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August 1, 2013

Will Changes to Frequent Flyer Programs Help Airline Satisfaction?

David Vanamburg

Passenger satisfaction with airlines is one of the lowest-scoring industries measured in the American Customer Satisfaction Index (69 on a 0-100 scale), beating only subscription TV and Internet service. Out of 11 categories of airline customer experience benchmarks ranging from ease of the check-in process to handling of baggage, the quality of loyalty programs is third from the bottom (73), scoring above quality of in-flight services at 68 and seat comfort at a dismally low 63.

Airlines may now be seeking to improve their loyalty program satisfaction, as many have announced changes to or entire overhauls of their existing programs within the past few weeks, according to the New York Times.

Some changes may have the potential to change satisfaction scores for the better—for example, an ability to convert hotel reward points to airline miles, to earn miles from flights on partner airlines, and expanded access to airport lounges. Other changes including higher award ticket fees, establishment of minimum annual spending stipulations, and removal of elite mileage bonuses could be detrimental to passenger satisfaction.

ACSI data show that added fees lead to lower overall customer satisfaction. Looking at the past two years, overall satisfaction for passengers who did not pay a baggage fee was 73, while those who paid fees were much less satisfied with scores in the mid-to-low 60s. It is interesting to note, however, that those paying a baggage fee are somewhat more satisfied this year (65) compared to 2012 (62). If passengers are adjusting to these fees—or more likely, finding ways to avoid paying them—this could account for the small uptick.

Nevertheless, changes to loyalty programs that move in the direction of higher costs for travelers, either adding fees or removing benefits from existing programs, will undoubtedly take a toll on customer satisfaction in this already poor-performing industry.

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