Gen Z and Millennial travelers are less swayed by traditional airline loyalty programs, focusing more on experiences and cost instead, according to a survey from OAG called Beyond the Ticket: Winning Traveler Loyalty With Rewards & Ancillary Services. The survey included responses from 2,000 travelers.

Only 65% of Gen Z and 70% of Millennials reported being enrolled in airline frequent flyer programs, compared with 89% of Baby Boomers and 80% of Gen X. The number one barrier to joining loyalty and frequent flyer programs was lack of consistent travel with a single carrier or brand.

The survey suggests that the number one way for airlines to improve loyalty program adoption and engagement is to allow customers to use earned points elsewhere in their travels. This speaks, according to the research, to younger generations’ desire to have rewards that are specific to their travel preferences and booking patterns. Fifty percent of Gen Z and 49% of Millennials want to use points with vacation rental providers. Seventy-three percent of all travelers want to put their airline rewards program points toward hotel accommodations, followed by car rental services (53%).

Other traveler preferences that influence loyalty and purchasing decisions were:

• Younger travelers prioritize experiential factors over cost, with Gen Z and Millennials both 27% more likely to pay up to $100 more for a ticket to fly with a legacy carrier as opposed to a low- or ultra-low-cost carrier.
• Most travelers purchase add-on services through an airline’s website (48%) or mobile app (37%), with only 10% opting for gate and 5% for in-flight purchases. Gen Z is the most likely to purchase add-ons once on the plane (12%).
• Half of all travelers prefer to purchase add-ons at the time of booking, with 26% purchasing add-ons in between booking and check-in. Another 12% are likely to purchase add-ons at the time of check-in, 6% at the airport and 6% in-flight.
• Although 67% of all travelers are willing to pay up to $20 to take more than one extra carry-on item into the cabin, 50% think too much luggage is being taken into the cabin and agree with airline policies getting stricter about carry-on baggage.

John Grant, chief analyst at OAG, said the loyalty program landscape “is shifting,” especially as younger generations make up a larger share of the traveling population. He said savvy airlines that create more meaningful rewards programs that align with the evolving preferences of today’s travelers and that understand how to tap into real-time aviation insights to customize their marketing strategies “will deepen connections with their customers and redefine how to win their loyalty.”

Image: OAG