Gen Z and millennial traveler preferences may change the future of airline loyalty programs, according to the results of flight database and statistics firm OAG's newly published report, “Beyond the Ticket: Winning Traveler Loyalty with Rewards & Ancillary Services."
“The loyalty program landscape is shifting, especially as younger generations make up a larger share of the traveling population,” said John Grant, chief analyst at OAG, in a release on the report.
OAG’s North American survey included 2,000 travelers with intent to analyze services including rewards programs and ticket inclusions and how those might be driving purchasing habits. The survey, taken in April, included input from travelers based in the United States, Canada and Mexico: 119 participants between ages 19 and 24, 406 participants between ages 25 and 39, 539 participants between ages 40 and 55 and 656 participants over the age of 56.
Of those groups, younger travelers are less likely than their older counterparts to join an airline loyalty program or to be loyal to an airline, OAG found.
Overall frequent flyer programs are popular among travelers - 82% of the respondents reported they had enrolled in a program - but only 65% of Gen Z and 70% of millennials reported being enrolled. That’s a significant drop from the 89% of baby boomers enrolled and 80% of Generation X members enrolled in airline loyalty programs.
The lack of interest in loyalty among younger travelers goes further. That demographic is also less consistent when it comes to booking with a particular brand.
Subscribe to our newsletter below
Sixty-one percent of Gen Z and 49% of millennial travelers surveyed reported “lack of consistent travel with a single carrier or brand” and 14% of Gen Z and 19% of millennial respondents cited points taking “too long to redeem” as barriers to joining loyalty programs.
OAG’s findings are in line with loyalty program dips reported by other sources. Lufthansa Innovation Hub’s TNMT, for example, showed a drop in frequent flyer program participation with 66% participating in 2019 and 52% participating in 2023. And some airlines are exploring avenues through which to evolve their loyalty programs.
“Savvy airlines who create more meaningful rewards programs that align with the evolving preferences of today’s travelers and who understand how to tap into real-time aviation insights to customize their marketing strategies will deepen connections with their customers and redefine how to win their loyalty,” said Grant.
OAG provided some feedback for airlines hoping to boost loyalty program appeal based on its survey.
One suggestion OAG made is to give customers the ability to use points in other parts of their travel. Free checked baggage - appealing to 63% of respondents - is another OAG suggestion, as was access to airport lounges - appealing to 43% - and sign-up bonuses - appealing to 53%.