Airlines and Fast Food Restaurants Lean on Loyalty Programs

Recovering from the Pandemic and Attracting Younger Consumers

Businesses across a variety of sectors are seeing loyalty programs as a way to shore up their balance sheets during a time of economic uncertainty. They are also using loyalty programs to appeal to millennial and Gen Z customers.

Airlines are leaning in to this trend for several reasons. They expect that younger travelers will be more likely to fly in the upcoming months as the pandemic continues. These customers will also be important in the years after the pandemic as airlines work to recover.

Even before COVID-19 hit, millennials made up the largest percentage of air travelers by generation. In 2018 25% of the 4.3 billion passengers who flew were millennials. Gen Z is beginning to reach an age where they will be spending money on travel, and airlines are eager to gain their loyalty early.

Spirit and American Airlines Offer Unique Perks

Airlines are noticing that millennials and Gen Z’ers tend to want easy, flexible ways to use air miles. Spirit Airlines (SAVE) recently revamped its loyalty program to add features like “points pooling,” a way for customers to share points with up to eight friends or family members.

American Airlines (AAL), which reported a record $8.9 billion in losses in 2020, has also been using creative ways to attract new customers to its loyalty program. Though some of these perks, like ebook services, are not directly related to travel. The air carrier’s leadership hopes these unique perks will draw in younger customers and help it recover from a year of hardships.

Burger King Begins Testing Loyalty Program

The airline industry is not alone in its quest for loyal customers. Yesterday Burger King (QSR) began testing its “Royal Perks” program in select American cities. The initiative allows customers to earn “crowns” when they spend money at Burger King and then redeem those crowns for free menu items.

Other big names in the fast food industry like McDonald’s (MCD) and Starbucks (SBUX) have built up app-based loyalty programs in recent years. As consumer habits have been altered dramatically this year and will likely continue to be volatile, brands see loyalty programs as a way to hold on to customers in an ever-changing market.

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