6 ms·

When considering the exploitation of these airline mileage opportunties, one should never forget the 'Pudding Man'. http://www.snopes.com/business/deals/pudding

by dpflan 11y ago

When considering the exploitation of these airline mileage opportunties, one should never forget the 'Pudding Man'. http://www.snopes.com/business/deals/pudding.asp http://www.snopes.com/business/deals/pudding.asp Of course this makes me wonder about how the exploited companies respond. The exploiters can be identified (are companies afraid of lawsuits and public defamation)? Is such a story like an advertisement that may make someone (a reader) slightly more likely to use Avis (in this case) in the future?

userbinator 11y ago
I don't think they were actually "exploited", because the money just came from somewhere else. From your article: "Because the airlines sell the frequent-flyer miles to Healthy Choice for the promotion for about two cents a mile, they aren't out a thing. Healthy Choice likely also made on the deal, because the value of the publicity surrounding Phillips' pudding run probably exceeds the actual dollar cost incurred by the company for purchasing those miles."
- dpflan 11y ago
  Perhaps we should use the definition of exploit that pertains simply to making full use of and to deriving benefit from a resource rather than the definition of doing something selfishly and in an unfair manner?
- ubernostrum 11y ago
  Well, things like this did ultimately have an effect on airline frequent-flyer programs, primarily in that every program which offers status-based perks for reaching mileage totals now only considers mileage that comes from actually putting your butt on a plane (unofficially referred to as "BIS" -- for "butt-in-seat" miles, officially referred to as various terms depending on program, such as "elite-qualifying miles" with American Airlines). And of course that also can be gamed through mileage runs, where you simply spend some time searching for cheap long-distance fares on the airline or one of its alliance partners, and use that to rack up extra qualifying miles. Which in turn has led to countermeasures from the airlines: ultra-discounted fares on partner airlines often earn only a tiny fraction of mileage flown, and two of the three US-based legacy carriers (Delta and United) now also have a minimum dollars-spent requirement in addition to the mileage-flown requirement. Largely this is because the miles themselves, as an alternate way to purchase airline tickets, are not much of a hit, but the status perks are. Airlines do some interesting balancing acts in terms of wanting to attract people who fly a lot (and thus spend money on tickets) vs. not wanting to be so top-heavy with people entitled to free perks that you end up losing money on them.
  - fennecfoxen 11y ago
    As a rare exception, Delta will in fact let you earn bona-fide Medallion Qualifying Miles by using their fanciest credit card (no, not the Gold card, the $400/yr Delta Reserve card that also gets you into the lounges and counts as half-a-status-level for first-class upgrades)
    - ubernostrum 11y ago
      The old US Airways card from Barclays did it too, but the reissue as AA-branded moved that perk to only the upper tier of the card, and drastically raised the spend requirement. Used to be, $25k spend would convert 10k miles to US PQM. Now, $20k spend converts 5k miles to AA EQM, and you can do it twice a year (so max 10k conversion from $40k spend).
    - sweettea 11y ago
      Also, if you spend $25k on their platinum card, the spending requirement is waived for all levels.
    - Dylan16807 11y ago
      How much do you have to spend to get $400 in miles?
  - vidarh 11y ago
    United used to be my favourite airline for flying London to San Francisco, because while their economy seating were so-so, their perks as you racked up the miles were vastly better than e.g. British Airways or Virgin (far more frequent upgrades, for example, and a year of free premium economy upgrade after just a couple of roundtrips). Given that the price per seat was not very different, it was crazy how big the difference in perks was, and totally unsurprising that they've tightened up....
  - fweespeech 11y ago
    I'm pretty sure most of the branded cards [e.g. Southwests Cards via Chase] provide "qualifying miles".
x5n1 11y ago
When the companies do it, it's not exploitation. When the consumers do it, it is?
violentvinyl 11y ago
I would venture a guess that the publicity generated by something like this far outweighs the REAL cost to the company. For people who collect air miles (and especially on FT), the value of the miles is very important, but it never takes into account the wholesale price (which, from my research, is a closely guarded secret). I would assume, at some point, Avis must have to pay the airline where these points are redeemed (whether that's through a few different intermediaries or not), but you would assume that they are NOT paying the retail cost of the flights. This is why you can do things like trading loyalty points from flights for car rentals and vice versa. They are so heavily diluted by these programs, and people are (I assume) drawn in by the promise of points, it's all still a great deal for these companies, even if someone ocassionally figures out a way to beat the system. Much the way one lucky gambler doesn't exactly break the bank at a casino, but insteads give everyone else a bit of encouragement to try and beat the system themselves.
- milesskorpen 11y ago
  From what I've seen, airlines account for their point liability in a number of round trip tickets. I believe the average liability incurred across the industry is $64 per ticket. About 75% of points get redeemed (since people who get a lot would tend to use them), so the total cost of a ticket if everything was redeemed might be around $64/.75 = $85 USD. Seems like tickets range in cost, but 50k seems a fair estimate of the average flight (probably a bit high). So $0.0017 per mile incremental cost (higher opportunity cost). This INCLUDES all the people gaming the system right now, though. And Avis is paying the airline for the points, so the airline wins no matter what happens — it's a billion+ dollar profit center for them. Avis might be a bit more annoyed.
  - vinceguidry 11y ago
    > And Avis is paying the airline for the points, so the airline wins no matter what happens — it's a billion+ dollar profit center for them. Well, they usually have corporate sales reps hammering out the particulars for big promos like this. Avis is certainly paying the airlines something, but as the size of the buy is enormous, they're going to get somewhere south of the wholesale price on the miles. Both parties therefore are eating the cost of the abusers.
giarc 11y ago
I was involved in a recent airline mistake situation. AirCanada accidentally listed an $8000 flight pass for $800. People are complaining that AirCanada is not honouring these passes and there's even a class action lawsuit starting up. I wonder though for those people that get heavily involved, will this mean years of getting "randomly" bumped from flights? Will AirCanada 'punish' these people?
- Roodgorf 11y ago
  I highly doubt it. Why would they take the risk in giving themselves a worse reputation? What would they stand to gain financially anyway? It's interesting that we seem to naturally assume that the business reaction would be congruent with what might be the reaction at the human level.
  - lifeisstillgood 11y ago
    Interesting - homo economicus might well be companies not people...
  - giarc 11y ago
    I would agree, but that's assuming everyone in the company is acting on behalf of and with the intentions of the company. I think there are plenty of examples where a company representative acts in a manner that is completely against what the company would want (see corporate Twitter accounts).
    - Roodgorf 11y ago
      Fair enough, and in other cases I could see this as being an issue (particularly with smaller businesses perhaps where employees may identify more strongly with their company and its success), but in this case I just don't see it happening. As I said it doesn't really make sense at a company level, and on a personal level who would be the one motivated to punish these customers in such a way? It seems the onus would be on some individual(s) in the ticketing system to "Hey, that's one of those jerks from that lawsuit! I'll teach them to cause trouble with my company." That just doesn't seem likely to me.
larrys 11y ago
Lawsuit for what? Hire an attorney to go after the miles and pay them and hope that he wins? Do you think a major corporation (who must handle simultaneously hundreds if not thousands of lawsuits over everything and anything) really cares? And almost certainly no class action (assuming in a country that allows class actions) how many people have this same issues? Public shaming? The opposite. Great free publicity better that it is made public and then they rectify it by giving him what he was denied in the first place. (And like you say to kids "all better now"). Do you honestly think an ordinary person will think the company should allow this type of thing and that this guy isn't obviously taking advantage of them? It's like someone taking all of the free plastic silverware at a restaurant most people recognize there is an implied limit. 37 rentals for this purpose kind of speaks for itself.
danparsonson 11y ago
Also on a considerably smaller scale (at least in terms of the reward, such as it was): http://www.independent.co.uk/news/banana-economics-buy-942lb-of-fruit-give-it-away--and-make-pounds-25-profit-1283219.html http://www.independent.co.uk/news/banana-economics-buy-942lb...
vijayr 11y ago
For every story that comes out (either written by the exploiters themselves or found out by others), I wonder how many more there are that quietly hack the system and don't tell anyone?
smpetrey 11y ago
That is absolutely wonderful.

by dpflan 11y ago

userbinator 11y ago

I don't think they were actually "exploited", because the money just came from somewhere else. From your article: "Because the airlines sell the frequent-flyer miles to Healthy Choice for the promotion for about two cents a mile, they aren't out a thing. Healthy Choice likely also made on the deal, because the value of the publicity surrounding Phillips' pudding run probably exceeds the actual dollar cost incurred by the company for purchasing those miles."

dpflan 11y ago
Perhaps we should use the definition of exploit that pertains simply to making full use of and to deriving benefit from a resource rather than the definition of doing something selfishly and in an unfair manner?
ubernostrum 11y ago
Well, things like this did ultimately have an effect on airline frequent-flyer programs, primarily in that every program which offers status-based perks for reaching mileage totals now only considers mileage that comes from actually putting your butt on a plane (unofficially referred to as "BIS" -- for "butt-in-seat" miles, officially referred to as various terms depending on program, such as "elite-qualifying miles" with American Airlines). And of course that also can be gamed through mileage runs, where you simply spend some time searching for cheap long-distance fares on the airline or one of its alliance partners, and use that to rack up extra qualifying miles. Which in turn has led to countermeasures from the airlines: ultra-discounted fares on partner airlines often earn only a tiny fraction of mileage flown, and two of the three US-based legacy carriers (Delta and United) now also have a minimum dollars-spent requirement in addition to the mileage-flown requirement. Largely this is because the miles themselves, as an alternate way to purchase airline tickets, are not much of a hit, but the status perks are. Airlines do some interesting balancing acts in terms of wanting to attract people who fly a lot (and thus spend money on tickets) vs. not wanting to be so top-heavy with people entitled to free perks that you end up losing money on them.
- fennecfoxen 11y ago
  As a rare exception, Delta will in fact let you earn bona-fide Medallion Qualifying Miles by using their fanciest credit card (no, not the Gold card, the $400/yr Delta Reserve card that also gets you into the lounges and counts as half-a-status-level for first-class upgrades)
  - ubernostrum 11y ago
    The old US Airways card from Barclays did it too, but the reissue as AA-branded moved that perk to only the upper tier of the card, and drastically raised the spend requirement. Used to be, $25k spend would convert 10k miles to US PQM. Now, $20k spend converts 5k miles to AA EQM, and you can do it twice a year (so max 10k conversion from $40k spend).
  - sweettea 11y ago
    Also, if you spend $25k on their platinum card, the spending requirement is waived for all levels.
  - Dylan16807 11y ago
    How much do you have to spend to get $400 in miles?
- vidarh 11y ago
  United used to be my favourite airline for flying London to San Francisco, because while their economy seating were so-so, their perks as you racked up the miles were vastly better than e.g. British Airways or Virgin (far more frequent upgrades, for example, and a year of free premium economy upgrade after just a couple of roundtrips). Given that the price per seat was not very different, it was crazy how big the difference in perks was, and totally unsurprising that they've tightened up....
- fweespeech 11y ago
  I'm pretty sure most of the branded cards [e.g. Southwests Cards via Chase] provide "qualifying miles".

x5n1 11y ago

When the companies do it, it's not exploitation. When the consumers do it, it is?

violentvinyl 11y ago

I would venture a guess that the publicity generated by something like this far outweighs the REAL cost to the company. For people who collect air miles (and especially on FT), the value of the miles is very important, but it never takes into account the wholesale price (which, from my research, is a closely guarded secret). I would assume, at some point, Avis must have to pay the airline where these points are redeemed (whether that's through a few different intermediaries or not), but you would assume that they are NOT paying the retail cost of the flights. This is why you can do things like trading loyalty points from flights for car rentals and vice versa. They are so heavily diluted by these programs, and people are (I assume) drawn in by the promise of points, it's all still a great deal for these companies, even if someone ocassionally figures out a way to beat the system. Much the way one lucky gambler doesn't exactly break the bank at a casino, but insteads give everyone else a bit of encouragement to try and beat the system themselves.

milesskorpen 11y ago
From what I've seen, airlines account for their point liability in a number of round trip tickets. I believe the average liability incurred across the industry is $64 per ticket. About 75% of points get redeemed (since people who get a lot would tend to use them), so the total cost of a ticket if everything was redeemed might be around $64/.75 = $85 USD. Seems like tickets range in cost, but 50k seems a fair estimate of the average flight (probably a bit high). So $0.0017 per mile incremental cost (higher opportunity cost). This INCLUDES all the people gaming the system right now, though. And Avis is paying the airline for the points, so the airline wins no matter what happens — it's a billion+ dollar profit center for them. Avis might be a bit more annoyed.
- vinceguidry 11y ago
  > And Avis is paying the airline for the points, so the airline wins no matter what happens — it's a billion+ dollar profit center for them. Well, they usually have corporate sales reps hammering out the particulars for big promos like this. Avis is certainly paying the airlines something, but as the size of the buy is enormous, they're going to get somewhere south of the wholesale price on the miles. Both parties therefore are eating the cost of the abusers.

giarc 11y ago

I was involved in a recent airline mistake situation. AirCanada accidentally listed an $8000 flight pass for $800. People are complaining that AirCanada is not honouring these passes and there's even a class action lawsuit starting up. I wonder though for those people that get heavily involved, will this mean years of getting "randomly" bumped from flights? Will AirCanada 'punish' these people?

Roodgorf 11y ago
I highly doubt it. Why would they take the risk in giving themselves a worse reputation? What would they stand to gain financially anyway? It's interesting that we seem to naturally assume that the business reaction would be congruent with what might be the reaction at the human level.
- lifeisstillgood 11y ago
  Interesting - homo economicus might well be companies not people...
- giarc 11y ago
  I would agree, but that's assuming everyone in the company is acting on behalf of and with the intentions of the company. I think there are plenty of examples where a company representative acts in a manner that is completely against what the company would want (see corporate Twitter accounts).
  - Roodgorf 11y ago
    Fair enough, and in other cases I could see this as being an issue (particularly with smaller businesses perhaps where employees may identify more strongly with their company and its success), but in this case I just don't see it happening. As I said it doesn't really make sense at a company level, and on a personal level who would be the one motivated to punish these customers in such a way? It seems the onus would be on some individual(s) in the ticketing system to "Hey, that's one of those jerks from that lawsuit! I'll teach them to cause trouble with my company." That just doesn't seem likely to me.

larrys 11y ago

Lawsuit for what? Hire an attorney to go after the miles and pay them and hope that he wins? Do you think a major corporation (who must handle simultaneously hundreds if not thousands of lawsuits over everything and anything) really cares? And almost certainly no class action (assuming in a country that allows class actions) how many people have this same issues? Public shaming? The opposite. Great free publicity better that it is made public and then they rectify it by giving him what he was denied in the first place. (And like you say to kids "all better now"). Do you honestly think an ordinary person will think the company should allow this type of thing and that this guy isn't obviously taking advantage of them? It's like someone taking all of the free plastic silverware at a restaurant most people recognize there is an implied limit. 37 rentals for this purpose kind of speaks for itself.

danparsonson 11y ago

Also on a considerably smaller scale (at least in terms of the reward, such as it was): http://www.independent.co.uk/news/banana-economics-buy-942lb-of-fruit-give-it-away--and-make-pounds-25-profit-1283219.html http://www.independent.co.uk/news/banana-economics-buy-942lb...

vijayr 11y ago

For every story that comes out (either written by the exploiters themselves or found out by others), I wonder how many more there are that quietly hack the system and don't tell anyone?

smpetrey 11y ago

That is absolutely wonderful.