The airline industry is one of the most competitive and less differentiated industries out there, which is why airlines invest heavily in loyalty, or "frequent flyer", programs.
In this post, we used our panel of transaction from over 3 million credit and debit card accounts, to discover how "loyal" customers of five major airlines are:
- American / US Airways
First, let's see how generally "valuable" a frequent flyer is to the industry. In 2016:
- 57.4% of total revenue for the above five airlines came from flyers who made more than 5 total ticket purchases with those airlines.
- 35.4% of total revenue came from flyers who made more than 10 ticket purchases.
As expected, frequent flyers amount for a very significant chunk of airline revenue, justifying airlines' investment in loyalty programs.
Now, let's see which airline's flyers fly most frequently. In terms of number of ticket purchases:
United Airlines tops the chart with over 3 ticket purchases per customer in 2016, while JetBlue is last with under 2.3 purchases per customer.
Another way to look at it is in terms of loyalty, i.e. which airlines command the highest share of their customers' flight spend:
Customers of Southwest and United are most loyal by this metric, with over 50% of their total spend across these five airlines going to Southwest and United, respectively.
Now, let's see what percentage of purchases each airline gets from its most frequent flyers:
Here again, United and Southwest are atop the group, each with over 16% of total spend coming from 5+ flyers and over 6% of total spend from 10+ flyers.
In conclusion, based on our analysis, United and Southwest have the most loyal customers, which is a good strategy to capture market share in the highly contested commercial flight space.
Learn more about consumer spending analytics with TXN.