Originally Posted by Ken hAAmer

Here's one of those points that doesn't neatly fit elsewhere, but seems to connect with everything else in this thread. That is, comparing airlines to laudries and donut shops and the like doesn't make any sense primarily for three reasons.

Those reasons are the massive capital requirements required to run an airline, the inability to adjust capacity in the economic short or near term, and the perfect perishability of the product.

If Tim Horton's makes too many donuts one Monday morning a couple of things might happen. First is they might sell them as "day olds" the next day for 50% off. Secondly, on the second day, they might throw some of them out. They'll probably also do something else -- next Monday, they'll make a few less donuts.

Airline's don't enjoy that luxury. Thirty minutes before flight time, that empty J seat might have a value of $10,000 or more. Thirty seconds after pulling the jetway back, that same empty seat now has a value of precisely $0. And there's nothing they can do about it.

They can't reduce the price and resell it tomorrow. And come next Monday, or next month, they can't easily "bake" not-quite-so-many seats. (They might be able to adjust the type of plane, but that has it's own problems, and doesn't work fleet wide.)

So two things happen... the airline loses money, sometimes buckets of money, and then they try to figure out ways to get people into that seat. Frequent flyer programs used to be just one of those ways.