Wendover Productions
5 HN recommenders · recommended in 9 months, 2021–2026
16:45 · 7.4M views · Dec 14, 2021
A Wendover Productions explainer arguing that major airlines make much of their profit from loyalty programs and co-branded credit cards rather than flying. It frames airlines as quasi-banks that sell points in bulk, using United's pandemic-era loan as a hook.
HN commenters point to it whenever airline economics or frequent-flier miles come up, since it clearly shows loyalty programs are worth more than the airlines themselves.
13 comments from Hacker News
One of my favorite YouTube videos on this subject: this video Key point: airlines are more powerful than normal banks - they are central banks, with complete control of the money (point) supply. On the trilemma [0], they chose to control the exchange rate (points to flight value) and have an independent monetary policy (how many points to issue to flyers or other buyers). [0] [LINK]
Fundamental problem: Flights don't make money. Airlines actually make all of their money through loyalty programs and credit card payments. They basically should have turned into regulated utilities long ago, but loyalty program revenue saved them. Unless this initiative will turn into a credit card company (which nobody likes or wants to do) it won't go anywhere Private equity will likely sell the company for parts. There is no operational improvements for cash flow that they can do. Useful watch (skip to 2:20): this video
Wendover Productions has a video on how airlines are banks now. Their Loyalty Programs are worth several times more than the Airlines and flying is basically a secondary business for them. How Airlines Quietly Became Banks this video
> how the major airlines now are more of a "bank that happens to have planes" Here is a decent video explaining it this video
Wendover Productions had a good video about this, framed around United getting a loan during the pandemic: this video