Delta Air Lines extended 2020 status, so everyone with elite status today keeps it through the beginning of 2022. United quickly followed hours later. Then the next day Air Canada announced the same thing.
These airlines follow Hilton and Hyatt in announcing that status earned for this year – that members aren’t getting full use of – can be used next year too.
The problem – for airlines – with this approach is that one of their most powerful tools to get frequent customers to pick them, when travel comes back, is no longer in their toolkit. Customers stick with their preferred carrier not merely to enjoy the benefits of status but to make sure they keep the status. Often it’s the keeping that is the more powerful motivator, especially when a competitor’s prices are lower or an airline’s schedule or hotel’s more convenient.
Several of the programs that have extended status haven’t given up their elite tools completely:
- Delta still has ‘rollover’ qualifying miles so elite miles earned later this year will still help requalifying for 2022.
- Air Canada is letting members who earn status despite the extension gift that status to someone else.
- Hyatt has benefits that accrue every 10 nights stays.
Each of these gives a partial reason to stick with them, and helps explain why it was easier for these programs to act early. (Hilton has none of these things, nor benefits which are as rich so extensions aren’t as cost – United appears to have been in the can to do whatever Delta did.)
So now that these loyalty programs have given up keeping elite status as a tool to keep loyal flyers sticking with their business once travel returns, when they’ll need to do significant marketing more than ever with empty seats and empty rooms, what are they going to have to do?
A loyalty program combines two separate programs into one.
- Recognition or elite status
- Reward the free travel rebate
With the recognition component somewhat ceded they need to:
- Get creative offering recognition incentives. That means offering either additional credit towards future status (as Delta is doing), the ability to confer benefits on others (as Air Canada is doing), or incremental benefits (as Hyatt does). Don’t expect these programs to stand still, either, they can take elements from each other and layer on more.
There remain things a program can do even once they grant a status extension to use their elite program to incentivize travel. None are quite as motivating as requalification, but the cupboard isn’t bare.
- Push the pedal to the metal on rewards. Since programs need to do even more marketing, and they’ll have less opportunity to move the needle with recognition once they’ve extended status, they need to focus on richer rewards. Already rooms and suites and seats and upgrades should be easier to get and the pressure to devalue points due to lack of redemption space or high cost of redemptions is lifted.
Expect programs though to either start printing a whole lot more points once travel returns, or add on new bonus programs offering free nights and free flights (as expiring certificates).
Loyalty programs are marketing tools. There hasn’t been need to spend nearly so much marketing to fill empty rooms (when there haven’t been empty rooms) or empty seats (when there haven’t been empty seats). However with those trends reversing, since we’ll still be facing recession even when the advice not to travel lifts, loyalty programs will need to become richer.
That will only last until good times return. And when travel demand comes back fully you can expect that loyalty program generosity will have its own consequences – more outstanding points liability, and seats that are once again scarce or rooms that are expensive – that will manifest themselves in future devaluations.