State of Airport Loyalty Programs (2023)

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46 This synthesis provides a comprehensive overview of the status of U.S. airport loyalty pro- grams, including development, monetization, and value of program adoption to the airports. The audience for this synthesis includes airport managers and stakeholders with responsibilities to strengthen customer loyalty and engagement and increase revenue. 5.1 Summary of Literature The literature review encompassed airport loyalty programs, airline frequent flyer programs, loyalty programs in other tourism sectors such as hotels, and loyalty programs adopted by retail and banking industries. Findings suggest that research in airport loyalty programs is in its early stages and remains relatively scarce compared to studies on customer loyalty in other areas. The majority of existing studies focus on the benefits of loyalty programs, either for customers or air- ports, and customers’ willingness to pay for loyalty program memberships. Conversely, research on loyalty programs in other sectors such as airlines, hotels, retailing, and banking industries is well-developed. Researchers have extensively examined the interaction between loyalty pro- grams and customers, markets, brands, and socioeconomic factors in these sectors. 5.2 U.S. Airport Loyalty Programs The project team reviewed 145 primary-hub airports, as determined by the 2021 Passenger Boarding Data, regarding how they adopt customer loyalty programs. As of October 2022, less than half of the 145 reviewed airports were operating a customer loyalty program. Smaller air- ports are more likely to have a loyalty program compared to primary, large-hub airports. U.S. airport loyalty programs can be grouped into four major categories: (1) parking rewards programs, (2) third-party, multiple-airport customer loyalty programs, (3) airport lounge pro- grams, and (4) blended programs that combine at least two of the first three categories. In addition, some airports operate community engagement programs that engage nontraveling visitors. Most of the U.S. airport loyalty programs are essentially parking rewards programs. These programs provide financial incentives and operational conveniences for travelers who frequently drive to airports and park their vehicles at airport parking facilities. Regarding airport lounge programs, less than a handful of airports are operating their own lounges for frequent travelers. Meanwhile, several airports provide spaces for commercial lounge operators and USO lounges. The survey results confirmed findings from the literature review and airport investigations. Among airports that responded to the survey request, few have airport loyalty programs. Of the airports indicating that they are operating loyalty programs, their membership bases are limited, and the annual enrollment of new members is modest. While airports are using diverse methods C H A P T E R   5 Summary of Findings

Summary of Findings 47   to operate loyalty programs that suit their practical needs, there is no consistency between the programs of different airports. Several airports indicated that they had previously considered loyalty programs but eventually chose not to pursue them. 5.3 International Airport Loyalty Programs While U.S. airport loyalty programs are primarily parking rewards programs, customer loyalty programs operated at selected international airports are predominantly shopping rewards pro- grams. These programs encourage travelers’ repeated purchases with airports and airport conces- sions. Members accumulate rewards points through their spending activities and redeem points for discounts, awards, or benefits. International airport loyalty programs also commonly provide symbolic benefits in addition to utilitarian benefits and hedonic benefits (Mimouni-Chaabane and Volle 2010) to foster members’ emotional loyalty beyond transactional loyalty. While rewards earning and redeeming opportunities of most airport loyalty programs are predominantly restricted to the hosting airports, Privium, the loyalty program of Amsterdam Airport Schiphol (AMS), extends its members benefit access at Eindhoven Airport (EIN) and Rotterdam the Hague Airport (RTM). This situation is similar to airlines’ frequent flyer programs in which members of one program can access the benefits of other programs through business partnerships. This feature could be adopted by some U.S. airports that share common opera- tors. For instance, the Port Authority of New York and New Jersey operates five airports in the greater New York area, including LaGuardia Airport (LGA), John F. Kennedy International Air- port (JFK), Newark Liberty International Airport (EWR), Teterboro Airport (TEB), and Stewart International Airport (SWF). A common airport loyalty program in this multiple-airport region could be attractive to local travelers and lead to new business opportunities for airports. 5.4 Comparison of U.S. Airport Loyalty Programs with Other Loyalty Programs U.S. airport loyalty programs are in an early stage of development. Members of U.S. airport loyalty programs have limited opportunities to earn rewards at airports and have few places to interact with programs outside of airports. Most of the airport programs focus on utilitarian benefits, allowing their members to redeem points for parking discounts or vouchers. Few pro- grams have explored symbolic benefits that provide members special recognition or perceived exclusivities. Currently, most U.S. airport loyalty programs focus on offering additional perks to their members to encourage them to utilize their services. These programs explore ways to establish a viable financial model to ensure their sustainability and profitability. To develop revenue streams, loyalty programs may require support from airports to experiment with new concepts or main- tain daily operations. However, if resources are constrained, loyalty programs may not receive high priority, which could potentially limit their potential for growth. 5.5 Gaps in Knowledge and Further Research Needs This synthesis reveals that airports are primarily responsible for developing and managing their own loyalty programs, without a standardized framework for assessing whether an airport can benefit from such a program. Important questions when airports are considering implementing or enhancing their loyalty programs may be raised, such as whether to rely solely on internal man- agement discretion or seek external expertise. Additionally, marketing teams may face challenges

48 State of Airport Loyalty Programs in justifying the need for stronger managerial support for proposed or existing loyalty programs. Addressing these issues will be critical for airports seeking to create successful loyalty programs that provide value for both customers and the airport itself. As the project team undertaking this synthesis, the following future research needs have been identified: • Assess the potential benefits of adopting customer loyalty programs. • Evaluate the cost of building and operating customer loyalty programs. • Calculate the expected return on investment of airport customer loyalty programs. • Design integral and organic loyalty program components that can interact with internal busi- ness units as well as external partners. • Implement loyalty programs using either in-house or outsourced resources.