Recent data from Velocity Frequent Flyer reveals a significant increase in the redemption and use of loyalty points among Australians over the past year, with $3.5 billion worth of points redeemed in the last 12 months. This trend is driven by economic pressures, leading consumers to convert points into tangible savings during a period of heightened spending, especially around Christmas.
Many members are now using their points for retail and everyday expenses, with nearly half planning to leverage loyalty rewards during the holiday season. Younger demographics, particularly Gen Z, are notably active, with high intentions to redeem points for shopping and travel, supported by the large stockpiles of unspent points—roughly $1.9 billion worth nationally.
Shift in Loyalty Program Strategies
Loyalty programs are evolving beyond traditional airline benefits to include retail incentives and cross-sector alliances. These efforts aim to increase engagement, accelerate redemption activity, and manage liabilities more effectively. Airlines are adjusting earn and burn policies, realizing that retail redemptions help maintain commercial yields and improve engagement metrics.
"Members are no longer just thinking about flights – a 40% surge in members earning through non-air partners shows Aussies are turning everyday spending into Christmas gifts,"
said Nick Rohrlach, CEO of Velocity Frequent Flyer.
This shift toward retail and everyday redemption not only reduces unredeemed liabilities but also influences consumer demand and booking behaviors. As loyalty balances increasingly facilitate everyday purchases, airlines and agents will need to adapt their strategies and advisories accordingly to maximize value and manage changing consumer patterns, especially during peak seasonal periods.
The strategic focus on diversified redemption options aligns with broader industry efforts to sustain engagement and competitiveness in a challenging economic environment.
