Welcome to issue 013 of abroaden’s WTF is going on with the Economy?! Newsletter! Did you know that airlines are similar to central banks? They have the power to create their own currency, control its value, and use it for financial purposes. Frequent flyer points or miles are the valuable assets that airlines possess. While most people use them for free flights, the real power of these points is often underestimated. Airlines can manage their own economy by adjusting the value of their points based on market conditions. They can also flood the market with points or raise the reward threshold to meet demand. Airlines can even borrow money by creating billions of dollars worth of frequent flyer points and selling them to banks and credit card companies. Frequent flyer programs can be as valuable as the airlines themselves. In light of the current global situation, airlines are facing financial challenges and are turning to their frequent flyer programs for cash. However, this can be a double-edged sword as redeemed flights with points do not generate new cash. Nevertheless, airlines want to fill seats and encourage more people to travel as a sign of economic recovery. Alternative financing methods, such as selling miles, are becoming more popular.
https://abroaden.substack.com/p/the-strange-way-airlines-are-actually