Why Younger Travelers Are Abandoning Traditional Loyalty Programs
As Generation Z comes of age, they are traveling more frequently for business, education, and leisure. Unlike previous generations, however, they are not developing the same level of loyalty to specific airlines or alliances. This trend signals a shift in how younger travelers engage with loyalty programs, revealing new preferences and behaviors that airlines must understand and adapt to.
Shifts in Airline Loyalty Trends
Recent years have seen Millennials (born 1981-1996) become the primary contributors to more than half of all air travel spending, surpassing Generation X and Baby Boomers. Generation Z (born 1997-2012), the youngest group of paying travelers, is also starting to make a significant impact. It is projected that by 2035, these two groups will account for over 80% of all airline-related travel expenditures.
Evolving Purchasing Habits
Historically, cost has been a crucial factor for younger travelers, and it remains significant to some extent. This focus on low cost has made airlines like EasyJet, Southwest, Air Asia, and JetStar household names, especially among Gen X and Baby Boomers. However, Gen Z, while still cost-sensitive due to their junior professional positions, shows a willingness to spend strategically.
A survey by OAG reveals that 27% of Gen Z and Millennials are open to spending an additional $100 to travel with legacy carriers rather than low-cost alternatives. This is a higher inclination towards premium service compared to 17% of Gen X and 18% of Baby Boomers showing a similar willingness to pay extra for legacy travel. Thus, cost remains important, but newer generations are seeking better quality for their money.
Decline in Traditional Loyalty
Despite the preference for premium services, Gen Z and Millennials are not as loyal to specific airlines as older generations. A McKinsey study shows that Gen Xers and Millennials interact with nearly double the number of brands compared to Baby Boomers, making them less inclined to remain loyal to a single brand. OAG’s 2024 North American traveler survey further supports this, indicating that only 65% of Gen Z and 70% of Millennials participate in airline loyalty programs, compared to 89% of Baby Boomers and 80% of Gen X.
Strategies for Reviving Loyalty
To regain loyalty, airlines need to rethink their approach by expanding ways to earn miles and status outside of just flights. They should make products and services that Gen Z uses valuable and reward them for using partner brands. A successful example is Flying Blue’s recent partnership with Uber, a mobility brand widely used by the younger demographic.
Loyalty is not dying; it just needs to adapt to the preferences of the new generation. Airlines should focus on areas that resonate with Gen Z to foster brand loyalty effectively.
