Allegiant Air is currently in the process of planning a major overhaul of Allways Rewards and its diverse co-branded credit card schemes to deepen customer engagement with the airline’s loyalty program. The dual objectives of having a simple loyalty program and one that actively engages customers are not the easiest things to balance. Currently, program members will earn one point per dollar spent, with these amounts redeemable at a value of $0.01 each when booking flights, and there are currently no elite status tiers.
It appears that Allegiant is now interested in building a dynamic loyalty program that rewards passengers for continuing to choose the carrier in a different manner than simply offering a few extra points for each purchase made by a customer. This reflects industry trends, with loyalty programs increasingly becoming a more important piece of any airline’s revenue-generating picture. Let’s take a deeper look at the moves that Allegiant is making to revamp its loyalty program.
A Flat Scheme Disincentivizes Loyalty
The principal issue with Allegiant Air’s loyalty system, as it stands today, is that it fundamentally disincentivizes passenger loyalty by having a flat scheme that offers limited opportunities for passengers to achieve compounded rewards. This rewards scheme effectively offers a 1% discount on all travel, but it does relatively little to actually incentivize significantly different passenger behavior over time. The leadership team at Allegiant has been quick to note its interest in improving the company’s rewards scheme offerings.
The new system could include perks like basic status, accelerated earnings on cobranded credit cards, bonuses for achieving key milestones, and other soft perks that matter to those flying for leisure. Because the airline now offers premium extra-legroom seats and other things like family pooling and limited-time transfer bonuses, the airline believes that these program upgrades could be essential pieces of ensuring that its customers continue to choose the company over its competitors. In an interview with The Points Guy, Drew Wells, Allegiant’s Chief Operating Officer, had the following words to share:
“We need to take another look at our loyalty program and our cobranded program.”
Why Does Loyalty Matter For Allegiant Airlines?
The Allegiant Air network and business model are uniquely built around providing flights to underserved city pairs, primarily targeting low-frequency, price-sensitive leisure travelers. Across the board, Allegiant is typically the biggest, if not the only name in town, a model that has historically pushed the carrier away from investing so heavily in a loyalty program. However, shifting market dynamics have helped reveal to Allegiant that it could be facing some competitive challenges.
By incentivizing passenger loyalty, the airline can help defend against competitive challenges posed by certain kinds of carriers that are expanding into smaller, midsize markets. Airlines like Breeze Airways and Avelo Airlines are both new kinds of low-cost carriers that target different kinds of destinations, some of which are beginning to overlap with Allegiant’s core markets.
Allegiant Air’s Main Competitors
- Avelo Airlines
- Breeze Airways
- Frontier Airlines
- Sun Country Airlines
- Southwest Airlines
A Quick Bit Of Industry Context
Originally, airline loyalty programs differed little from conventional loyalty programs, as they had the exclusive purpose of attempting to instill loyalty in customers. Originally, airline loyalty program members were simply rewarded with free travel for their continued loyalty.
Today, however, there is a strong incentive for passengers to use loyalty programs, due to credit card partnerships and elite status benefits. As a result, they have become extremely valuable revenue-generating assets for a carrier.
Therefore, it is not at all surprising that Allegiant wants to get in on the action. The most valuable airline loyalty program on the market today is Delta’s, which generates more than $7 billion in revenue per year alone through its cobranded credit card partnership with American Express.
Credits: Allegiant Airlines
