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Airlines are a lot like central banks (2020)
- altcognito 3y agoShould be noted that this is from March 2020
- sand500 3y agoThis post is from 2020 when all air travel ceased. It would be nice to see an update with the new creative airline miles schemes.
- deleted 3y ago[deleted]
- OO000oo 3y agoCould someone elaborate? What are the new airline miles schemes?
- cratermoon 3y agoInstead of the old "fly X miles get X points", it's now "fly X miles and the airline determines at the time of the flight how many points its worth". That trend started in 2019, but it took off as the pandemic wound down.
- strictnein 3y agoMaybe it's different for other airlines, but Delta shows you the miles you'll earn when you book the flight.
- cratermoon 3y agoI'm not familiar with all airlines. The important change is that the rewards vary and the airlines can and do change them at any time, subject to whatever marketing or sales numbers they are targeting.
- blitzar 3y agoInstead of the old "fly X miles get X points", it's now "pay X air fare get X points".
- cratermoon 3y agoI 100% agree I would love to see a follow-up. The post made predictions about post-pandemic air travel, I wonder if they've panned out. As for the new miles schemes: airlines used to publish charts showing you earned for X points per mile. The shorthand "miles" referring to FF points is telling. Now airlines use "Dynamic award pricing". It's impossible to tell in advance how much your points are worth. https://thriftytraveler.com/guides/points/points-principles-what-is-dynamic-award-pricing/ https://thriftytraveler.com/guides/points/points-principles-...
- bunga-bunga 3y agoA day doesn’t go by without someone claiming a company is a bank. Apple is a bank, Starbucks is a bank, my hospital is a bank, my cat prints money.
- anononaut 3y agoThey're notably distinct in that you can simply exit their system and choose not to participate. Calling them banks is apt, I suppose, but calling them central banks takes gravitas away from the most heinous, utterly unethical institutions that are the actual central banks.
- banannaise 3y agoJust because it sounds silly on its face doesn't make it not true. The basic premise is solid: many of the most successful corporations today make a large portion of their profit from convincing customers to park funds in their accounts, and investing that money in financial instruments. Everyone's got millions of unsecured creditors at zero interest. What could possibly be problematic about that?
- javier123454321 3y agoYeah, the truth is we live on a Casino Chip Society https://brettscott.substack.com/p/casino-chip-cashless-society https://brettscott.substack.com/p/casino-chip-cashless-socie.... And it is true that companies love this status quo.
- 3y ago
- Shrezzing 3y agoIt seems like false equivalence to state that Central Banks and airlines are the same because they both create an intangible asset. Most nation's central banks bailed out airlines (if by proxy) just a few days after this was originally posted, which should be a fairly big indicator that airlines are far from akin to Central Banks.
- dermesser 3y agoBut that's only because (unfortunately for the airlines) miles are not a universally accepted currency. Just like some poorer countries needing to be bailed out by the IMF, despite issuing their own currency.
- noslenwerdna 3y agoThe strange way Chuck E Cheese is like a central bank.
- harryposner 3y agoYou joke, and yet [Lucas 1988] uses an amusement park as a toy model to demonstrate how monetary shocks can affect real economic activity. The key difference between this and Chuck E. Cheese, though, is that Chuck E. Cheese is the only merchant that accepts their tokens for any sort of payment. [Lucas 1988] https://home.uchicago.edu/~vlima/courses/econ203/fall01/Lucas_wedo.pdf https://home.uchicago.edu/~vlima/courses/econ203/fall01/Luca...
- johnzim 3y agoTo be fair to the article, the title is "the strange way airlines are actually central banks", implying that it's just in that one way that they are central banks.
- yieldcrv 3y agoanalogies compare dissimilar things with a common attribute it is almost impossible to judge an analogy, despite how common it is to do so
- d3vmax 3y agoCentral bank comparison is farfetched here.
- victorp13 3y agoWas going to post the exact same here. Economics major. Making this comparison shows lack of insight into what a central bank actually does, or the power it yields.
- spraveenitpro 3y ago[dead]
- jmopp 3y agoRelevant Wendover video: https://youtu.be/ggUduBmvQ_4 https://youtu.be/ggUduBmvQ_4
- logshipper 3y agoAlso relevant Byrne Hobart post on how frequent flyer miles programs are worth more than the airlines themselves: https://archive.is/yUTay https://archive.is/yUTay
- wonderwonder 3y agoThis is a pretty interesting read. There is definitely a similarity to crypto currency here as well. Wonder why the SEC does not categorize airline points as securities and come after them...
- HWR_14 3y agoBecause people don't buy FF points as a speculative investment. If you said "I am starting wonderwonder's airline. I will only sell tickets based on FFPs. I am currently selling FFPs at a discount to what I will sell them at later and they are transferable. You should buy them now to resell them later" they would be securities.
- hammock 3y ago>Because people don't buy FF points as a speculative investment Why not? People do it with forever stamps. >If you said "I am starting wonderwonder's airline. I will only sell tickets based on FFPs. I am currently selling FFPs at a discount to what I will sell them at later and they are transferable. You should buy them now to resell them later" they would be securities. Might as well be the way the USPS advertises forever stamps.
- HWR_14 3y agoPeople buy stamps that are guaranteed to rise at less than the rate of inflation as an investment? And the USPS advertises it that way?? I'm not convinced. I would need some evidence of that. (I am aware that stamps may be used in prison as a currency, but that's a special case.)
- pgwhalen 3y agoYou can sell forever stamps. You can't sell airline points.
- breser 3y agoSee the Howey Test: https://www.investopedia.com/terms/h/howey-test.asp https://www.investopedia.com/terms/h/howey-test.asp Airline Miles don't grant you access to a portion of the profits from the airline. They aren't an investment. They are a currency for future travel.
- citizenkeen 3y agoMax Berry's book Jennifer Government[1] posits that WW3 will be fought over airline miles. [1]: https://en.wikipedia.org/wiki/Jennifer_Government https://en.wikipedia.org/wiki/Jennifer_Government
- suoduandao2 3y agoThere’s a blast from the past. I played the associated online game back in the day, dang I’m old.
- Paul-Craft 3y agoIt looks like it's still around: https://www.nationstates.net/ https://www.nationstates.net/
- indus 3y agoI’m sure the author has a sequel planned——Cashback Planet :-/
- jpcfl 3y agoSide bar: Does anybody else dislike this one-sentence-per-paragraph format?
- ada1981 3y agoI dislike it less than the hyphen-between-every-word format.
- cratermoon 3y agoI dislike it, but there's something maybe related to it that I do like and recommend. Unsurprisingly, it appeared here on HN about a year ago. One sentence per line: https://news.ycombinator.com/item?id=31808093 https://news.ycombinator.com/item?id=31808093 I started writing like that after I saw it here and it's definitely improved my writing process. Note that this is not one sentence per paragraph. After my source writing (in markdown) is processed to whatever output format, the paragraphs look normal. Just like the comment you are reading now.
- jpcfl 3y agoYes, I use one sentence per line for things like latex or markdown, but I mainly do that because of line-based diff tools. For me, reading one sentence per paragraph is fine for short things like comments, but I find it gets exhausting after 8~10 sentences. It feels like the author is unable to focus and expand on one thing, and keeps moving on new points over and over again, or like every sentence is of equal importance and some pivotal revelation in the story.
- A_Duck 3y ago>> Unfortunately, in the EU, rules concerning credit card payments and fees make co-branded credit cards unattractive to airlines and banks In the EU card fees are capped and this is a good thing. AMEX extracting excess fees from my local coffee shop and then giving (some) of it back to me as air miles is the dysfunction.
- indus 3y agoI was shocked to find out that there is a 3-legged marketplace between acquirers, issuers, and merchants that funds a trillion dollar business model where neither the merchant nor the customer gets benefited. Large merchants like Walmart and Amazon pay 50% less fees for every dollar compared to smaller merchants—-Smaller merchants is the channel where the most cashback accrues to cardholders.
- tracker1 3y agoCostco play pretty hardball with them as well. Only supporting one payment processor for CC payments. No idea where their fees/margins are, but guessing they're lower than just about anyone else as a merchant. Winco, as a contrast doesn't even play the game at all.
- gaoshan 3y agoMany small merchants just refuse as well. Try to use Amex at the local Chinese food marts around me and they will not take them (and I don't blame them).
- r00fus 3y agoA tax by any other name... is still a tax. That it's levied by our financial elite and not by the government is the more concerning part.
- thedaly 3y agoIt isn't a tax if you can opt out of paying it. The part I find most concerning is the shift away from accepting cash at various retailers.
- efitz 3y agoI just want them to upgrade my damn seat. United 1k, hundreds of thousands of lifetime miles, and they almost never upgrade me even with their new “plus points” model which appears just to be some kind of fixed price bid for increasing your place on the waitlist.
- balderdash 3y agoIt’s been my experience over the past ~year (as a top-tier flier on multiple airlines) that the airlines have completely depreciated their frequent flyer programs to the extent that regardless of your status the only thing you really get is, preferred economy seating, not boarding last, and some free checked bags. I used to direct my spend to preferred airlines, now I don’t bother, it literally doesn’t matter. (Not to mention the ~80% devaluation in mile value)
- t3rabytes 3y agoPlatinum Medallion with Delta whose been on 30 segments this year with 2! "complimentary upgrades" across those. I'm going to start just booking first on the major (DL,UA,AA) with the direct flight from my local airport and be done with it. Loyalty doesn't buy anything when everyone has it via credit cards.
- quasse 3y agoThe thing that keeps me on Delta (despite frequent flyer status being worth ~nil) is that fact that they're the only one out of the big three who has not frequently delayed my flights by more than an hour or just cancelled them outright *after* everyone has already boarded the plane. Honestly, I like it this way. Provide good service -> receive customer loyalty.
- pknomad 3y agoAlso United 1K here for 2 years straight. It really depends on the flight segment and the seating class you bought. Flying to/from the hubs? Forget it. Everyone and their mother are 1K for United if you're flying from SFO. United really screwed the pooch by allowing insane amount of people to qualify for 1K. At least you get priority boarding (assuming non-1K members don't line up in 1K pre-boarding) and 1K priority support line.
- kykeonaut 3y agoHa, I just posted about this in another discussion about an hour ago [0]. It astonishes me how a link to an article tucked away in a thread can find itself in the top page of HN an hour later. [0] https://news.ycombinator.com/context?id=36943868 https://news.ycombinator.com/context?id=36943868
- flygurl 3y agoThat’s where I first read it! Very interesting analogy. The automatic title mangling somewhat hides that the author intends it to be an analogy only, not an identity.
- shark1 3y agoIt's different. Nowadays, central banks create money out of nothing. Companies can create these loyalty points but they need to pay the customer back with services when they come back to exchange it.
- JohnFen 3y agoPersonally, I ignore frequent flier points (and similar programs in other industries). They add additional complication that I don't need to something that's already a substantial hassle.
- bartvk 3y ago> According to some valuations, these programs are worth just as much as the airline itself Interesting source about this: https://www.wsj.com/articles/are-frequent-flier-programs-really-worth-more-than-airlines-11615810430 https://www.wsj.com/articles/are-frequent-flier-programs-rea... or its archive: https://archive.is/ZOVme https://archive.is/ZOVme