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Will airlines charge to join frequent flyer programs?

A survey finds consumers in their 20s and 30s are much more willing to pay for membership in loyalty programs. (Image: Delta)

A survey finds consumers in their 20s and 30s are much more willing to pay for membership in loyalty programs. (Image: Delta)

If fee-hungry airlines haven’t already started thinking about imposing fees to join their frequent flyer programs, they might start to consider it after they see the results of a new survey from LoyaltyOne.

That survey of 1,005 consumers found that the younger they are, the more willing they’d be to join a fee-based loyalty/rewards program. The survey focused on rewards programs offered by large retailers, like Amazon Prime and a comparable new effort from Walmart, but the same attitudes could well apply to mileage plans.

The survey found that 62 percent of all respondents said they were willing to sign up for a fee-based rewards program if their favorite retailer had one. But the positive rate was much higher among millennials (age 18-24) at 75 percent, and among those age 25-34 at 77 percent.

Almost half of the respondents (47 percent) said they believe rewards in a fee-based program would be better than those in programs that offer free membership — but again, that attitude was much more prevalent among younger consumers.

“These results should attract the attention of brands considering a shift to fee-based loyalty programs as marketers look for ways to create competitive differences and lock in customer spend against a backdrop of waning program effectiveness and engagement challenges,” said LoyaltyOne Consulting Associate Partner Lance Du Chateau.

LoyaltyOne specializes in designing and deploying customer loyalty plans.

Readers: Would you be willing to pay for membership in your favorite frequent flyer program? How much? What would you expect to get in return?

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Comments

  1. Can anyone remember which programs started fee-based? Hint: One was a major hotel chain. It was before Mr. Ferris rounded up United, Westin and Hertz, failed, and then lost his job. But they did cause one chain’s loyalty program to drop its fee. No not Westin, but a future Westin partner, as luck and consolidation by another name would have it…

    And all before the $$ ante travel loyalty program by another name: The credit card.

  2. Amazon Prime is a membership program, but not a loyalty program. It’s like the membership fees, especially the Executive level, at Costco.

  3. Already done and died. Remember when some travel rewards programs charged an entry fee? The competition didn’t, and that was that.

  4. Obviously those who think that this is a good idea haven’t read the T&C of the airlines’ programs or don’t understand them. I wouldn’t pay anything where I have no legal possession and the airline can change the rules and value any time they want to (and have proven that they would).

  5. Exactly. The survey would not apply to conventional FF programs. They would have to offer something up-front, like priority upgrades, access to lounges, or a huge sign-up bonus points. But as you point out, the credit cards already do this with the annual fees. I’m not sure a FF program can duplicate this.

  6. United, in particular, has done a really elaborate job of implementing this sort of thing already, wouldn’t you say? There are LOTS of ways to buy your way into at least bits and pieces status if you come up a bit short on BIS / PQM totals for the year. The credit card (group 2, checked bag, better reward seat availability) has an annual fee. There’s also the E+, baggage and lounge subscriptions. And they always seem happy to sell you bonus miles including PQMs.

    The thing is, though, anything with a fee up front really does need to come to the table with a guaranteed quid pro quo, *especially* for Milennials. I hope nobody at the airlines is hearing “the kids will pay for your loyalty programs!” No, friends, we’ll pay up front for something that makes using your company a better experience for us — see all that you get when you pay up for Prime, for example.

  7. Charging a fee for a loyalty program would be a bad decision for airlines specifically since everything they’ve done in the past several years has been to devalue the programs. Consumer pressure would come to bear to force them to actually offer real benefits which they are not willing to do. Unless they’ve been aiming at this all along. Can you spell conspiracy?

  8. United effectively does already, I have noticed that award space with a Mileage Plus credit card is much better than without, more so than previously. Try searching to Hawaii late summer.

  9. First: I seem to recall that some airlines actually did try to charge a membership free way back in the early/mid 1980s. I want to say I remember being a young teenager and the flight attendants on a Pan Am flight in ’86 promoting membership and saying the “fee was waved” if we joined in-flight. (And yes, that is how I eventually became a Delta medallion!). But as others have pointed out, the fee works against the point of the general membership level of a loyalty program-to bring as many peeps into the fold as possible and then exploit them for more travel, etc.

    Second: All of the airlines more or less do this now for status level frequent flyers. For $50 to $450, their respective credit cards buy you some or parts of status (the real value of the program for many of us); USAir essentially did this by selling status and UA comes close by selling subscriptions to Econ+ and baggage service.

  10. BB. Absolutely correct. It is a subscriptions. I’m not sure what advantage it would be to charge for an airline loyalty program other tha an extra onetime or yearly fee.

  12. Amazon Prime is not a loyalty or a rewards program. It is a subscription service, and it should not be likened to an airline loyalty program.

  13. Amazon Prime delivers tremendous value for the amount of the fee. If the airlines expect to be paid for memberships, they would have to offer something of value in their loyalty programs, rather than the bait-and-switch of zillions of “miles” that are very hard to use in first or business class or on convenient flights.

  15. Why put ideas into their bean counting brains by even discussing this? Sometimes bloggers add credibility to a crummy idea by pondering about it.

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