Author Topic: "Airlines Make More Money Selling Miles Than Seats"  (Read 10987 times)

Offline m.m.

  • Dansdeals Gold Elite
  • ***
  • Join Date: Jul 2016
  • Posts: 242
  • Total likes: 6
  • DansDeals.com Hat Tips 0
    • View Profile
Re: "Airlines Make More Money Selling Miles Than Seats"
« Reply #20 on: March 31, 2017, 01:10:36 PM »
Nice write up on DDMS!
+1
the reason aa has citi, Barclay, and bank of America is probably makes the most money that way, have three banks buying miles from them...

Offline JTZ

  • Dansdeals Lifetime Platinum Elite
  • *******
  • Join Date: Apr 2016
  • Posts: 1884
  • Total likes: 230
  • DansDeals.com Hat Tips 1
    • View Profile
Re: "Airlines Make More Money Selling Miles Than Seats"
« Reply #21 on: April 02, 2017, 01:33:18 PM »
What is next? How 5x CB cards are goldmines for CC companies? I have a few bridges for all you.  :)
"LESS IS MORE" It is the cumulative effect that kills deals!!! How many times do I have to say this?  >:(

Offline mmgfarb

  • Dansdeals Lifetime Presidential Platinum Elite
  • *********
  • Join Date: Dec 2015
  • Posts: 8355
  • Total likes: 1110
  • DansDeals.com Hat Tips 4
    • View Profile
Re: "Airlines Make More Money Selling Miles Than Seats"
« Reply #22 on: April 02, 2017, 01:39:50 PM »
What is next? How 5x CB cards are goldmines for CC companies? I have a few bridges for all you.  :)
Most people aren't JTZ with 5x cards
"JS [is] a fetid cesspool of unvarnished linguistic manure, with lots of useless drivel and post-padding." -Moishebatchy

Offline Yammer

  • Dansdeals Presidential Platinum Elite
  • ********
  • Join Date: Aug 2015
  • Posts: 3695
  • Total likes: 217
  • DansDeals.com Hat Tips 1
    • View Profile
Re: "Airlines Make More Money Selling Miles Than Seats"
« Reply #23 on: April 02, 2017, 02:05:25 PM »
I'd be shocked if they pay more than a third of that.
I remember when i assumed that Verizon gets a steep discount for the iPhone. It was only when Sprint got the iPhone and the 5 billion deal ( I believe ) was publicized when everyone realized how it works.

Same here

Offline chaaarvy

  • Dansdeals Platinum Elite
  • ****
  • Join Date: Nov 2012
  • Posts: 252
  • Total likes: 16
  • DansDeals.com Hat Tips 0
    • View Profile
Re: "Airlines Make More Money Selling Miles Than Seats"
« Reply #24 on: April 02, 2017, 02:57:16 PM »
Here's an idea for all those with millions of miles: Offer to sell them back to the bank for less than they paid for them originally.
Getting 1.7 cash per mile is pretty good. I'd like to know how such a conversation would go.

CSR: Thank you for calling. How can I help?
Customer: Here's an idea to save you guys money. Remember all those bonuses you gave me? How about buying them back and then posting a higher profit for the quarter?

How many HUCAs would that take?  ;D ;D ;D


Offline Dr Moose

  • Dansdeals Presidential Platinum Elite
  • ********
  • Join Date: Nov 2013
  • Posts: 4196
  • Total likes: 180
  • DansDeals.com Hat Tips 3
    • View Profile
Re: "Airlines Make More Money Selling Miles Than Seats"
« Reply #25 on: April 02, 2017, 03:00:33 PM »
If only banks knew they can get a better deal buying the points on the grey market ...
Hey there! I am using DansDeals Forums.

Offline mmgfarb

  • Dansdeals Lifetime Presidential Platinum Elite
  • *********
  • Join Date: Dec 2015
  • Posts: 8355
  • Total likes: 1110
  • DansDeals.com Hat Tips 4
    • View Profile
Re: "Airlines Make More Money Selling Miles Than Seats"
« Reply #26 on: April 02, 2017, 03:04:10 PM »
If only banks knew they can get a better deal buying the points on the grey market ...
I wonder well that would play with the airlines
"JS [is] a fetid cesspool of unvarnished linguistic manure, with lots of useless drivel and post-padding." -Moishebatchy

Offline chaaarvy

  • Dansdeals Platinum Elite
  • ****
  • Join Date: Nov 2012
  • Posts: 252
  • Total likes: 16
  • DansDeals.com Hat Tips 0
    • View Profile
Re: "Airlines Make More Money Selling Miles Than Seats"
« Reply #27 on: April 02, 2017, 03:14:36 PM »
If only banks knew they can get a better deal buying the points on the grey market ...

+ + +

You know all those brokers that boast about buying over 10 billion miles? If the banks would have a side business buying miles, they'd save $100,000,000s. Maybe I'll suggest it at the next shareholder meeting and take a broker's fee. 😂 😂
« Last Edit: April 02, 2017, 03:19:35 PM by chaaarvy »

Online aygart

  • Dansdeals Lifetime 10K Presidential Platinum Elite
  • *******
  • Join Date: May 2008
  • Posts: 17395
  • Total likes: 14333
  • DansDeals.com Hat Tips 14
    • View Profile
    • Lower Watt Energy Brokers
  • Programs: www.lowerwatt.com
Re: "Airlines Make More Money Selling Miles Than Seats"
« Reply #28 on: April 02, 2017, 05:24:47 PM »
What is next? How 5x CB cards are goldmines for CC companies? I have a few bridges for all you.  :)
I would guess that the ones with category changes and registering etc are since most probably don't take full advantage of the 5x
Feelings don't care about your facts

Offline BP16

  • Dansdeals Platinum Elite
  • ****
  • Join Date: Feb 2017
  • Posts: 323
  • Total likes: 59
  • DansDeals.com Hat Tips 0
    • View Profile
Re: "Airlines Make More Money Selling Miles Than Seats"
« Reply #29 on: April 02, 2017, 06:25:17 PM »
I remember when i assumed that Verizon gets a steep discount for the iPhone. It was only when Sprint got the iPhone and the 5 billion deal ( I believe ) was publicized when everyone realized how it works.

Same here
You just made that up didn't you?

Offline Yammer

  • Dansdeals Presidential Platinum Elite
  • ********
  • Join Date: Aug 2015
  • Posts: 3695
  • Total likes: 217
  • DansDeals.com Hat Tips 1
    • View Profile
Re: "Airlines Make More Money Selling Miles Than Seats"
« Reply #30 on: April 02, 2017, 06:28:15 PM »
You just made that up didn't you?
Huh?

Offline BP16

  • Dansdeals Platinum Elite
  • ****
  • Join Date: Feb 2017
  • Posts: 323
  • Total likes: 59
  • DansDeals.com Hat Tips 0
    • View Profile
Re: "Airlines Make More Money Selling Miles Than Seats"
« Reply #31 on: April 02, 2017, 06:30:55 PM »
Huh?
When you thought Verizon got the deal from sprint for 5B!

Offline Yammer

  • Dansdeals Presidential Platinum Elite
  • ********
  • Join Date: Aug 2015
  • Posts: 3695
  • Total likes: 217
  • DansDeals.com Hat Tips 1
    • View Profile
Re: "Airlines Make More Money Selling Miles Than Seats"
« Reply #32 on: April 02, 2017, 06:43:20 PM »
When you thought Verizon got the deal from sprint for 5B!
You didn't understand.

When Sprint finally​ got the iPhone, it was a 20 Billion deal ( just Googled it ). When the details were publicized it was clear that they were paying full price per phone. $666

http://www.foxnews.com/tech/2011/10/03/sprint-scores-iphone-5-exclusive-thanks-to-20-billion-deal-with-apple.html
When you thought Verizon got the deal from sprint for 5B!

Offline EJB

  • Dansdeals Lifetime Presidential Platinum Elite
  • *********
  • Join Date: Sep 2012
  • Posts: 5409
  • Total likes: 254
  • DansDeals.com Hat Tips 15
    • View Profile
"Airlines Make More Money Selling Miles Than Seats"
« Reply #33 on: April 02, 2017, 07:14:21 PM »
1.5-2.0 are standard buying rates. Iirc a certain european airline charges above 2 for its miles to banks. Rates are similar to banks and hotel programs that offer transfers.

Online PlatinumGuy

  • Dansdeals Lifetime 10K Presidential Platinum Elite
  • *******
  • Join Date: Apr 2011
  • Posts: 14958
  • Total likes: 2421
  • DansDeals.com Hat Tips 11
    • View Profile
Re: "Airlines Make More Money Selling Miles Than Seats"
« Reply #34 on: April 02, 2017, 07:20:29 PM »
If the credit card companies pay more than 1.5 cents per mile, then every single credit card company would have a 1.5 cents cashback card.

It would go against all rules of logic and business to say otherwise.

Massive breakage of unused points, apparently enough that most amex cards only give 1.0 towards travel
״וזה כלל גדול: שישנא אדם כל דבר שקר. וכל מה שיוסיף שנאה לדרכי השקר – יוסיף אהבה לתורה.״ - אורחות צדיקים

Offline EJB

  • Dansdeals Lifetime Presidential Platinum Elite
  • *********
  • Join Date: Sep 2012
  • Posts: 5409
  • Total likes: 254
  • DansDeals.com Hat Tips 15
    • View Profile
Re: "Airlines Make More Money Selling Miles Than Seats"
« Reply #35 on: April 02, 2017, 07:24:40 PM »
Massive breakage of unused points, apparently enough that most amex cards only give 1.0 towards travel
Airlines (and hotel chains) have much more breakage due to expiration rules. Depending on expiration rules can be upward of 30%.

Online PlatinumGuy

  • Dansdeals Lifetime 10K Presidential Platinum Elite
  • *******
  • Join Date: Apr 2011
  • Posts: 14958
  • Total likes: 2421
  • DansDeals.com Hat Tips 11
    • View Profile
Re: "Airlines Make More Money Selling Miles Than Seats"
« Reply #36 on: April 02, 2017, 07:25:38 PM »
Airlines (and hotel chains) have much more breakage due to expiration rules. Depending on expiration rules can be upward of 30%.
Could be, how does that affect my statement?
״וזה כלל גדול: שישנא אדם כל דבר שקר. וכל מה שיוסיף שנאה לדרכי השקר – יוסיף אהבה לתורה.״ - אורחות צדיקים

Offline EJB

  • Dansdeals Lifetime Presidential Platinum Elite
  • *********
  • Join Date: Sep 2012
  • Posts: 5409
  • Total likes: 254
  • DansDeals.com Hat Tips 15
    • View Profile
Re: "Airlines Make More Money Selling Miles Than Seats"
« Reply #37 on: April 02, 2017, 07:30:45 PM »
Could be, how does that affect my statement?

There could be a cost disparity between different cards. A 1.0 cent card costs close to 1.0 cents, and an airline cars that they buy at 1.5 cents costs 1.5 cents. The discount due to breakage is more relevant to the airline's internal costs, which usually are half or less of what the bank pays.

Online PlatinumGuy

  • Dansdeals Lifetime 10K Presidential Platinum Elite
  • *******
  • Join Date: Apr 2011
  • Posts: 14958
  • Total likes: 2421
  • DansDeals.com Hat Tips 11
    • View Profile
Re: "Airlines Make More Money Selling Miles Than Seats"
« Reply #38 on: April 02, 2017, 07:34:26 PM »
There could be a cost disparity between different cards. A 1.0 cent card costs close to 1.0 cents, and an airline cars that they buy at 1.5 cents costs 1.5 cents. The discount due to breakage is more relevant to the airline's internal costs, which usually are half or less of what the bank pays.

Oh, I was referring to UR/MR where only a fraction of points earned are converted to airlines
״וזה כלל גדול: שישנא אדם כל דבר שקר. וכל מה שיוסיף שנאה לדרכי השקר – יוסיף אהבה לתורה.״ - אורחות צדיקים

Offline EJB

  • Dansdeals Lifetime Presidential Platinum Elite
  • *********
  • Join Date: Sep 2012
  • Posts: 5409
  • Total likes: 254
  • DansDeals.com Hat Tips 15
    • View Profile
Re: "Airlines Make More Money Selling Miles Than Seats"
« Reply #39 on: April 02, 2017, 07:35:06 PM »
Oh, I was referring to UR/MR where only a fraction of points earned are converted to airlines
That's not "breakage." That just could reduce the average cost of point.