It was the late 1970's. I started traveling to Europe frequently on business, almost always on Pan Am, a great airline that we had to use, being government travelers. Pan Am's fleet was extensive, its service incomparable, and the staff incredible. I was always given free access to the Clipper Club on Dulles International's lower level. The one with the small blue Pan Am meatball on a brass plaque at the door. I eventually joined and remained a member until the club and Pan Am vanished in 1991.
On one of those journeys the counter person enrolled me in the FT Program, which he jokingly referred to as the "Federal Traveler" program. It was actually Pan Am's Frequent Traveler program, hence the name FT. The Program morphed into WorldPass (no spaces) at a later date. I still have some of the credentials.
The benefits were immediate: upgrade to Clipper or to First with no additional charge; ground transport to a hotel when landing, including a helicopter ride from JFK to Manhattan; upgraded amenities to take home, etc.
The bag tag, made all the difference--showing up with that on luggage guaranteed special treatment on top of the special treatment that the airline was already known for. Like the Intercontinental Hotel's Six Continent's Club discreet red sticker, it signaled a need to pay more attention to the individual carrying the luggage. These were programs to which you were invited, not one's that you joined. They relied on personal relationships with the traveler, and were not concerned with miles or points earned. It was a moment of giving back from the service provider to those who used their service more frequently.
Perhaps seeing what Pan Am was doing, American Air Lines loyalty program, the AAdvantage program, started in 1981, several years later. And the rest, as they say, is history.