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They make extra money from fools thinking they can beat the system, not from the people that avoid it. If points systems caused losses then nobody would have t

They make extra money from fools thinking they can beat the system, not from the people that avoid it. If points systems caused losses then nobody would have them. They’re money makers, and that money is coming from someone’s pocket.

fn-mote 1y ago
> If points systems caused losses then nobody would have them. They’re money makers, and that money is coming from someone’s pocket. It sounds like you believe the losses are coming from the people who _have_ the points? That doesn't seem likely to me. It would be a better analysis to say "it's complicated" - * Business travelers earn personally-owned points on their company spending. In this case, the company might be paying higher prices but the individual is being incentivized to continue that because the miles are essentially a kickback. * Personal travelers have an incentive to travel with the same airline for more points, so a kind of lock-in for either (1) those who are not as sensitive to price differences or: (2) those for whom the benefits of the points are high enough to outweigh some higher costs acquiring them. * In the same vein, a points system that encourages a traveler to stay with the same airline can give _that airline_ greater profits from _that consumer_, even if on a per-flight basis the airline might hypothetically be making less. It's like Costco selling stuff for a cheaper unit price.
- amrocha 1y ago
  We could argue about the monetary value of points, but I don’t think we would get anywhere. Instead I’d rather focus on human nature and induced behaviour. When mcdonald's offers 2 burgers for the price of one, they make money because people who wouldn’t normally eat at mcdonald’s show up. When airlines offer points, they make money because people who normally wouldn’t book flights end up booking them. Even if the points are a good deal, you end up spending more money than you normally would because you’re enticed by the points.
  - ghaff 1y ago
    The incentive is right in the term loyalty points. Tending to stick with one airline, if you travel a lot, has all sorts of status and rewards incentives. Which you can augment with things like branded credit cards, etc.
    - amrocha 1y ago
      Sure, if you value those things then by all means, but it’s strictly speaking a poor financial decision
      - ghaff 1y ago
        For people who travel by air a lot, even things that make that travel even marginally more comfortable are worth it.
        amrocha 1y ago
        Not really. I fly a lot. Lounges are entirely superfluous. Business class is overkill when premium economy exists. Boarding early is silly, the plane takes off at the same time. People just like feeling like they’re special, and they think points are a cheaper way of getting special treatment. In practice they’re not tough.
- account42 1y ago
  > Business travelers earn personally-owned points on their company spending. In this case, the company might be paying higher prices but the individual is being incentivized to continue that because the miles are essentially a kickback. Yes and tax authorities should fix that loophole.

fn-mote 1y ago

> If points systems caused losses then nobody would have them. They’re money makers, and that money is coming from someone’s pocket. It sounds like you believe the losses are coming from the people who _have_ the points? That doesn't seem likely to me. It would be a better analysis to say "it's complicated" - * Business travelers earn personally-owned points on their company spending. In this case, the company might be paying higher prices but the individual is being incentivized to continue that because the miles are essentially a kickback. * Personal travelers have an incentive to travel with the same airline for more points, so a kind of lock-in for either (1) those who are not as sensitive to price differences or: (2) those for whom the benefits of the points are high enough to outweigh some higher costs acquiring them. * In the same vein, a points system that encourages a traveler to stay with the same airline can give _that airline_ greater profits from _that consumer_, even if on a per-flight basis the airline might hypothetically be making less. It's like Costco selling stuff for a cheaper unit price.

amrocha 1y ago
We could argue about the monetary value of points, but I don’t think we would get anywhere. Instead I’d rather focus on human nature and induced behaviour. When mcdonald's offers 2 burgers for the price of one, they make money because people who wouldn’t normally eat at mcdonald’s show up. When airlines offer points, they make money because people who normally wouldn’t book flights end up booking them. Even if the points are a good deal, you end up spending more money than you normally would because you’re enticed by the points.
- ghaff 1y ago
  The incentive is right in the term loyalty points. Tending to stick with one airline, if you travel a lot, has all sorts of status and rewards incentives. Which you can augment with things like branded credit cards, etc.
  - amrocha 1y ago
    Sure, if you value those things then by all means, but it’s strictly speaking a poor financial decision
    - ghaff 1y ago
      For people who travel by air a lot, even things that make that travel even marginally more comfortable are worth it.
      - amrocha 1y ago
        Not really. I fly a lot. Lounges are entirely superfluous. Business class is overkill when premium economy exists. Boarding early is silly, the plane takes off at the same time. People just like feeling like they’re special, and they think points are a cheaper way of getting special treatment. In practice they’re not tough.
account42 1y ago
> Business travelers earn personally-owned points on their company spending. In this case, the company might be paying higher prices but the individual is being incentivized to continue that because the miles are essentially a kickback. Yes and tax authorities should fix that loophole.