[HN Gopher] Airlines are a lot like central banks (2020)
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Airlines are a lot like central banks (2020)
Author : flygurl
Score : 76 points
Date : 2023-07-31 15:27 UTC (7 hours ago)
(HTM) web link (abroaden.substack.com)
(TXT) w3m dump (abroaden.substack.com)
| jpcfl wrote:
| Side bar: Does anybody else dislike this one-sentence-per-
| paragraph format?
| ada1981 wrote:
| I dislike it less than the hyphen-between-every-word format.
| jpcfl wrote:
| You sound like a run-of-the-mill chocolate-chip-loving stay-
| at-home mother-in-law.
| cratermoon wrote:
| I dislike it, but there's something maybe related to it that I
| do like and recommend. Unsurprisingly, it appeared here on HN
| about a year ago. One sentence per line:
| https://news.ycombinator.com/item?id=31808093
|
| I started writing like that after I saw it here and it's
| definitely improved my writing process. Note that this is _not_
| one sentence per paragraph. After my source writing (in
| markdown) is processed to whatever output format, the
| paragraphs look normal.
|
| Just like the comment you are reading now.
| jpcfl wrote:
| Yes, I use one sentence per line for things like latex or
| markdown, but I mainly do that because of line-based diff
| tools.
|
| For me, reading one sentence per paragraph is fine for short
| things like comments, but I find it gets exhausting after
| 8~10 sentences. It feels like the author is unable to focus
| and expand on one thing, and keeps moving on new points over
| and over again, or like every sentence is of equal importance
| and some pivotal revelation in the story.
| edpichler wrote:
| It's different. Nowadays, central banks create money out of
| nothing. Companies can create these loyalty points but they need
| to pay the customer back with services when they come back to
| exchange it.
| A_Duck wrote:
| >> Unfortunately, in the EU, rules concerning credit card
| payments and fees make co-branded credit cards unattractive to
| airlines and banks
|
| In the EU card fees are capped and this is a good thing. AMEX
| extracting excess fees from my local coffee shop and then giving
| (some) of it back to me as air miles is the dysfunction.
| indus wrote:
| I was shocked to find out that there is a 3-legged marketplace
| between acquirers, issuers, and merchants that funds a trillion
| dollar business model where neither the merchant nor the
| customer gets benefited.
|
| Large merchants like Walmart and Amazon pay 50% less fees for
| every dollar compared to smaller merchants---Smaller merchants
| is the channel where the most cashback accrues to cardholders.
| tracker1 wrote:
| Costco play pretty hardball with them as well. Only
| supporting one payment processor for CC payments. No idea
| where their fees/margins are, but guessing they're lower than
| just about anyone else as a merchant.
|
| Winco, as a contrast doesn't even play the game at all.
| gaoshan wrote:
| Many small merchants just refuse as well. Try to use Amex
| at the local Chinese food marts around me and they will not
| take them (and I don't blame them).
| r00fus wrote:
| A tax by any other name... is still a tax. That it's levied
| by our financial elite and not by the government is the more
| concerning part.
| thedaly wrote:
| It isn't a tax if you can opt out of paying it. The part I
| find most concerning is the shift away from accepting cash
| at various retailers.
| r00fus wrote:
| It's still a tax even if you don't incur it by avoiding
| the activity.
| [deleted]
| [deleted]
| jmopp wrote:
| Relevant Wendover video: https://youtu.be/ggUduBmvQ_4
| logshipper wrote:
| Also relevant Byrne Hobart post on how frequent flyer miles
| programs are worth more than the airlines themselves:
| https://archive.is/yUTay
| altcognito wrote:
| Should be noted that this is from March 2020
| sand500 wrote:
| This post is from 2020 when all air travel ceased. It would be
| nice to see an update with the new creative airline miles
| schemes.
| cratermoon wrote:
| I 100% agree I would love to see a follow-up. The post made
| predictions about post-pandemic air travel, I wonder if they've
| panned out.
|
| As for the new miles schemes: airlines used to publish charts
| showing you earned for X points per mile. The shorthand "miles"
| referring to FF points is telling. Now airlines use "Dynamic
| award pricing". It's impossible to tell in advance how much
| your points are worth.
|
| https://thriftytraveler.com/guides/points/points-principles-...
| [deleted]
| OO000oo wrote:
| Could someone elaborate? What are the new airline miles
| schemes?
| cratermoon wrote:
| Instead of the old "fly X miles get X points", it's now "fly
| X miles and the airline determines at the time of the flight
| how many points its worth".
|
| That trend started in 2019, but it took off as the pandemic
| wound down.
| strictnein wrote:
| Maybe it's different for other airlines, but Delta shows
| you the miles you'll earn when you book the flight.
| wonderwonder wrote:
| This is a pretty interesting read. There is definitely a
| similarity to crypto currency here as well. Wonder why the SEC
| does not categorize airline points as securities and come after
| them...
| HWR_14 wrote:
| Because people don't buy FF points as a speculative investment.
| If you said "I am starting wonderwonder's airline. I will only
| sell tickets based on FFPs. I am currently selling FFPs at a
| discount to what I will sell them at later and they are
| transferable. You should buy them now to resell them later"
| they would be securities.
| hammock wrote:
| >Because people don't buy FF points as a speculative
| investment
|
| Why not? People do it with forever stamps.
|
| >If you said "I am starting wonderwonder's airline. I will
| only sell tickets based on FFPs. I am currently selling FFPs
| at a discount to what I will sell them at later and they are
| transferable. You should buy them now to resell them later"
| they would be securities.
|
| Might as well be the way the USPS advertises forever stamps.
| pgwhalen wrote:
| You can sell forever stamps. You can't sell airline points.
| HWR_14 wrote:
| People buy stamps that are guaranteed to rise at less than
| the rate of inflation as an investment? And the USPS
| advertises it that way??
|
| I'm not convinced. I would need some evidence of that.
|
| (I am aware that stamps may be used in prison as a
| currency, but that's a special case.)
| breser wrote:
| See the Howey Test: https://www.investopedia.com/terms/h/howey-
| test.asp
|
| Airline Miles don't grant you access to a portion of the
| profits from the airline. They aren't an investment. They are a
| currency for future travel.
| bombcar wrote:
| They're a liability of the airline, and they're an asset of
| the customer, but they are not an investment, because they
| can only go down in value, not up.
|
| Same as gift cards.
| Scoundreller wrote:
| Sometimes the dollar price of a flight goes up but the
| points price stays the same = points went up.
| breser wrote:
| That you can make money through arbitrage is not the
| definition of a security. See my link above.
| wonderwonder wrote:
| Does the CC companies buying these and then granting them to
| card holders as a reward qualify or affect the test at all?
| Shawnj2 wrote:
| You can generally only get frequently flyer points by flying on
| an airline, and even then airlines sometimes sell points for
| money and it's always a bad deal.
| wonderwonder wrote:
| I get them on several of my credit cards as rewards. I have
| the option of getting FF points or something else.
| Shawnj2 wrote:
| Yes you can use other rewards programs to get frequent
| flyer points but you could also get dollars instead if you
| wanted
| efitz wrote:
| I just want them to upgrade my damn seat. United 1k, hundreds of
| thousands of lifetime miles, and they almost never upgrade me
| even with their new "plus points" model which appears just to be
| some kind of fixed price bid for increasing your place on the
| waitlist.
| balderdash wrote:
| It's been my experience over the past ~year (as a top-tier
| flier on multiple airlines) that the airlines have completely
| depreciated their frequent flyer programs to the extent that
| regardless of your status the only thing you really get is,
| preferred economy seating, not boarding last, and some free
| checked bags.
|
| I used to direct my spend to preferred airlines, now I don't
| bother, it literally doesn't matter.
|
| (Not to mention the ~80% devaluation in mile value)
| t3rabytes wrote:
| Platinum Medallion with Delta whose been on 30 segments this
| year with 2! "complimentary upgrades" across those. I'm going
| to start just booking first on the major (DL,UA,AA) with the
| direct flight from my local airport and be done with it.
| Loyalty doesn't buy anything when everyone has it via credit
| cards.
| quasse wrote:
| The thing that keeps me on Delta (despite frequent flyer
| status being worth ~nil) is that fact that they're the only
| one out of the big three who has not frequently delayed my
| flights by more than an hour or just cancelled them
| outright *after* everyone has already boarded the plane.
|
| Honestly, I like it this way. Provide good service ->
| receive customer loyalty.
| pknomad wrote:
| Also United 1K here for 2 years straight.
|
| It really depends on the flight segment and the seating class
| you bought. Flying to/from the hubs? Forget it. Everyone and
| their mother are 1K for United if you're flying from SFO.
| United really screwed the pooch by allowing insane amount of
| people to qualify for 1K.
|
| At least you get priority boarding (assuming non-1K members
| don't line up in 1K pre-boarding) and 1K priority support line.
| bunga-bunga wrote:
| A day doesn't go by without someone claiming a company is a bank.
|
| Apple is a bank, Starbucks is a bank, my hospital is a bank, my
| cat prints money.
| mcbishop wrote:
| > All and all, frequent flyer points are a massive business for
| airlines. According to some valuations, these programs are
| worth just as much as the airline itself.
|
| This alternative currency that's been around long before
| cryptocurrency... is more significant / interesting than your
| cat printing money.
| _jal wrote:
| The original assertion is ambiguous - we can't determine if
| the GP meant that their cat operates a printing press that
| outputs currency, or that the cat itself outputs currency.
|
| Honestly, I'd be pretty interested either way.
| bombcar wrote:
| If you're in the right place with heavy machinery at the
| right time, your CAT will print money.
|
| https://www.cat.com/en_US/products/new/equipment.html
| albybisy wrote:
| and this is the only the beginning. Wait until everyone can
| create his own credits and everything is liquid and can be
| exchanged :)
| anononaut wrote:
| They're notably distinct in that you can simply exit their
| system and choose not to participate. Calling them banks is
| apt, I suppose, but calling them central banks takes gravitas
| away from the most heinous, utterly unethical institutions that
| are the actual central banks.
| banannaise wrote:
| Just because it sounds silly on its face doesn't make it not
| true. The basic premise is solid: many of the most successful
| corporations today make a large portion of their profit from
| convincing customers to park funds in their accounts, and
| investing that money in financial instruments.
|
| Everyone's got millions of unsecured creditors at zero
| interest. What could possibly be problematic about that?
| konschubert wrote:
| The question is: What is their value add? What is their moat?
|
| People call Mc Donald's a real estate fund and feel smart
| about it, but their moat is in fast food, no matter how they
| realise their earnings.
| banannaise wrote:
| > What is their moat?
|
| That's only a useful question if you're an entrepreneur
| trying to answer the question of "How do I get in on this
| game?" The question currently being asked is closer to "Is
| it a problem for society that so many players are in on
| this game?"
|
| If every big business is just a moat and/or backdoor for
| banking, that might be indicative of a problem.
| yodelshady wrote:
| Sure but the problem might be internal find-the-lady
| accounting.
|
| In fact it probably _is_. Much like internet advertising
| has to be. You can 't have an entire economy based around
| free services funded by advertising for other free
| services, you can't have returns generated solely by
| investing in companies that invest in other investors.
| Unless massive numbers of private sector backers have
| been defrauded, the lady is _somewhere_. Though maybe not
| somewhere that taxman looks.
|
| I might buy slighter fewer Starbucks, or Fords, or
| flights if they were no loyalty programs, but I'd be
| spending _zero_ money on StarBank /FordBank/DeltaBank
| without the product to go with it.
| javier123454321 wrote:
| Yeah, the truth is we live on a Casino Chip Society
| https://brettscott.substack.com/p/casino-chip-cashless-
| socie.... And it is true that companies love this status quo.
| j-bos wrote:
| Cool article, thanks for sharing :)
| teddyh wrote:
| Discussed on HN 8 months ago:
| <https://news.ycombinator.com/item?id=33801973>
| nocoiner wrote:
| The only really interesting breakdown I've seen along these
| lines was a dissection of how cheap Starbucks' cost of capital
| is due to their gift card system. It's quite a remarkable
| business they've created totally apart from selling coffee!
|
| In my opinion frequent flyer points are only interesting to
| consider in terms of the implications of a currency that will
| only get shittier over time.
| [deleted]
| kykeonaut wrote:
| Ha, I just posted about this in another discussion about an hour
| ago [0]. It astonishes me how a link to an article tucked away in
| a thread can find itself in the top page of HN an hour later.
|
| [0] https://news.ycombinator.com/context?id=36943868
| flygurl wrote:
| That's where I first read it! Very interesting analogy.
|
| The automatic title mangling somewhat hides that the author
| intends it to be an analogy only, not an identity.
| citizenkeen wrote:
| Max Berry's book Jennifer Government[1] posits that WW3 will be
| fought over airline miles.
|
| [1]: https://en.wikipedia.org/wiki/Jennifer_Government
| suoduandao2 wrote:
| There's a blast from the past. I played the associated online
| game back in the day, dang I'm old.
| indus wrote:
| I'm sure the author has a sequel planned----Cashback Planet :-/
| Shrezzing wrote:
| It seems like false equivalence to state that Central Banks and
| airlines are the same because they both create an intangible
| asset.
|
| Most nation's central banks bailed out airlines (if by proxy)
| just a few days after this was originally posted, which should be
| a fairly big indicator that airlines are far from akin to Central
| Banks.
| dermesser wrote:
| But that's only because (unfortunately for the airlines) miles
| are not a universally accepted currency. Just like some poorer
| countries needing to be bailed out by the IMF, despite issuing
| their own currency.
| noslenwerdna wrote:
| The strange way Chuck E Cheese is like a central bank.
| harryposner wrote:
| You joke, and yet [Lucas 1988] uses an amusement park as a
| toy model to demonstrate how monetary shocks can affect
| real economic activity. The key difference between this and
| Chuck E. Cheese, though, is that Chuck E. Cheese is the
| only merchant that accepts their tokens for any sort of
| payment.
|
| [Lucas 1988] https://home.uchicago.edu/~vlima/courses/econ2
| 03/fall01/Luca...
| johnzim wrote:
| To be fair to the article, the title is "the strange way
| airlines are actually central banks", implying that it's just
| in that one way that they are central banks.
| d3vmax wrote:
| Central bank comparison is farfetched here.
| victorp13 wrote:
| Was going to post the exact same here. Economics major. Making
| this comparison shows lack of insight into what a central bank
| actually does, or the power it yields.
| spraveenitpro wrote:
| [dead]
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