3 ms·
I don't know the details of the industry but that is revenue ignoring expenses. Presumably it is orders of magnitude more expensive to fly the planes than manag
by BoiledCabbage 3y ago
I don't know the details of the industry but that is revenue ignoring expenses. Presumably it is orders of magnitude more expensive to fly the planes than manage a rewards system.
I expect the author is saying that if your split each up into profit, the profit is greater on the rewards program than the flying part.
- goldfish3 3y agoRevenue ignoring expenses is also known as revenue.
- bdunks 3y agoThe points are not "free" to airlines, though. (Without looking at every airlines 10k, at least one mechanism is to): Account for them as a liability on the balance sheet as "deferred revenue." They then recognize the revenue when the points are redeemed, meaning they incur the same blended Cost per Available Seat Mile (CASM) as a purchased ticket. That's in addition to the significant costs of managing a loyalty program (IT, Partnerships, Legal, etc.)