Issue #11: The End of the Loyalty Participation Trophy

American Airlines recently made loyalty news with a program change that would have been unthinkable years ago: it will no longer award points for Basic Economy seats—even when booked directly on AA.com.

This isn’t without precedent. Delta Air Lines implemented a similar rule back in early 2022. (Frankly, I’m surprised it took another airline four years to follow.)

What Delta and AA are effectively saying is: you, the people in the way back of the plane in the cheapest seats, are no longer worth rewarding from a loyalty perspective. Sounds harsh. And it feels like a line-crossing moment in loyalty—one we’re likely to see more of.

But you know what? I actually agree with it. More on why in a minute.

I get the gut reaction. I’ve long believed loyalty programs should reward all forms of engagement, including spend, and shouldn’t gate earning simply because a transaction didn’t happen through a preferred channel. But most brands have gone the opposite direction, declaring direct booking the sacred cow of loyalty.

And that makes sense for many brands. That’s where profitability lives. That’s where data collection is strongest. That’s where brands control the experience. So why is that no longer enough?

Because the airlines aren’t pretending anymore.

There’s no longer the illusion that a highly price-driven, infrequent Basic Economy flyer might “someday” earn enough points for a free flight. The math doesn’t support it, and neither does behavior. These customers are motivated almost entirely by price, not future rewards, and airlines know it.

American and Delta are explicitly saying their loyalty programs are not for everyone. That honesty matters, even if it’s uncomfortable. They’re not improving loyalty with this move, but they are clarifying its purpose. And that’s the right call.

I’ve written before that loyalty programs across industries have become bloated: enrolling everyone, over-promising, under-delivering, and diluting meaning in the process. “Millions of members” becomes the KPI instead of incremental behavior.

In every program I’ve personally overseen—or supported as a provider—the pattern was the same: a small subset of members drove not only the majority of spend, but nearly all of the incrementality.

Stop auto-enrolling anyone with an email address. Instead, require a spend threshold and visit cadence before someone can actually be a member—not just qualify for a higher tier. This reframes loyalty as earned status, not a participation trophy, while also reducing liability and improving engagement rates.

Consumers who engage with your brand in meaningful ways are paying attention. Reward actions like leaving reviews, completing quizzes, engaging digitally, or advocating to friends and colleagues. Loyalty shows up in many forms, not just how many discounts someone can accumulate.

Let promotions do what they’re meant to do: drive sales at key moments and close revenue gaps. When everything promotional lives behind loyalty, you’re just filling your database with value chasers. Trust me. I learned this the hard way while trying to grow programs. Loyalty members should get gifts, access, and benefits with minimal strings attached, not just the same discounts everyone else gets.

We’ve become tier-happy as an industry, and it’s contributing to program bloat. “Silver” members feel good about moving up from the base tier, but beyond a slightly higher earn rate, most benefits will never materialize. Fewer tiers send a clearer message about where the bar truly is for meaningful value.

Our obsession with frictionless everything has made loyalty so easy to join that some consumers don’t even know they’re enrolled. When a cashier asks, “You have $2 in rewards, do you want to use them?” is that loyalty… or mild embarrassment? (Yes, this happened to me at Athleta last week.) Ask members to opt in, set goals, or choose benefit paths. Those who do are signaling real intent.

None of this is easy. Especially when the industry (and Wall Street) loves some of these misguided metrics.

But loyalty isn’t about making everyone feel included. It’s about changing behavior that matters.

If your program can’t clearly articulate who it’s for (and just as importantly, who it’s not for) then it’s not a loyalty program. It’s a discount engine with a database attached.

American Airlines didn’t make loyalty better with this move. But they did make it more honest. And right now, honesty might be exactly what loyalty programs need.

YOUR POV

Are you feeling the pressure for more members? How have you been able to focus on quality over quantity?