3 ms·

This is a bad customer. I'm surprised the airlines just don't ban him.

nkassis 11y ago
I'm not sure they care. They may be accepting these users because the programs are profitable for them in how they increase normal customers spending patterns. Tightening up the rules or banning these users might be bad PR for them they don't want to deal with.
fennecfoxen 11y ago
It's not strictly about being a bad customer of the airlines... You can get free flights by being bad customers of other businesses offering airline miles (like credit cards) or by defrauding taxpayers (the well-known "buy dollar coins from the Mint" scam). This might even be profitable for the airlines. Sometimes.
imjk 11y ago
It's actually a big circle jerk that benefits the airlines. Most of the strategies that Ben and his cohorts promote is "gaming" credit card signup bonuses. Basically, sign up for X credit card and get X number of of frequent flyer miles. The airlines sell the miles to the cc companies for much cheaper than a consumer could buy and in return get some revenue and customer loyalty. In the case of co-branded credit cards, there's probably some revenue share going on. The credit card companies then incentivize a new customer by giving X frequent flyer miles after X spend threshold. The CC companies make money by charging retailers a merchant fee for transactions. The bonus miles they give to new customers is often itself cheaper than what they'll earn in transaction fee from retailers, but almost certainly after you take into account the lifetime value of the customer. The customer feels as if they got miles for free or super cheap as they often make purchases they would have made anyway on another card. And of course, bloggers like Ben get paid on affiliate fees for promoting specific credit cards.
- biot 11y ago
  I'm surprised these guys haven't gone to the next level and started up their own credit card company. That might allow them to buy frequent flyer miles at the dirt-cheap levels and offer ridiculous signup bonuses for their card. For example, if 100K miles costs them $X, have an annual membership fee of $1.25X and you get 100K miles a year bonus. Or for $12.5X, get 1M miles a year bonus. The use of this as an actual credit card is purely optional. Or is this only financially viable due to the transaction fees the credit card companies get?
  - fweespeech 11y ago
    > Or is this only financially viable due to the transaction fees the credit card companies get? Yes. These reward cards work out to about 1-2% cashback equivalents after the sign up bonuses. From the credit card perspective, the financials are basically identical to their normal "cashback cards". If you are like me and just want a couple free plane tickets a year, you just pick up 4 new credit cards [~160-200,000 points/miles] and cancel them. If you put 100% of your spending on credit cards and just cycle through the sign up bonuses every 3 months, its really easy and 160k miles is 2 round trip tickets a year anywhere domestically, with some leftover.
  - deleted 11y ago
    [deleted]

I'm not sure they care. They may be accepting these users because the programs are profitable for them in how they increase normal customers spending patterns. Tightening up the rules or banning these users might be bad PR for them they don't want to deal with.

fennecfoxen 11y ago

It's not strictly about being a bad customer of the airlines... You can get free flights by being bad customers of other businesses offering airline miles (like credit cards) or by defrauding taxpayers (the well-known "buy dollar coins from the Mint" scam). This might even be profitable for the airlines. Sometimes.

imjk 11y ago

It's actually a big circle jerk that benefits the airlines. Most of the strategies that Ben and his cohorts promote is "gaming" credit card signup bonuses. Basically, sign up for X credit card and get X number of of frequent flyer miles. The airlines sell the miles to the cc companies for much cheaper than a consumer could buy and in return get some revenue and customer loyalty. In the case of co-branded credit cards, there's probably some revenue share going on. The credit card companies then incentivize a new customer by giving X frequent flyer miles after X spend threshold. The CC companies make money by charging retailers a merchant fee for transactions. The bonus miles they give to new customers is often itself cheaper than what they'll earn in transaction fee from retailers, but almost certainly after you take into account the lifetime value of the customer. The customer feels as if they got miles for free or super cheap as they often make purchases they would have made anyway on another card. And of course, bloggers like Ben get paid on affiliate fees for promoting specific credit cards.

biot 11y ago
I'm surprised these guys haven't gone to the next level and started up their own credit card company. That might allow them to buy frequent flyer miles at the dirt-cheap levels and offer ridiculous signup bonuses for their card. For example, if 100K miles costs them $X, have an annual membership fee of $1.25X and you get 100K miles a year bonus. Or for $12.5X, get 1M miles a year bonus. The use of this as an actual credit card is purely optional. Or is this only financially viable due to the transaction fees the credit card companies get?
- fweespeech 11y ago
  > Or is this only financially viable due to the transaction fees the credit card companies get? Yes. These reward cards work out to about 1-2% cashback equivalents after the sign up bonuses. From the credit card perspective, the financials are basically identical to their normal "cashback cards". If you are like me and just want a couple free plane tickets a year, you just pick up 4 new credit cards [~160-200,000 points/miles] and cancel them. If you put 100% of your spending on credit cards and just cycle through the sign up bonuses every 3 months, its really easy and 160k miles is 2 round trip tickets a year anywhere domestically, with some leftover.
- deleted 11y ago
  [deleted]