By Ryan Barwick
2 hours ago
As airlines prep for the gradual return of bookings, United Airlines is taking a page out of hotels’ playbook.
Hotels’ approach to brand loyalty has particular appeal for airlines navigating the way back to greater passenger demand. Speaking to investors during an earnings call, United CEO Scott Kirby alluded to how the airline could pitch itself to corporate clients when business travel (eventually) rebounds in a post-Covid world. Although he didn’t provide specifics on strategy, Kirby said that the industry’s current mentality of leaning heavily on “price to win customers” needed to change.
“Hotels do a remarkable job of having a brand value, and getting customers to like them, and getting customers to be loyal for reasons other than price,” said Kirby. “Getting our customers to like us and choose us because they like us, like what they stand for and they have confidence in us as opposed to competing on price.”
Holding a seat for loyalty
While United probably won’t unveil any branded spinoffs, Kirby’s point emphasized the importance of leaning on loyalty programs and going beyond cheap flights to entice travelers. While still mired in the pandemic, each airline is looking for differentiators that will help them attract new business coming out of the pandemic.
Delta’s commitment to blocking the middle seat has apparently paid off: Last week the airline told investors it was seeing a “meaningful premium” generated by the decision. Though its middle seats are open, American Airlines is also seeing a loyalty bump. A representative for the airline told Adweek that it has seen a 40% conversion of new travelers into its loyalty program.
Airlines hope that every new customer earned amid the pandemic will pay off down the road, as United doesn’t expect to see a substantial recovery until 2023.
Although the Christmas holiday provided a boost, United’s earnings were expectedly grim. The airline saw a Q4 net loss of $1.9 billion and $7.1 billion for all of 2020. Heading into the new year, it expected operating revenue to be down 65% to 70% this quarter, with capacity down 51% compared to 2019.