Report Overview

Airline loyalty programs were originally developed as tools to compete in a hypercompetitive market, but have evolved and transformed over the years into profit centers for the airlines. 

These programs have turned into platform-based businesses for airlines which are scalable and create marketplaces for buyers and sellers to make efficient transactions. They are asset light and enable the airline to extend the boundaries of its scope while also enabling businesses to acquire, manage and monetize customer data. 

The value proposition offered by loyalty programs to the customers and the strong program economics have prompted airlines across the globe to rethink their commercial strategy and invest heavily into them. Although loyalty programs have existed since 1981, technology has enabled continued innovation in these programs.

In this report we launch our first Airline Loyalty Assessment Model where we look at some of the best and the most highly-rated loyalty programs in the world. Our proprietary model extensively covers a wide spectrum of parameters from business health of the program, to program partnerships and other key features. This allows us to draw interesting insights into how each program performs. 

What You'll Learn From This Report

  • How Airline Loyalty programs have evolved and transformed over the years
  • Difference between legacy and modern loyalty programs
  • Introduction to Skift Research’s Airline Loyalty Assessment Model
  • Rankings of the best loyalty programs in all major categories
  • Key Insights, findings and discussions from our assessment model

Executive Summary

Airline loyalty programs were originally developed as tools to compete in a hypercompetitive market, but have evolved and transformed over the years into profit centers for the airlines. Through a journey of transformation, these programs have turned into platform-based businesses for the airlines which are scalable, create marketplaces for buyers and sellers to make efficient transactions, are asset light, enable the airline to extend the boundaries of its scope while also enabling businesses to acquire, manage and monetize customer data. 

The value proposition offered by loyalty programs to the customers and the strong program economics have prompted airlines across the globe to rethink their commercial strategy and invest heavily into them. Although loyalty programs have existed since 1981, technology has enabled continued innovation in these programs.

In this report we launch our first Airline Loyalty Assessment Model where we look at some of the best and the most highly-rated loyalty programs in the world. Our proprietary model extensively covers a wide spectrum of parameters from business health of the program, to program partnerships and key features. This allows us to draw interesting insights into how each program performs. 

The model is built up of 16 different indicators, divided into three categories: Business Health, Program Partnerships, and Program Highlights. Each indicator has a weighting based on Skift Research’s understanding of each category.

We find that United Airlines has the best overall program, performing particularly well in the business health section. Overall, the U.S. airlines perform well in business health, boosted by high valuations and membership numbers. Profitable credit card partnerships, which are less common in other parts of the world, help U.S. airlines to stand apart from the rest. 

While partnerships are important to the overall health of loyalty programs, we find that there is no real correlation between the breadth of partnerships and redemption rates. We would have assumed that more partners means more opportunities for members to redeem their points, and therefore higher redemption rates, but our research is not in line with this hypothesis.. Southwest stands out for having the highest redemption rate, but also one of the lowest number of partnerships.

Where U.S. airlines fall behind their European competitors is program features, with European airlines offering more flexibility to its members to earn and redeem points, with features like family pooling and part-redemption. This is an area U.S. airlines should focus to improve the attractiveness of their programs further. 


Transformation of Airline Loyalty Business

Over the past years, and especially during the pandemic, loyalty programs have proven to be of immense value for the airline’s overall revenue and profitability. According to our estimates, for seven out of 10 of the largest loyalty programs, 70% or more of the overall ancillary business of the airline stems from loyalty revenues. 

Loyalty programs have gone through a significant transformation over the past decade. 

In recent years, we have seen many loyalty programs adopting revenue-based accrual methods instead of miles-based programs, essentially rewarding loyalty based on money spent rather than miles flown. 

With a greater focus on dollars spent, the growth of the relationship between the loyalty program and credit cards is becoming more critical, and these partnerships have helped generate billions of dollars in additional revenue. 

Loyalty programs allow consumers to earn points on spending, which they can then use for free or discounted tickets and other goods or services. Loyalty programs therefore “sell” points to the airline, credit card companies and other third parties to give out to their customers, in return for a promised service when the customer redeems those points.

The majority of loyalty programs offer at least one co-branded credit card that travelers can use to earn miles or points. These cards also provide a variety of redemption and point exchange opportunities.

Airlines benefit incredibly from this arrangement as they sell miles/seats for points to the banks they have partnered with. In 2022, the sale of miles to credit card partners generated more than $12 billion for U.S. network carriers alone accounting for almost 10% of the total passenger revenue. 

However, the use of credit cards differs by country. As a matter of fact, just three out of 100 people in a country like India have a credit card, while this is more than two-thirds of the population in the U.S. 

Airlines operating out of countries with lower credit card penetration may find it difficult to promote the idea of a co-branded credit card and exacting benefits from a co-branded arrangement in the way their American counterparts are getting, and therefore need to find other ways to interact with their members.  

Today, airlines are partnering with a host of other travel and non-travel partners that offer to use miles to buy a variety of products and services other than air travel. 

Airlines are no longer just selling seats but are full fledged retailers. Customers, for example, can purchase items other than seats. A considerable number of miles (up to 30% for some airlines) are used to purchase other items and services. Data is crucial in understanding consumers and their demands.

Using data, loyalty programs can provide a 360-degree view of customer spending (transactional and behavioral) and customer journey analytics. Capturing consumer data has become paramount. 

For example, Delta Airlines announced that all passengers on board will have access to free WiFi when registered for SkyMiles. The SkyMiles program alone acquired more than three million members in Q1 2023, setting a program record in terms of membership growth.

Airlines can benefit greatly from the data generated by loyalty programs. Travel has come back strong over the past year, but understanding consumer demands is paramount to capturing this demand.  

According to a 2022 research survey by OAG, 85% of all Baby Boomers said they value brand loyalty with only a marginal 15% switching loyalties. Younger generations like Millennials, however, are much less loyal, with 47% switching airline loyalties.  

With the above shifts in mind, many airlines have changed how they run their programs. We can summarize the evolution of loyalty programs as follows:

LegacyModern
Strategic FocusFrequent flyersFrequent flyers and everyday spenders
StructureFrequent Flyer Program department (part of Marketing / Sales)Separate company
Ownership100% owned by the airlineOwned by airline and/or outside investors
Suitable for third party investmentNoYes
ReportingAt aggregate levelSegmental Reporting/Income and balance sheet
Non-air partner accrual as percentageSmall (<20%)Large (>50%)
Partner rangeTravel related (hotel, car)Travel, financial and everyday spend
AwardsAward tickets and upgradesAir travel, other travel, merchandise, experiential awards
Staff profileAirline backgroundOther backgrounds including retail and finance
Award allocation policyFixed – supplemented with distressed inventoryCombination of fixed and dynamic –any seat is available

Although many airline loyalty programs have much in common, there are also major differences. In this report we introduce a proprietary model to compare 14 of the largest loyalty programs based on a set of indicators. This provides a comparable analysis of each loyalty program, highlighting where each program is strong, and how it can improve.

Airline Loyalty Assessment Model Methodology

To study airline loyalty programs in more detail and to be able to compare them to one another,  Skift Research has broken down every aspect of loyalty programs. For this study, we have combed through more than 30 airlines worldwide and compiled a sizable collection of publicly accessible data points.

Our Airline Loyalty Assessment Model breaks down the strength of each loyalty program into three major categories:

  • Program Business Health
  • Program Partnerships
  • Program Highlights

We created our own proprietary model and analysed all three major categories for each of the programs. Our assessment is unique since we look at all aspects of a loyalty program, including what a program means financially and commercially to an airline as well as the value it offers to an enrolled member of the program through its features and partnerships. Our model illustrates the scope of value realized by all sizes of airlines through their loyalty programs.

Our assessment model, as comprehensive as it is, may not cover some areas. Our goal is to keep building and refining this model as we move forward. We plan to analyze more loyalty programs in the coming years as more airlines disclose necessary information about their loyalty programs.

Included Airline Loyalty Programs 

We initially chose 28 airline loyalty programs. Considering the geographic diversity, information availability, and financials of loyalty programs and airlines, we selected programs from every region. All of the airlines shown in the table below were on our initial list. 

AmericasAsia PacificEMEA
Delta-SkyMilesAir India-Flying ReturnsTurkish-Miles&Smiles
American-AadvantageSingapore-Kris FlyerLufthansa-Miles & More
United-MileagePlusQantas-Frequent FlyerEmirates-Skywards
Southwest-Rapid RewardsIndigo-6E RewardsEtihad-Etihad Guest
Air Canada-AeroplanAir China-PhoenixMilesIAG-Avios
Avianca-LifeMilesChina Eastern-Eastern MilesQatar-Privilege Club
LATAM Airlines-LATAM PassAir Vistara-Club VistaraAir France/KLM-Flying Blue
Hainan Airlines-Fortune Wings ClubEasyJet-The Scheme
RyanAir-Choice
Norwegian-Reward
Ethiopian-ShebaMiles
Royal Air Maroc-Safar Flyer
EgyptAir-EgpytAir Plus

We had to settle for a smaller sample of 14 airlines that disclosed their financials and loyalty program specifics. This list included all seven airlines from the Americas region, three airlines from the EMEA and four airlines from the Asia Pacific region.

AmericasAsia PacificEMEA
Delta-SkyMilesSingapore-Kris FlyerTurkish-Miles&Smiles
American-AadvantageQantas-Frequent FlyerLufthansa-Miles & More
United-MileagePlusChina Eastern-Eastern MilesIAG-Avios
Southwest-Rapid RewardsAir France/KLM-Flying Blue
Air Canada-Aeroplan
Avianca-LifeMiles
LATAM Airlines-LATAM Pass

Assessment Model Categories

We assessed each loyalty program using 16 indicators, split in three categories:

Program Business Health (50%)Program Partners (30%)Program Highlights (20%)
Redemption Rate (20%)Airline Partners (25%)Tiers (10%)
Accrual Method (10%)Credit Cards (25%)Point Expiry (20%)
Program Membership (20%)Hotels (25%)Points Sharing (25%)
RPK/Total Membership (15%)Car Rental (20%)Family Pooling (25%)
Program Valuation/Total Revenue (15%)Shopping/Dining (5%)Point + Cash Redemption Option (20%)
Hub Airport (20%)
  1. Program Business Health: This category measures the success of a program through business-specific parameters. Our model weighs this category the highest as a strong loyalty program needs to be profitable for the airline. In our final score, 50% is derived from this category.   
  • Redemption Rate: Calculated as a percentage of travel and non-travel Miles redeemed in a calendar year as per the average of the opening and closing balance of loyalty program deferred revenue in a certain year. This parameter  indicates the quality of the entire program and to what extent they know their customer base. A high redemption rate is reflective of an airline’s understanding of its customer base and spending patterns, usage of data, and identifying the right partners for its program.
  • Accrual Method: Traditionally, loyalty programs are used to reward flyers for every mile flown. Modern loyalty programs have adopted a revenue-based system that rewards money spent over miles flown. Revenue based systems are inherently better as they incentivize monetary spend over distance traveled. They also help the airline in removing complex rules specifying percentages for accrual depending on distance and class selected. A revenue-based accrual system is reflective of an airline’s revenue management system, an integrated IT system, and offers better program economics, which is why these programs are ranked higher than miles-based programs in our model.
  • Program Membership: The number of members an airline loyalty program provides insight into how effectively the program can recruit new members and its total reach. 
  • RPK/Total Membership: A statistic that we have used to normalize total membership anomalies. Membership numbers are in direct relation to the size, network, and total passengers flown by airline, and hence airlines with significantly smaller networks will have a decided disadvantage when only taking absolute values of the total membership. Hence, we divide membership by the Revenue Passenger Kilometers, a key metric used by the industry to indicate how many kilometers paying passengers have flown with the airline in any given year. 
  • Program Valuation/Total Revenue:  Program valuation, taken from On Point Loyalty (January 2023 report) is divided by the total revenue of the airline. This highlights the value of the loyalty program, while taking into consideration the size of each airline. 
  • Hub Airport: In line with the size of the network, the airline’s airport strategy  can also offer an advantage in terms of passenger reach, as well as retail partnerships and connectivity across the world. The more passengers moving through the airport, and the more flights taking off and connecting, the greater the potential for an airline using that airport as a main base, to capture these passengers. 
  1. Program Partnerships: Our second category is where we look at program partners for each of the loyalty programs. We look at the length and breadth of partnerships.This category holds a 30% weightage in our total score. To simplify, we focused on five major sub-categories:
  • Airline Partners: Most Full Service Carriers (FSC) have an inherent advantage over their low-cost peers as they have alliances and codeshare agreements with other international peers. For example, Southwest has zero airline partners while Air Canada has 51. This means Southwest Rapid Rewards points can only be redeemed on Southwest Airlines while Air Canada’s Aeroplan points can be redeemed on 51.  We rank each airline based on the number of partnerships.
  • Credit cards: The advantage of credit cards, especially co-branded credit cards, and the value they bring to the airlines is no longer a trade secret.  We rank each airline based on the number of partnerships.
  • Hotels: Most loyalty programs have partnerships with hotels and other travel-related companies. This offers  customers a host of hotel partners to redeem and convert points. We rank each airline based on the number of hotels they partner with.
  • Car rental: Another essential feature of most programs is offering partnerships with car rental companies. We rank the airline programs based on the number of such partnerships.  
  • Shopping/dining: Finally a sub-category that has emerged more recently, and most programs have tied up to online and offline retailers where points can be used to make purchases. We rank each program on the volume of retail and restaurant partnerships.
  1. Program Highlights: This category weighs different aspects of the program itself in terms of the structure, tiers and other highlights of the program. This category holds a 20% weightage in our total score.
  • Tiers: We look at the number of levels or tiers a program has. With the assumption that more tiers will keep members engaged better and make moving up the ladder more achievable, we have rated these programs higher. 
  • Points Expiry: Most programs have an expiration date between 24 to 36 months, but some have no expiration at all. Delta, Southwest, and United were rated the highest in this sub-category as points earned through their programs never expire, which likely increases the engagement over time. 
  • Points sharing: Sharing of points with friends and family is becoming a key feature for most airline loyalty programs. Programs that offered sharing of points were rated higher than those that did not.
  • Family pooling: Similar to point sharing, many programs also allow the pooling of points in a family account or a similar group of friends/family. Points earned by one person in the pool can be used by other members in the same pool. Programs that allow for family pooling were rated higher than those that did not. 
  • Point + Cash Redemption Option: Part redemption options have added a fair amount of flexibility, especially when it comes to redemption of points. Programs that allow for part redemption were rated higher than those that do not. 

What Makes Airline Loyalty Programs Successful

U.S. Airlines Have Best Performing Loyalty Programs

The three largest U.S. airlines, Delta, United and American, are in the top four of best-performing loyalty programs. United’s MileagePlus program is the best-rated overall program in the world, followed by Air France/KLM’s Flying Blue program. Delta and American are third and fourth, respectively, while Air Canada’s Aeroplan is fifth, rounding out the top five best overall programs. North American programs have historically performed far better than their counterparts in other locations, and they continue to do so.

Table of Scores

Program NameTotal ScoreBusiness Health ScorePartnership ScoreProgram Highlight Score
United-MileagePlus63%63%56%75%
Air France/KLM-Flying Blue62%57%50%93%
Delta-SkyMiles60%68%39%75%
American-Aadvantage59%65%57%48%
Air Canada-Aeroplan58%52%50%87%
Singapore Airlines-Kris Flyer56%46%63%68%
Lufthansa-Miles & More53%49%52%63%
IAG-Avios50%43%34%93%
Turkish-Miles&Smiles50%44%47%68%
Qantas-Frequent Flyer45%38%47%62%
Southwest-Rapid Rewards42%52%20%50%
China Eastern-Eastern Miles38%52%28%18%
Avianca-LifeMiles32%39%13%42%
LATAM Airlines-LATAM Pass28%27%14%48%

Healthy Loyalty Programs Have Highest Valuation

The big three network carriers are the clear winners when it comes to business health. Having been around since 1981, these programs have done it all. Evolved and transformed over years, built partnerships and solidified its core memberships. Globally, these are the only programs which have crossed more than 110 million membership. 

Air France/KLM’s Flying Blue Programme, a relatively lesser known but highly rated program, joins the big three U.S. carriers in our top four programs by Business Health. With roughly one sixth of the total membership (20 million), Flying Blue not only has closed the gap against its American peers in recent years but also emerged as our top rated program in EMEA.

Our business health scores are directly correlated to the industry program valuations. The highest rated programs on our business scores are also the most highly valued programs in the world. Delta, American and United are the only programs to have crossed the $20 billion valuation. As of January 2023, Delta’s SkyMiles is valued at $27.9 billion, American’s Aadvantage is at $23.9 billion and United’s MileagePlus is at $22 billion. 

Similarly, the correlation is also true for the lowest rated programs on our business health score. In line with the lower business health scores, their program valuations are lower as well. 

Our health business score is also reflective of program membership worldwide. The size and scale of the membership count is reflective of the program’s reach and acceptability globally. 

Program Partnerships – Quality over Quantity

Singapore Airlines with its vast network of partners has scored the highest with American and United tied at second place for Partnerships. Lufthansa and Air Canada join them at fourth and fifth positions respectively to make up our top five. 

An interesting theme emerging out of this chart is the representation of airlines from all regions in the top five, demonstrating how all airlines irrespective of region know the paramount importance of partnerships.

When comparing our partnership score with the redemption rate of each loyalty program, we see that more program partners did not automatically guarantee a higher redemption rate. Southwest Airlines, scoring just 20% on our partner score alongside China Eastern with a 28% partner score, both ranking in the bottom four, have the highest redemption rates (Southwest: 62%, China Eastern: 54%) amongst all carriers we studied.

At the same time, three of the top five highest rated airlines (United, American and Lufthansa) on our partnership score had an average redemption rate of just 29%. Also, while Singapore Airlines and Air Canada, were both top five in both redemption and our partnership score – one clear picture seems to emerge – a greater number of partners does not guarantee a higher engagement of customers. 

Programs that have carefully studied the profile of their customers, leveraged data on customer spend, and structured the program to cater to the needs of its flyers will go a long way in developing a sustainable model for partner selection and boosting customer engagement, thereby building loyalty. Each airline needs to find the right balance between the partners it has and how this enhances the earning and burning of miles. It is a fine line between keeping customers engaged while also making money.

Program Highlights: Family Pooling Missing from All U.S. Programs 

For program highlights, U.S. airlines are performing below par, with European airlines Air France/KLM and IAG registering the highest scores. This is mainly due to the absence of family pooling as a feature in U.S. based loyalty programs. 

Air Canada’s Aeroplan is the only North American airline that offers family pooling, and it is also our highest rated program in North America in this category. 

Next to family pooling, all European carriers in our study offer a part redemption option while in North America only Delta, United and Air Canada offer this feature.

Where some U.S. airlines redeem themselves is on point expiration. It is our view that no expiry policy has more long-term benefits to a program to keep consumers engaged. American airlines like Delta, Southwest and United have no expiration dates on their loyalty points, while Air France/KLM and IAG points do expire. 

Conclusion

In our first iteration of our proprietary Airline Loyalty Assessment Model, we break down the entire business of airline loyalty into three major categories – business health, partnerships, and program highlights. We assigned weights to categories and subcategories to be able to rank 14 loyalty programs. 

United Airlines, with its large fleet capacities and vast network, has built the most successful loyalty programs according to our model. The company continues to lead the way in changing and evolving its loyalty program, and while no program is perfect, United stands out for its strong performance across all subcategories. 

Overall, the U.S. airlines perform well. Loyalty programs by Delta, American and United combined have a total membership of over 350 million worldwide. Along with having the most modern program in terms of accrual mechanism and non-traditional partnerships, these programs are also some of the most engaging with redemptions rates above 30%. Another U.S. airline, Southwest Airlines, has the highest redemption rate of all at 62%. The company shows that a different tactic, focusing little on partnership and credit cards, and more on keeping members within its low-cost environment, can work when done well. 

European carriers like Lufthansa and Air France/KLM may be struggling domestically with demand, but they are continuing to innovate their loyalty programs. According to our Model, Air France/KLM and IAG have the best program highlights and features. Air France/KLM has more than 42 million members across the world and has outperformed many of the top American programs to secure second place on our final score. And then there is Turkish Airlines, the only large European carrier that has improved on its 2019 capacity with great ambitions and plans for the future.

In Asia, Singapore Airlines has scored the highest on our partnership score. Singapore Airlines has more than 400 partners across the five major sub-categories. To put this into perspective, the airline with the second most partners is Air Canada with 180. Qantas also does remarkably well on partnerships. Overall, Asian airline loyalty programs do fall behind their American and European counterparts in the overall ranking, and could improve considerably by an increased focus on business health indicators.

Appendix

For a deeper dive into the scores for each airline loyalty program, see the table below:

Business Health

AirlinesTotal Membership (millions)Program Valuation / Total RevenueRPKs/Total MembershipPoints Redemption Rate (as per the latest Annual fillings)Airport Connectivity – Direct ConnectionsRevenue Based/Miles Based
Delta100%83%17%40%73%100%
American88%73%21%35%82%100%
Southwest72%56%15%62%24%100%
Air Canada13%80%44%44%58%100%
Singapore Airlines5%51%100%44%44%50%
Qantas10%100%18%34%31%50%
Turkish23%21%38%30%100%50%
Lufthansa27%34%42%17%96%100%
Air France/KLM13%37%84%43%89%100%
Avianca7%85%25%26%30%100%
United81%74%22%33%80%100%
IAG29%43%40%29%71%50%
China Eastern38%92%9%54%68%50%
LATAM Airlines31%55%16%8%19%50%

Program Partnerships

AirlinesAirline PartnersCredit CardsHotelsCar RentalsShop & Dine
Delta39%15%20%100%2%
American47%100%12%82%8%
Southwest0%3%20%73%1%
Air Canada100%8%37%64%32%
Singapore Airlines55%18%100%73%100%
Qantas59%90%24%18%6%
Turkish57%15%44%91%3%
Lufthansa73%49%41%55%1%
Air France/KLM69%31%29%91%1%
Avianca51%0%0%0%0%
United84%46%27%82%6%
IAG41%13%29%64%4%
China Eastern37%41%20%18%0%
LATAM Airlines31%3%7%18%0%

Program Highlights

AirlinesTiersPoints ExpiryPoints sharingFamily PoolingPoints + Cash Mix
Delta100%100%100%0%100%
American100%67%100%0%0%
Southwest50%100%100%0%0%
Air Canada100%33%100%100%100%
Singapore Airlines100%67%0%100%100%
Qantas100%33%0%100%100%
Turkish100%67%0%100%100%
Lufthansa50%67%0%100%100%
Air France/KLM100%67%100%100%100%
Avianca100%33%100%0%0%
United100%100%100%0%100%
IAG100%67%100%100%100%
China Eastern50%67%0%0%0%
LATAM Airlines100%67%100%0%0%