Travel & Entertainment

Airlines: Unpacking the State of Customer Loyalty

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Introduction‍

Previously, Cardlytics defined loyalty as a consumer’s preference for a merchant over its competitors.* We analyzed billions in spending across six industries to measure customer loyalty and spending patterns with both loyal and non-loyal customers.

But customer behavior isn’t fixed—customers shift between loyalty segments over time. Understanding these shifts helps identify churn and informs strategies to nurture relationships and move customers to higher loyalty segments. In our Loyalty Movement Report, we dive into the Airline category to better understand engagement over time by analyzing more than £40B in consumer spend behavior.

Findings:

We looked into purchase data at all Airlines in the UK over the last 8 quarters (Q1-23 through Q4-24) on a quarter by quarter basis to see whether even the “most loyal” customers showed changes in their purchase behavior.

Segment Movement

Of the portion of each customer segment that is non-lapsed, those that are loyal to a specific airline show the strongest brand retention - 31% remain loyal quarter over quarter. In contrast, Tied and Prefer customers demonstrate greater variability in behaviour, with only 4% and 12% respectively maintaining their previous preference.

Loyal customers tend to remain consistent in their airline choice, likely driven by the strength of airline loyalty programmes and exclusive incentives. However, Tied and Prefer customers show clear signs of behaviour fluidity, highlighting a key opportunity for targeted campaigns to drive conversion toward brand loyalty.

Lapsed behaviour is high across all segments—65% of previously loyal customers lapsed, and similar rates are observed among Tied (63%) and Prefer (67%) segments. This reflects typical airline purchasing patterns, where customer loyalty can be disrupted by pricing, availability, or external factors, regardless of prior loyalty classification.

Airlines Leaky Bucket 

Airlines are acquiring new customers yet even more existing customers are moving into the lapsed tier. This cycle is expected based on typical consumer behavior for airline travel quarter over quarter but reinforces need to nurture existing relationships.

Takeaways:

Airline marketers’ inherent focus on nurturing loyal customers is well-know and consumer spend data show it’s working - Loyal customers tend to stay loyal. But huge opportunity exists with customers who are not loyal to any specific airline and could be lured through greater incentives. To stay top of mind, marketers must continuously nurture relationships, understand customer needs, and offer seamless experiences. To foster loyalty with your customers, consider these recommendations:

• Use an “always on” strategy to keep customers engaged, regardless of purchase frequency.
• Regularly update/refine customer segments and adjust reward offers to keep them engaged.
• Use targeted campaigns to boost loyalty and revenue.

Cardlytics can deliver a comprehensive Customer Loyalty Analysis with insights into customer behavior and movement across defined loyalty segments. Contact us for more details.

Airlines: Unpacking the State of Customer Loyalty

Introduction

In our previous report, Redefining Customer Loyalty, Cardlytics defined loyalty as a consumer’s preference for a merchant over its competitors. We analyzed $160B in spending across six industries to measure customer loyalty and spending patterns with both loyal and non-loyal customers.

But customer behavior isn’t fixed—customers shift between loyalty segments over time. Understanding these shifts helps identify churn and informs strategies to nurture relationships and move customers to higher loyalty segments. In our Loyalty Movement Report, we dive into the Airline category to better understand engagement over time by the entire more than $58B in consumer spend behavior.*

Airline Category Loyal Customers

On average, 39% of a merchant’s customers are not loyal. Yet the loyal segment shows extreme loyalty when it comes to share of wallet (95%) where as a not loyal segment does not (28%).

Top Customers (top 10% of most frequent transactors) are heavily loyal - 2/3. And that loyal customer segment shows the same extreme loyalty in terms of share of wallet as all customers.

Findings

We looked into purchase data at all Airlines in the US over the last 8 quarters (Q1-23 through Q4-24) on a quarter by quarter basis to see whether even the “most loyal” customers showed changes in their purchase behavior. 

Airline Loyalty Movement

Overall, quarter over quarter, customers tend to stay in their same segment (36%) while there is an equal amount that increase/decrease loyalty (7%) and are either new or lapsed (22% and 26%, respectively). However, when digging into the individual segments, the opportunity becomes more clear among segments that are categorized as non-loyal. 

Segment Movement

Of the ⅔ of each customer segment that is non-lapsed, those that are loyal to a specific airline tend to stay loyal (57%). However, those categorized as “non-loyal” (Tied/Prefer) show significant willingness to to shop around (43% and 46%, respectively).  

Airline Leaky Bucket

Airlines are acquiring new customers yet even more existing customers are moving into the lapsed tier. This cycle is expected based on typical consumer behavior for airline travel quarter over quarter but reinforces need to nurture existing relationships .

Diving deeper into the individual segments tells us:

• Loyal customers typically do not switch airlines, which is most likely due to airlines robust loyalty programs and incentives. However, customers that are Tied or Prefer have a high propensity for behavior change and show an opportunity for targeted campaigns to influence their behavior.
• Lapsed customers are similar across all segments, which is reflective of typical airline purchasing behavior - regardless of their loyalty categorization.

Definitions of Customer Segments

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Loyal Customers
Loyal: Only shop with a specific brand, or have the highest share of wallet with a given brand and relative rank is lower than all other brands in consideration set

Not Loyal Customers
Tied: Similar relative ranks to 2 or more brands regardless of share of wallet ranking
‍Prefer: Lower share of wallet and higher rank than other brands in their consideration set
‍Lapsed: Shopped historically but do not shop currently, as defined by the analysis time period
‍New: Shop currently but have not shopped historically, as defined by the analysis time period

Takeaways

Airline marketers’ inherent focus on nurturing loyal customers is well-know and consumer spend data show it’s working - Loyal customers tend to stay loyal. But huge opportunity exists with customers who are not loyal to any specific airline and could be lured through greater incentives. To stay top of mind, marketers must continuously nurture relationships, understand customer needs, and offer seamless experiences. To foster loyalty with your customers, consider these recommendations:

• Use an “always on” strategy to keep customers engaged, regardless of purchase frequency.
• Regularly update/refine customer segments and adjust reward offers to keep them engaged.
• Use targeted campaigns to boost loyalty and revenue.

Cardlytics can deliver a comprehensive Customer Loyalty Analysis with insights into customer behavior and movement across defined loyalty segments. Contact us for more details.

* For this report, we've selected the entire Airlines category in our data, collectively representing$58bn in annual card spend. This sample differs from the previous Customer Loyalty Analysis report.
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About Cardlytics‍

Cardlytics (NASDAQ: CDLX) is a commerce media platform, powered by our publishers’ first-party purchase data, that makes commerce smarter and more rewarding for everyone. We offer a range of solutions to help advertisers and publishers, including financial institutions, grow and strengthen customer loyalty. With visibility into approximately half of all card-based transactions in the U.S. and a quarter in the U.K., Cardlytics enables advertisers to engage consumers at scale and drive incremental sales through our industry-leading financial media network. Publisher partners can enhance their platforms with relevant and personalized offers that improve the shopping experience for their customers. Cardlytics also offers identity resolution capabilities through Bridg, which helps convert anonymous shoppers into known and reachable customers. Headquartered in Atlanta, Cardlytics has offices in Menlo Park, Los Angeles, Champaign, New York and London. Learn more at www.cardlytics.com or follow us on LinkedIn.

Here to stay(cation)

According to recent Cardlytics data, we found that UK staycations will be most popular among holiday makers, with nearly half (44%) of those planning to go on holiday this year opting to stay local, compared to short-haul (38%) and long-haul (24%) destinations. Holiday lettings providers like Airbnb and Vrbo have also seen increased transaction volumes maintain year-on-year. Transaction volumes a year ago (December 2022 into January 2023) hiked 54% year-on-year, reaching 60,353 transactions, with similarly high levels this year (58,562 transactions) indicating a shift from more expensive hotel bookings.

Tour de Force

Tour operator providers such as Tui, Virgin Holidays and Jet2 have seen a continuation of their post-Covid revival, with transaction volumes growing 7% year-on-year, after a massive 61% growth against the previous period (December 2021 into January 2022). This is a further indicator of travellers seeking value where they can.

Airlines take off

Alongside those seeking to stay local, airlines such as British Airways and Virgin Atlantic also saw a rise in spending, with overall spending up 13% year-on-year, and transaction volumes up 15% in the same time period. This indicates those that can afford longer-haul destinations are prioritising doing so, as the high cost-of-living shows signs of easing. Budget airlines also saw a 3% rise in spending, with the volume of transactions up 2% year-
on-year.
According to Hannah Collins, Partnership Director, Travel: “We are continuing to see the real effect the cost-of-living crisis is having on travel spending, with the increase in domestic holiday bookings demonstrating the focus on finding more affordable getaway options. “That said, people are on the hunt for their ideal 2024 holiday – they’re just seeking the best possible deals and promotions on the market. With that in mind, travel brands and booking sites need to ensure they’re offering the most targeted and personalised discounts and rewards to ensure they continue to attract and retain customers to drive incremental growth in what’s set to be another tough operating environment this year.”

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Download our infographic here.

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Cardlytics data is based on spending from over 20 million UK bank accounts. This data is based on spending between (unless stated): The four weeks leading up to 8th January of each year:

• This year (2023/24): 7th December 2023 – 8th January 2024
• Last year (2022/23): 8th December 2022 – 7th January 2023
• 2021/22: 9th December 2021 – 6 th January 2022

The poll was conducted by Opinium, based on a sample of 2,000 adults between 12-16th January 2024.

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The travel industry has faced an uphill battle over the past few years. Covid-19, cancellations, labour shortages and rising operating costs have all beset the industry with issues. 

Many punters have in turn forgone their normal holidays abroad or ditched the business travel, swapping flights to Portugal for trains to Cornwall and face-to-face meetings for Zoom calls.  

It was therefore unsurprising that as restrictions lifted, travel spend skyrocketed as consumers made up for lost time, splashing the cash to make their next trip better than ever. 

Cardlytics spend data across 24 million UK bank accounts shows that travel brands across the sector have seen spend increase in the past year. Total spend on airlines grew 542% between 2021 and 2022 whilst package holiday’s (496%), holiday rentals (222%) and even UK retreats (111%) saw significant rises in the same period. 

However, headwinds loom. The industry is facing unprecedented staff shortages, while a cost-of-living crisis is likely to put a squeeze on the amount consumers are willing to spend on their holidays. 

Looking to the next 6 months, how can travel brands win back customer loyalty as we head towards the winter travel and January holiday booking season?

Invest in certainty

Overall spend on package holidays has increased by 171% in the past six months compared to prior same period, pointing to the fact that consumers are increasingly opting for package deals that offer more protection and support when things go wrong.  

Investing in certainty will go a long way in helping to rebuild trust and get consumers booking their trips again, whether it is offering extra protection on holidays or the choice for free cancellation, giving consumers choice and backup options will help to incentivise bookings. 

Focus on affordable getaways

Despite the post-Covid boom in bookings, the cost-of-living crisis will tighten purse strings and as consumers cut-back on non-essential spending, luxuries like holidays could be one of the first things to go. Recent Cardlytics consumer polling of 2000 UK adults shows that two in five (42%) consumers are already planning to reduce the number of holidays they take this year.

As travel brands struggle themselves with increased operational costs and inflation, prices are only set to rise. The average spend per purchase across the travel sector has already seen an increase of 26% in the past 6 months compared to the previous 6 months.

With prices increasing, consumers are likely to opt for shorter mini-breaks and more affordable destinations. For brands, this is an opportunity to offer more flexible and value driven options that suit peoples’ needs now but help to retain customers in the long term.

Reward customers and build loyalty

Disposable income is continuing to decline, leading to more consumers turning to loyalty programmes and discounts to save. Our consumer research showed that 59% of consumers are reacting by utilising discounts, rewards, and offers by searching for more discount codes online before they make a purchase.

Travel brands need to seize this opportunity to offer tailored incentives to help their customers save money but also build loyalty and ensure they keep coming back. The travel industry is renowned for its loyalty programmes, now is the time to take them up a notch. 

List with price comparison sites to increase exposure

Consumers aren’t just looking to discount codes to save their spending. Cardlytics consumer polling showed that 73% of consumers plan to shop around more this year for the best deals whilst 58% intend to use price comparison sites more. 

Brands need to tap into this savvy customer base by featuring on price comparison sites. This not only increases visibility and exposure but also makes it easier for customers to find a brand’s deals.

Memorial Day weekend historically marks the unofficial start of summer travel. But this year, it also served as a bellwether of whether consumers would be ready to travel again. Our purchase insights show that, in the near term, travel post-COVID may be considerably changed.  

Consumers still want a change of scenery, but they are turning to more regional and local destinations. Airline and cruise spending were still significantly down compared to this time last year— -77.6% and -85.8% respectively, but we’re seeing signs of return in other travel categories. 

As further evidence of the shift toward local and regional travel, customers are rapidly returning to car rentals. Car rental spend increased +30.8 points to –42.7% after hitting a low of -73.4% year over year in early April. This suggests that customers are once again taking summer road trips to driver-friendly destinations. 

At first glance, hotels & lodging recovered the most by Memorial Day weekend, but within the aggregate figures is an important shift. Spend increased +38.1 pts from a low the week of 4/2 (this category is now pacing at –47.8% from a low of -85.8% YOY). However, most of these gains were driven by alternative lodging and homestay brands – not traditional hotels.  

Alternative lodging leads the path forward

Alternative lodging spend is now showing a positive increase of +16% year-over-year, surpassing even last year’s Memorial Weekend spend. In comparison, traditional hotel brands remained down -61.6% year over year. Because alternative lodging is typically paid for in advance, it can serve as an early indicator of upcoming travel spend. However, the dramatic recovery of this category has significantly outpaced the slower turnaround of other industry spend for many weeks and seems to indicate an accelerated adoption of vacation rental disruptors.

Actionable tip: minimize the impact of disruptors

COVID-19 has changed consumer behavior. Across the board, disruptors are rapidly gaining a foothold over their traditional counterparts. We’ve seen the shift in spend toward e-Commerce retailers, online grocery, third-party restaurant delivery, and now, alternative lodging.  

Prior to COVID-19, hotel spend was growing so quickly that it allowed for the expansive growth of alternative lodging without significantly impacting the growth prospects for the major hotel brands.  But with alternative lodging and homestay brands devouring summer leisure travel demand again while traditional hotel spend remains in steep decline, this represents a more significant threat. Hotels and other impacted categories need to act quickly to bring their customers back before they’re lost for good. 

Drive growth with our trusted, fraud-free ad platform

Using purchase insights, Cardlytics can identify customers who have started to resume spending in relevant categories and engage them with highly targeted offers in our 100% brand-safe and fraud-free ad platform. These offers reach real customers in their online and mobile banking channels while they’re thinking about how to spend their money. Our campaigns minimize the risk associated with returning to marketing with a pay-for-performance model. We drive proven results and positive cashflow with no upfront costs.

Want more actionable insights?

With insight into 50% of US transactions, Cardlytics puts purchase insights into action every day for advertisers in banks’ digital channels. Whether marketers are experiencing ups or downs in consumer spend, we're here to help our clients navigate the curve and drive measurable sales. Contact us for an analysis and campaign strategy customized for your brand.

These insights were recently featured in our State of Spend report, which follows important shifts in consumer spend and track early signs of recovery. Download our latest State of Spend Report today and be sure to check back for the next issue.

Analysis in this report is based on data derived from the Cardlytics platform between March 5th and June 3rd. While analysis is representative of purchase behavior, it does not include every customer or every financial institution on the Cardlytics platform.