Why Younger Travelers Are Drifting Away From Traditional Loyalty Programs

Generation Z is coming of age, meaning they are gradually traveling more as they do business, study, or travel with their families for the younger generation. By analyzing behavior from previous generations, we could assume this means that they would start gaining loyalty toward an airline or an alliance – however, this isn’t exactly what’s happening. Let’s look at the younger generation’s intriguing relationship with loyalty programs.

What is the current landscape of airline loyalty?

According to OAG, in recent years, Millennials (born 1981-1996) have become the primary contributors to more than half of all air travel spending, surpassing Generation X and Baby Boomers. Additionally, 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 together will make up over 80% of all airline-related travel expenditures.

Related

OAG Data Shows Airbus A320 As Last Year’s Most-Used Aircraft By Available Seat Kilometers

Since 2008, the Airbus A320 has been the most productive aircraft in terms of Available Seat Kilometers (ASKs).

Purchasing habits of the new generation.

Historically, one key metric for the younger population was cost—and to some degree, it still is. Customers wanted to fly for the lowest overall cost possible, hence why big LCC names like Easyjet, Southwest, Air Asia, and JetStar have become household names. They remain in this strong position thanks to the current market domination by Gen X and Baby Boomers.

Photo: Sven Hansche | Shutterstock

Gen Z are mostly still very cost-sensitive because they occupy junior positions but are more willing to spend strategically. A survey by OAG shows some exciting results after asking 2,000 North Americans about their travel habits. Here’s what they found out:

27% of individuals within the Gen Z and Millennial age groups are open to spending an additional USD 100 for the opportunity to travel with legacy carriers rather than low-cost alternatives.

This inclination toward premium service is markedly higher than that of Gen X and Baby Boomers, with only 17% and 18% of these demographics showing a similar willingness to pay extra for legacy travel.

Cost is essential, but the newer generations also want to experience better quality for what they pay.

Related

Worldwide Megahubs: Inside OAG’s 5 Busiest Airports By Seats In 2023

Does Atlanta Hartsfield-Jackson International Airport keep its crown as the busiest airport in the world?

So, what about airline loyalty, then?

Well, given what we examined earlier, one would be forgiven for thinking Gen Y and Gen Z are die-hard legacy carrier “loyalists,” but this appears to have also somewhat changed.

According to a McKinsey study, Gen Xers and Millennials interact with nearly double the number of brands compared to Baby Boomers. They are less inclined to remain loyal to just one brand.

Related

Innovation Needed: Gen Z & Millenials Are Less Interested In Traditional Airline Loyalty Programs

Gen Z prefer rewards tailored to their travel preferences and booking patterns. 

OAG’s 2024 North American traveler survey further reinforces this idea, revealing that only 65% of Gen Z and 70% of Millennials participate in airline loyalty programs, in contrast to 89% of Baby Boomers and 80% of Gen X.

So yes, Gen Z is still somewhat loyal to airlines, but their loyalty has dropped by almost 20%—that’s still a majority, but it’s getting thinner.

How can airlines reverse that trend?

Airlines must rethink how they deal with brand support by expanding the ways to earn miles and status outside of just flights. Make things Gen Z uses valuable and reward them for using partner brands.

A great example is Flying Blue’s recent partnership with Uber, a household mobility brand used primarily by this new target demographic.

Loyalty is not dying, it’s in need for change and is capable of it. It just needs to think about which areas the new generation loves.