Question

During the 1990s, several airlines were on the brink of bankruptcy. These same airlines were giving away millions of dollars in free airline travel through their frequent-flyer programs. Do you think it would have been a good idea for these airlines to eliminate their frequent-flyer programs in order to earn higher profits?

Answer 1

Assuming that the elimination of frequent-flyer programs would have enabled the airlines to earn higher profits and remain in business, then it would be a purely good idea for the airlines to eliminate their frequent-flyer programs.

The big question is, how much did the frequent-flyer programs cost the airlines? Would the cost-savings be sufficient to eliminate their bankruptcies? It is a known-fact that the airlines that create such programs always recover the program costs by charging higher fares.

Step-by-step explanation:

The issue of airlines going bankruptcy does not seem to stem from customer-loyalty programs like the frequent-flyer programs. The root cause lies in operational and other costs that airline managements have not been able to control.