Experts in the industry attribute this transformation to increased partnerships, digital payment methods, and a growing trend toward more flexible and accessible reward structures.
Current operation of airline loyalty programs
At their essence, loyalty programs still reward air travel. However, the framework for earning and redeeming points has significantly broadened.
Amol Date, Chief Revenue & Product Officer – Loyalty at Vernost, a B2B technology firm based in Mumbai, notes that airlines are transitioning away from mileage-only systems toward ecosystem-based models. Under this new structure, points can be earned not just on flights, but also through credit card use, retail purchases, dining, hospitality, and various lifestyle categories.
He further explains that these programs increasingly depend on data and personalization to tailor offers to consumer behaviors, facilitating more targeted rewards and flexible redemption options like upgrades, discounts, and bundled travel benefits.
Amresh Acharya, MD & CEO – Loylty Rewardz, a company focused on customer engagement and loyalty solutions, emphasizes the growing significance of co-branded credit cards and partnerships in broadening access.
He points out that points earned outside of travel can now be routinely converted into airline benefits, often through airline alliances and partner networks.
Sunil Suresh, Head of Loyalty, Marketing and E-Commerce at Air India, refers to airline-led ecosystems such as the Maharaja Club, where loyalty points function as a more general transactional currency.
Members can earn and redeem points across over 100 brand partners, which encompasses both travel and non-travel categories.
Reasons for changes in airline loyalty programs
The evolution of loyalty programs is fueled by three primary structural changes.
Firstly, broader participation is evident as airlines extend loyalty benefits to occasional travelers by linking rewards to everyday spending.
Secondly, ecosystem expansion is taking place, as partnerships with banks, digital wallets, retailers, and service providers transform loyalty programs into interconnected networks instead of isolated airline-only systems.
Lastly, increased usage frequency is crucial; by integrating rewards into daily transactions, airlines seek to retain consumer engagement even between travel periods.
Amol Date observes that this shift reflects a change from rewarding travel frequency to enabling broader value accumulation across various consumer touchpoints.
Amresh Acharya adds that this integration has effectively “democratized” access to travel rewards, allowing non-frequent flyers to build meaningful benefits over time through regular spending.
Sunil Suresh notes that airlines are also redefining loyalty as a constantly active system rather than an occasional redemption mechanism, bolstered by lower entry thresholds and expanded redemption options.
Emerging forms of loyalty value
In the industry, loyalty benefits are now structured across various layers instead of a singular reward format.
Traditional perks like free tickets, upgrades, lounge access, and priority services continue to be central to most programs.
Simultaneously, points can now be accrued through credit card use, digital payments, retail spending, and lifestyle purchases.
Amresh Acharya points out that interoperability among banks, airlines, and partner networks allows users to transfer and redeem points across different platforms, enhancing flexibility.
Sunil Suresh highlights that loyalty ecosystems are broadening into sectors like hospitality, wellness, luxury goods, and essential services, extending their utility beyond air travel.
Amol Date mentions that increasing use of dynamic pricing, partial payments, and personalized offers allows consumers to derive value in more customizable ways.
Do loyalty programs lower travel costs?
Insights from the industry suggest that loyalty programs can help reduce travel costs, although the degree of impact varies according to usage patterns.
For frequent users, accumulated points and benefits like upgrades, baggage allowances, and complimentary services can effectively decrease travel costs over time.
Amresh Acharya notes that consistent users often manage to partially fund family or leisure trips with their accumulated rewards.
At the same time, Sunil Suresh mentions that lowered redemption thresholds and expanded partner networks contribute to making rewards more accessible for occasional travelers.
However, Amol Date remarks that loyalty programs also shape spending behavior, encouraging users to centralize transactions within specific ecosystems to maximize returns.
This creates a dual structure where value creation is tied not only to rewards accumulation but also to consumer behavior within the ecosystem.
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