Why startups are coming for airline reward programs

To the occasional traveler, frequent flyer programs usually feel like just another retail gimmick.

• Complicated point systems.

• Blackout dates.

• Endless fine print.

A marketing scheme that’s more of a hassle than help.

But for road warriors and business travelers, these programs have long been a kind of golden ticket: priority boarding, upgrades, lounge access, and the occasional “free” first-class flight – if you’ve played the game right. 

Over the years, they’ve become symbols of savvy travel, even lifestyle flexes for frequent flyers.

And make no mistake. Airlines didn’t just invent this game; they perfected it.

In fact, the modern loyalty program was born in aviation. 

• American Airlines’ AAdvantage, launched in 1981, is widely credited with pioneering the concept of tracking customer behavior to drive repeat purchases, long before the term “retention engine” became a startup cliché. 

• What started in the skies eventually spilled into nearly every consumer-facing sector, from hotel chains and credit card companies to grocery stores and coffee apps.

But for airlines, loyalty programs have always been more than a marketing tool. 

They’re serious business.

Especially in the U.S., loyalty has grown into a high-margin, high-stakes empire. 

Fueled by lucrative co-branded credit card partnerships, where banks buy miles in bulk to reward customers, these programs can now account for more than 20% of an airline’s total revenue (see Southwest in the chart below). In some cases, the loyalty arm is worth more than the airline itself.

And it’s not just an American phenomenon. 

Across Europe, major legacy carriers (including our parent company Lufthansa) have built billion-dollar loyalty machines of their own. These programs now represent powerful standalone business units with sizable P&Ls and strategic leverage.

But here’s the twist: despite their profitability, these once-beloved programs are coming under increasing scrutiny. 

• Travelers are growing disillusioned.

• Perks are harder to earn.

• Rules keep changing.

• And the value exchange is starting to feel…off.

It was time for us to take a closer look.

The Growing Loyalty Backlash

In recent years, frustration with airline loyalty programs has been growing louder.

• Frequent travelers, once proudly flashing their elite status, are increasingly questioning the real-world value of these programs.

• Earning perks feels harder, redemption options are more limited, and the goalposts keep shifting.

But until recently, much of this discontent was mostly anecdotal: loud voices on social media, sporadic complaints, and the occasional think piece, for example, in the New York Times.

So, we went looking for harder data.

First stop: Trustpilot, a popular consumer review platform where customers share open-ended feedback about their experiences with brands and services.

Our finding: A staggering 95% of airline loyalty program reviews between 2019 and 2025 are rated just one star, the lowest possible score.

In all fairness, the sample may be somewhat skewed:

• Platforms like Trustpilot tend to attract more feedback from those with particularly strong (and often negative) experiences.

• In general, people are more likely to post reviews when they’re angry, not when they’ve scored an upgrade to business class.

• But even so, 95% is far from noise. It’s a warning sign.

To cross-check the signal, we tapped a broader and more neutral source: social media.

• We scraped about 10,000 recent posts across major platforms like X (formerly Twitter), Facebook, Instagram, Reddit, and a few consumer forums, specifically targeting discussions around airline loyalty programs.

• Using natural language processing (via our data tool Quid), we analyzed the sentiment behind each post.

The result?

A more balanced picture than Trustpilot, yes, but still troubling.

• As of Q4 2024, one in three social media posts about airline loyalty programs carries a negative tone.

• Even more importantly, negative sentiment has been rising steadily over the past two years.

This is not just a few disgruntled voices yelling into the void. It’s a growing trend that airlines can’t afford to ignore.

But what exactly is behind this dissatisfaction?

To dig deeper, we turned to Point.me, a specialist platform known for its detailed assessments and rankings of global airline loyalty programs.

Their methodology breaks down program quality into multiple criteria, such as ease of redemption, value per mile, program transparency, and partner airline availability.

Here’s what we found:

• Most airline loyalty programs underperform across the board.

• Only one category, “availability of partner airlines”, meaning how easily you can redeem your points with non-home carriers in the same alliance, had more programs rated positively than negatively.

• For everything else, at least half of the programs fell short of expectations.

What’s causing this dissatisfaction in program quality and customer trust?

The Loyalty Betrayal?

The rising dissatisfaction with airline loyalty programs is not simply the result of shifting customer expectations. A major part of the story lies with the airlines themselves, who, over the past few years, have fundamentally altered the design and value proposition of their loyalty schemes. 

Some might say this is eroding the very loyalty these programs were meant to foster.

• Starting in 2023, a wave of program overhauls swept across the industry. 

• And unlike past updates aimed at expanding partner networks or adding perks, the recent changes have largely been unfavorable to customers.

Here’s the gist: Loyalty programs are not necessarily about loyalty anymore.

• Historically, frequent-flyer programs were designed to reward miles flown. 

• The more you traveled, especially on longer routes, the more points you accumulated, making the system particularly attractive to frequent business travelers and aviation enthusiasts.

But that logic is rapidly disappearing.

• In 2023 and 2024, major carriers, including Delta, United, Emirates, and our own Lufthansa, transitioned to revenue-based models. 

• That means elite status and point earnings now hinge primarily on how much money travelers spend, not how often or how far they fly.

One of the biggest gut-punches to longtime members? The elimination of fixed award charts.

• Many airlines, including American and United, have adopted dynamic pricing for award tickets. 

• So instead of predictable mileage thresholds (e.g., 60,000 miles for a transatlantic business-class flight), redemption prices now fluctuate like cash fares. 

• That same seat might now cost 150,000 miles, or more, depending on demand.

Travelers who spent years saving miles for aspirational redemptions are now finding themselves priced out, while the rules keep changing with little warning.

Even worse: airlines have consistently marketed these updates as enhancements, often burying the real trade-offs in fine print. 

The result? 

A growing sense of disillusionment. Airline reward programs, once seen as relationship builders, are now viewed as extractive and often misaligned with customer expectations.

Unsurprisingly, the backlash has been loud:

• Delta’s overhaul of SkyMiles triggered such intense public outcry that the airline had to walk back several changes. 

• United and British Airways also faced mounting criticism after reducing elite perks and inflating redemption costs – both airlines were forced to reverse parts of their rollouts following customer uproar.

The irony is hard to miss: loyalty programs are undermining the very loyalty they were meant to build.

And while travelers once put up with small changes in exchange for aspirational rewards, the recent wave of devaluations has broken that contract. 

For many, the magic is gone.

So, if loyalty is no longer earned through flying, and the rewards feel increasingly out of reach, what’s next?

Let’s look at where opportunity might still lie.

Startups Are Taking on Loyalty’s Broken Promise

There’s a bright side to all of this.

When legacy systems underdeliver, especially in high-margin categories where customers are both loyal and willing to spend, opportunities for disruption tend to emerge quickly. 

And that’s exactly what we’re seeing in the travel loyalty space.

The frustration with today’s airline reward programs has triggered a wave of entrepreneurial response. 

• Founders and investors are sensing a moment: a chance to reimagine loyalty from the ground up.

• Venture capital has followed suit. 

• In 2024, investment in travel loyalty startups reached an all-time high, nearly half a billion dollars.

Recent VC investments into startup examples include:

• Arcube, a startup building modern airline loyalty infrastructure.

• Superlogic, which raised a Series A to offer experiential, non-monetary rewards.

• Point.me, a fast-growing search engine and booking tool that helps users find and book reward flights using points or miles from various airline and credit card loyalty programs.

At the Lufthansa Innovation Hub, we’re closely tracking a new generation of loyalty disruptors, and we’re seeing some exciting patterns.

• Many of these startups are no longer treating loyalty as a rigid points system. 

• Instead, they view it as a layer of emotional experience, tailored to individual preferences and designed to spark a genuine connection between the brand and the traveler.

In practice, this means shifting from transactional rewards (think: earn 5,000 miles, get €50 off) to more flexible, surprise-driven benefits like early access, exclusive events, and personalized perks based on actual behavior and values.

This evolution is particularly relevant for younger travelers, especially Gen Z, who have never experienced the “golden age” of traditional loyalty programs. 

• They don’t miss award charts or predictable redemption tables. 

• Instead, they expect brands to reward them with relevance, not just rebates. 

• And as this generation’s share of travel spending grows, so too does the pressure on airlines to rethink what loyalty should actually mean in 2025 and beyond.

Curious which startups are leading the loyalty revolution? 

Then stay tuned. 

Our next TNMT Newsletter edition will spotlight the most promising loyalty disruptors shaping the future of air travel.