Driving loyalty through better CX

Learnings from the airline industry

How can participants in a highly competitive industry improve financial performance without resorting to competing on price? Surprisingly, the airline industry offers a fascinating insight into how investments in providing richer customer experiences can boost customer loyalty and profitability, sometimes overriding price considerations.

Why does customer experience and loyalty matter to airlines?

Essentially, there are three main reasons:

• The emotional stakes for passengers, relating primarily to travel anxiety, delays and cancellations
• The intangibility of the service, and how comfort and staff behaviour or baggage handling can change significantly
  
• The ability for customers to switch easily to other carriers relatively easily

In this context, a better customer experience can influence whether an airline can retain a customer, and whether they can encourage a customer to pay more. Of course, a plethora of airline loyalty programs exist with the aim to encourage continued patronage. But why would customers continue to accept poor customer experience to seek loyalty points, when better CX options (and accompanying loyalty offers) exist in the market?

Where are airlines investing in CX?

Airlines are investing significantly across the spectrum of CX touchpoints –inflight entertainment, provision of Wi-Fi and texting options, better seating, cleaner cabins and more inflight services – and these all impact the actual journey. At the same time, greater emphasis on on-time performance, higher levels of staff service and flexible booking policies round out the overall experiences that airlines are now offering.

With Asian and Middle Eastern airlines, which are increasingly associated with positive customer experience, the use of personalization as a means of differentiated experience is becoming more common, along with the leveraging of more technology and superior service provision.

What are the results of these CX investments?

Rebooking rates are seen to improve, validated across a number of studies, with data points suggesting:

• ‘Delighted’ customers are 3.6 times more likely to rebook with the same airline
  
• Above average CX scores had 20 to 30 per cent higher rebooking rates within North America
  
• Middle Eastern airlines were more likely to see higher engagement rates through more personalization
  
• Asian budget airlines could attribute over 99 per cent of variations in brand loyalty as a result of improved service and customer satisfaction – not price

Additionally, specific to North America, Delta Air Lines’ investment in driving more on-time performance, coupled with better customer service training and a better inflight entertainment system yielded an NPS improvement of 22 points, over 25 per cent improvement in rebooking rates, and most encouragingly, 30 per cent growth in premium cabin seats.

Key insights

In a commoditized industry like the airline industry, emotional loyalty – based on good experiences – can outperform price-based loyalty. The increase of trust, reduced anxiety, operational reliability and positive human interactions drives loyalty and increases customer lifetime value and general goodwill, encouraging customers to not just return, but also to spend more, potentially in premium products.

Conclusion

Could highly competitive industries seek solid results through the age-old adage of focusing on the customer and enriching their experience? The airline industry, with its hyper-competitive nature, demonstrates the value of improving CX to drive performance without reducing prices. In fact, the delivery of reliability and personalization creates opportunities for premiumization while building brand strength and loyalty. Organizations that are seeking to perform in any market are reminded of the importance of putting the customer at the heart of everything they do.

Author: Scott D’Cunha

Sources:
1. JD Power North America Airline Satisfaction Study (2023)
2. American Customer Satisfaction Index (ACSI) 2023 Airline Report
3. Delta Air Lines
4. Elevating brand loyalty: Deciphering the impact of airline service quality and customer satisfaction in Bangkok's aviation industry: Case study low-cost airlines (2024)
5. Journal of Infrastructure Policy and Development
6. COMARCH - The Future of Customer Loyalty in the MEA Region: Trends, Challenges, and Opportunities (2025)