And Bernie Madoff is behind bars? As airlines make final guts to their frequent flyer programs, they soar in value thanks to non existent regulation: AA and UA FF programs are worth more than the airlines themselves
nice job by law enforcement and regulators. If ordinary people did this they’d be doing hard time:
The article is old -- published in 2017. One wonders what the breakdown is today.
However, one part of the article is spot on: "the most profitable co-brand partnership is only useful if customers perceive value in the airline mileage currency." According to the article, it's the sale of miles by the airline to the credit card issuers that is bringing in the huge profits -- "get miles without flying by using the credit card". Will the constant devaluations of what miles can buy (all three programs) and reduction of benefits attached to having the card itself (Delta, I'm looking at you) kill the golden goose by making the "miles" less attractive?
Put another way, at what point does the consumer go to a cash-back credit card to earn hard cash instead of trying to earn (increasingly less valuable) miles? When that point is reached, the value of the "loyalty" program nosedives and the income stream from the credit card companies dries up. Suddenly miles are earned only by flying and again become ancillary to the income stream, and are a cost rather than a profit.
Pretty sure if you or I operated this kind of mixed game of chance/Ponzi Scheme/Straight up fraud we would be in federal custody. They are on a path to give mo free flights to anyone even as they have carefully hide behind the thinnest veneer of plausible deniability. They are Exquisitely Madoffian. They are selling perhaps billions of miles with no present intent of honoring them. And yes it is far worse now than even in 2017.