
The Tyrannical World of Airline Loyalty Programs  - HackerGarth27
https://flightfox.com/tradecraft/tyrannical-world-airline-loyalty-programs
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joosters
The article only looks at how many miles it costs to claim a free flight. It
doesn't touch on the other half of the complicated mess of the loyalty
schemes: how to collect the miles.

These days, it's rare that you get 1 reward mile for every 1 mile that you
fly. Instead, there's all kinds of bonuses/penalties and scale factors based
upon your ticket class. Discounted ticket types earn fewer miles, first travel
earns more, and so on.

So you can't just say that free flight 'costs' have increased if they need
more miles to claim them. Perhaps the reward miles are given out more freely
than before? Or perhaps less? (I'm guessing less!) In any case, the article
leaps to conclusions without the evidence.

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peterdundi
Waaaa! People aren't giving me enough free stuff! Waaaa!

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wahsd
Personally, I think loyalty programs should be broken up. Their very existence
is premised on creating monopoly and cartel outcomes by round-about ways of
curtailing competition; remember, that thing that our corporations pay lip-
service to?

This may sound strange, but the best way to break up loyalty programs for, not
only the airlines, but also hotels, is for someone to sue and get the IRS to
start collecting taxes on income gained from loyalty programs. The hassle
would not be worth it and they would die off; leading to more competition and
lower rates.....actual free market competition.

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yourapostasy
The IRS already collects if points are gifted with a valuation of $600 or more
[1]. However, the conventional loyalty program is not a taxable event because
it is treated as a rebate tied to a repeated series of sales events.

There are also many other factors in play that you haven't mentioned. The
airlines, hotel and rental car companies run special loyalty programs for
travel department heads and C-level execs at large customers with a lot of
travel needs. These business customers get steep discounts, but push huge
volumes (in the hundreds of thousands of dollars and up range) of bookings
each week through their preferred vendors. The reward points systems are a lot
more attractive at these more rarefied levels than what the traveling public
(or corporate rank and file) has access to. I would be surprised if the
decision-making didn't take these perquisites into account at least informally
during negotiations.

[1] [http://www.creditcards.com/credit-card-news/irs-taxable-
inco...](http://www.creditcards.com/credit-card-news/irs-taxable-income-
credit-card-rewards-points-gift-1277.php)

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PaulHoule
I think Tyranny is harsh.

For a long time the loyalty programs have been a profit center rather than a
cost center since the airlines sell them to credit card companies and other
vendors.

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peterdundi
If you don't like them don't use them! It's their ball, they can take it home
if they want to.

