Cheap offers will extend until the end of 2020 for domestic routes and through next spring for longer-haul international routes, Sorensen said. Some airlines may cut down non-travel awards to save cash, or offer discounted business-class seats to loyalty members as companies reduce premium travel, he said.
“Loyalty programs will play an essential role in the industry’s recovery by creating incentives for customers to restart traveling,” said Renato Ramos, director for loyalty at Star Alliance, a grouping of airlines that includes the likes of Air China Ltd., Deutsche Lufthansa AG and United. “In addition to the existing perks for frequent fliers, we are looking at ways to find new benefits.”
Airline Woes
One risk is there’s little value left in miles or co-branded credit cards if the issuing airline collapses, which is a very real threat as the likes of Virgin Australia Holdings Ltd., Avianca Holdings SA and others show.
“The airline industry itself, among them the legacy airlines, will be transformed after this earthquake-like shock,” said Pankaj Pandit, an independent consultant based in the Indian city of Bengaluru, formerly known as Bangalore. “Many legacy airlines may simply vanish, so naturally their appendage, the loyalty programs, will also wither away,” he said in an email.
Some are trying to incentivize members to spend on associated credit cards and transfer points in from other partners such as hotels, according to Gary Leff, co-founder of InsideFlyer.com who writes on loyalty programs.
“There will be empty seats to fill and airlines will need to rely on their programs to make generous offers in order to bring back consumers,” Leff said. “Expect loyalty programs to run aggressive promotions, travel businesses to spend heavily marketing to their frequent fliers and frequent stay guests. In addition, with all of this excess inventory it’ll be easier for consumers to use their points. This will last as long as the downturn lasts.”
--With assistance from Layan Odeh, Siddharth Philip, Mary Schlangenstein and Matt Turner.
This article was provided by Bloomberg News.