Summary
- Airline loyalty programs have evolved into multi-billion dollar profit earners.
- Carriers control loyalty points, sell miles in bulk to companies for profit.
- United Airlines used its MileagePlus program as collateral for a $5 billion loan.
When first designed, airline loyalty programs functioned similarly to the punchcard at one’s local sandwich shop, offering a free flight after passengers had purchased tickets for a number of previous journeys. With this kind of system, loyalty programs were designed to incentivize exactly what one would expect: loyalty to a given airline.
However, the concept of the original airline loyalty program, however, is virtually nonexistent today, as airline loyalty programs have expanded to do something that no one could have originally imagined. Today, major loyalty programs, such as Delta Air Lines’ SkyMiles program or United’s MileagePlus program,…