The perceived value of frequent flyer program benefits among Australian travelers

Abstract

Understanding the perceived value of frequent flyer program benefits is crucial for commercial operations of airlines. This study aimed to investigate if travelers value various benefits provided by airlines and if such valuation correlates with certain characteristics of travelers. Through a scenario-based questionnaire it was confirmed that travelers do value extra and premium benefits offered by airlines, and such valuation increases along with the distance of route. It was also been found that top-tier members were willing to make a much higher offer for the same benefits on long-haul international route than members of lower status, but such difference in offer was not statistically significant on other routes. Results of this study could fulfill the gap of the current literature on frequent flyer programs, and offer practical guidance for airlines to generate higher revenues though customized pricing and targeted sales promotion to elite frequent flyers.

Authors

• Gao, Yi Embry-Riddle Aeronautical University
• Carrigg, Madeline Embry-Riddle Aeronautical University
• Lewinski, Robert Embry-Riddle Aeronautical University
• Polderman, Danielle Embry-Riddle Aeronautical University
• Tkalcevic, Paul Embry-Riddle Aeronautical University

Keywords

• Frequent flyer programs
• Loyalty programs; perceived value
• Management and Operations