5 Ways The Coronavirus Will Affect Airline Frequent Flier Programs

Frequent Flier programs are an important part of the Airline marketing mix. Designed to reward personal traveler loyalty, their impact will undoubtedly change as people fly less often and the true “road warrior” traveler will likely not return in the same form for a few years. Given that most programs function on a one-year basis, how will Frequent Flier programs remain effective and profitable for airlines during the drop in travel due to the coronavirus? Here are five ways I see these programs likely reacting:

1. More Reliance on Credit Card Spend. Airlines love it when you carry and use their affinity credit card, because they get paid by the bank for the miles the bank issues you for spending. Frequent Flier programs have had to adjust to this over time, reducing the “status” value of miles earned from spending on non-airline things versus spending for airline tickets. With less travel over the next few years, airlines will likely give more credit to travelers for miles earned from credit card spend since the airlines know that while you may not be comfortable flying yet, you can still help the airline generate revenue though non-airline spend.
2. Lower Reward Tiers. To be an incentive, reward levels must be attainable and reasonable. Whether the reward is an upgrade to a nicer seat or free trip to Europe in business class for the family, if the amount of mileage required to attain this is not feasible then the program fails its core objective. With fewer trips by most people in the next few years, airlines will likely, temporarily, make it easier to get rewards from traveling, recognizing that each trip you take is helping to bring total demand back to normal.
3. Creative Ways to Reach Tier Status. For most regular travelers, Frequent Flier programs get most interesting and valuable when you reach at least a minimum status level. Over the past few years, airlines have moved from rewarding only usage (trips taken, miles flown, etc) to total revenue paid. Those who buy higher priced tickets now reach status levels sooner than those who only buy on sale. While this will hold through the coronavirus demand period, the amount of usage or dollars currently needed may seem aggressive in the next few years. Most airlines have extended tier status for a year, a helpful and appreciated gesture by travelers for sure. But this one year extension won’t change the fact that during this next year, the likelihood of generating enough trips is less than before the virus. Thus, I expect airlines to get creative about how the following year’s tier status will be granted. Be sure to watch your program rules and read the emails that come so that you know how the program is changing in the near term.
4. Relaxation of Mileage Expiration. Many airlines expire miles from accounts after some period of non-use. Emirates, for example, gives you three years to use your miles even if you keep flying them. Given the reduction in travel expected, a program that expires miles too quickly will become less attractive to travelers if they can’t keep up what is needed to keep the miles active. Again temporarily, I expect that airlines will make it easier to not lose miles previously earned because of reduced activity.
5. More Exceptions for the Most Elite Travelers. The “new normal” for airlines is still evolving, and whether it is facial coverings, temperature checks, baggage limitations, and more, you can bet that airlines will try to minimize the impact on the travelers that show the most loyalty through the Frequent Flier programs. Of course they won’t sacrifice safety by saying these customers wouldn’t need to wear a mask, for example, but they likely will make it easier for them to upgrade to a seat with more space, or be able to carry bags that others can’t, or improvements in their boarding process, or more. In a world where fewer travelers are keeping the system afloat, airlines will find ways to be sure they have no reason not choose their airline when they fly.

The coronavirus has affected the economy in so many ways, and airlines are among the businesses most affected. The rapid drop in demand for air travel has no parallel, and the uncertainty of air travel demand returning means that while airlines are managing cash and capacity, they also will be reaching out to their most loyal customers and finding ways to keep them engaged in a period of reduced travel.