The Economy, Stupid The Cost of Loyalty Programs
Aug 22, 2024
Loyalty programs in the airline industry have evolved into significant financial assets, affecting consumer behavior since the 1980s. Discover how airlines monetize points and the psychological appeal driving customer loyalty. Dive into the complexities of Qantas and Velocity, and explore savvy strategies for maximizing rewards. There's also a focus on the implications of data privacy, examining how airlines harvest consumer information and the potential risks. Join experts as they highlight the need for clearer regulations and consumer awareness.
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Airlines Became Financial And Data Firms
- Frequent flyer programs evolved from simple rewards into complex financial-like systems tied to credit and data.
- Airlines now treat loyalty points as created currency sold to banks and partners for real revenue.
Points Tied To Spending Not Miles
- Airlines moved from mileage to spend-based rewards and complex fare classes.
- That shift made points valuation depend on spending and fare rules, not just miles flown.
Points Are Airline-Minted Currency
- Airlines create loyalty points out of nothing and monetize them by selling to banks and partners.
- Wall Street often values loyalty programs higher than the airline operations themselves.