts’ not just flying. Delta made award travel count towards status, following in Virgin Atlantic’s footsteps.
There’s been something of a travel renaissance and in some cases elite ranks have grown, not just from status extensions but from those re-earning status and new customers earning status for the first time.
However there are many former elites who aren’t on track to requalify for status.
- Some business travel has returned, but much of it has not.
- Take offices in New York City, which are still below 50% occupancy. Consultants aren’t doing their traditional Monday – Thursday fly out to client site weekly trips. When people aren’t in-office, it’s tough to visit people in their offices too.
Southwest is running a promotion where award travel segments count, and where paid travel dollars count double. That says they’re either behind in status numbers, or recognize a big customer cohort that may lose their status.
However what programs need to do is wait and offer win-back promotions. They should target customers who (1) used to be valuable but (2) haven’t re-earned their status, recognizing that 2022 started out without much travel as Omicron surged and that the business travel that used to drive value may not be back for some customers.
Some of these members may be hugely valuable again. Maybe they did regular business class trips to Asia and Asia is only just re-opening, or they were part of the consultant class and will do work from client sites again. Many of these members won’t be valuable to an airline again, either because their work has fundamentally changed or because they’ve become more senior and their current and future roles won’t require it.
But giving up on these members seems like a mistake – it makes sense to look at the cost of servicing an incremental elite member and apply some bet as to the future value of that member. Then figure out what kind of activity might signify continued engagement, interest, and potential future value. Encourage members to keep their status with modest activity – flights, a co-pay, or miles redemption.
Walking away from what could be “approximately 15% of total global travel spending” that these customers represent would seem to be a mistake.