Originally Posted by
5khours
What a lot of you don't understand is that FF programs are not primarily about offering perks and rewarding loyalty. They're about price discrimination and you have to price discriminate to maximize profits and the best way to price discriminate is through FF programs.
Indeed, price discrimination is what airline revenue is all about. The costs of this product are almost entirely fixed as to a given seat on an airplane. Whether it's fares, miles or a combo of both, this is all about getting the most money possible from each customer. Sell cheap to the bargain-hunters (elastic demand); stick it to the gotta-get-there-exactly-then customers (inelastic). There are many shades of grey between the extremes, and mileage programs help add more colors to the price-discriminating palate.