Airlines are actually Banks #Airlinesarebanks || Howtoguroo
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Airlines Are Actually Banks
According to an earnings report in 2018, American Airlines lost 0.43 cents per passenger for every mile flown.
Yet, the company made a total profit of $1.9 billions.
How?
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Number 1, Frequent-Flyer Program
FFPs are loyalty programs that airlines offer to their customers for flying with them.
These points can be redeemed for various benefits like free flights or other benefits
These work as a great incentive to retain customers.
They feel obligated to fly with the same airline again and again to pile up enough loyalty points to claim a big reward
Now, here's the crazy part
The total value of the FFP is usualy greater than the airline who owns them.
This means that the FFP aside, the airlines actually suffer losses!
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Credit Card Companies
Airlines also lend their loyalty points to credit card companies in exchange for money.
Customers are then able to earn points for the airline whenever they use that credit card.
Thus, the airlines function like a bank!
However, loyalty points are not regulated, not liable to taxes and don't have any intrinsic value, unlike currency.
This means the airlines themselves decide the value of their points, and what they can be spent on.
So airlines can change the amount of points that can be earned, the amount of points required to claim a reward, etc. at their will.
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Airlines are banks
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