Originally Posted by pushback
Regardless of usage there are still fixed costs associated with the administration of the program. The miles are also carried as a liability on the balance sheet. There can be costs associated with carrying liabilties on a balance sheet such as being viewed as more of a credit risk which implies the cost of borrowing goes up.
i agree 100%
who pays for the mailings to frequent flier members?
who pays for the additional ticket agents to help customers convert miles to tickets?
who pays for the website modifications that allows you to track and/or redeem miles online?
who pays for the whole set of airline employees associated with maintaining and running a frequent flier program
all of these costs must be covered and are in effect added to the price of the airplane ticket
regardless of whether or not any individual chooses to collect frequent flier miles and regardless of if they are ever redeeemed or not
the net effect is that those who dont collect or redeem their miles assist in paying for those who do
here is a another example
food and grocery store coupons
literally billions are spend each year on printing and distributing them
only 5% are ever redeemed
but the cost of the whole pogram is included in the price you pay at the counter
those who dont redeem pay an average higher price than those who do