Frustration Slows Growth of Airline Mileage Programs

Colloquy (registration required), a trade publication for loyalty marketers, has released the results of its 2009 Loyalty Census. Among the findings:

• The total number of memberships in all U.S. loyalty programs currently stands at 1.8 billion. Of those, 556 million are memberships in travel and hospitality industry programs.
• The average U.S. household is enrolled in more than 14 loyalty programs, but only participates in six of them.
• Airline frequent flyer program memberships total 277.4 million, up 9 percent since the 2007 Census; hotel reward program memberships total 161.9 million, up 26 percent; and gaming program memberships now total 106.0 million, up 37 percent.
• For the first time in loyalty marketing history, the number of consumers participating in credit card rewards programs (422 million) has surpassed the number of memberships in airline frequent flyer programs (277.4 million).

What does it all mean?

First of all, the numbers confirm that modern loyalty programs, which trace their roots to the launch of airline mileage schemes in 1981, are now firmly established in the minds and behavior of U.S. consumers.

The next-most-striking finding is the slow growth of airline memberships relative to the growth in the hotel and gaming sectors, and the new dominance of the credit card programs over their airline counterparts.

This could be due in part to simple market saturation. But I suspect that it is largely a symptom of consumers’ increasing frustration with airline programs’ lack of transparency.

Loyalty programs in most industries are relatively straightforward. They’re of the “buy 10, get one free” variety. Consumers know exactly what they can expect in return for their business.

But as I’ve suggested on numerous occasions, and most recently in [% 2883438 | | this column %] comparing mileage programs to Ponzi schemes, airline programs are opaque: Earn your miles and you may or may not be able to redeem them for a free ticket. That lack of transparency has been a continual source of irritation to those who participate in the airlines’ programs, which have become the butt of late-night talk show jokes.

Apparently, many consumers have indeed heard the one about the frequent flyer trying to cash in his miles for a free trip.