Analysts have revealed the truth about frequent flyer points, proving that big businesses are always winners.
The results show that popular credit schemes sacrifice loyal customers and bring greater benefits to airlines.
Tony Webber, chief executive of the Association for Aeronautical Intelligence and Research (Airline Intelligence&Research,AIR), said airlines manipulated rules to allow your points to expire in order to generate a continuous, cheap and easy-to-use cash flow.
The aim of the frequent flyer program is simple: reward loyal customers to build businesses and promote their continued patronage of the company.
However, Weber told Australia and Guangzhou that airlines were quickly aware of the financial potential of frequent flyer plans to build profitability and economic success.
Airlines get instant cash by selling tickets. In the transaction, the airline gives passengers points so that they can use them in the future.
The airline controls how and when points are exchanged. They determine the value of the points and how much you need to use for a flight or lift, and can cost passengers extra.
In this sense, frequent flyer credits represent a currency managed by airlines, which are in fact unregulated banks.
Weber, who has been chief economist at Qantas'(Qantas) for nearly four years, said the credit system is good for airlines' cash flows because they can generate revenue streams at very low costs.
Qantas has one of Australia's most successful frequent flyer programs, which it applauds.
Paul Butler, head of equity research at Credit Suisse, said the value of frequent flyer points reflected the public's emphasis on social status.
About a decade ago, he said, Qantas realized that it had the opportunity to commercialise the market more broadly, largely because consumers attached importance to points because it was both a status symbol and an opportunity to buy tickets.
The program currently has 12 million members and received 120 billion points last year.
Qantas has 200 partners, including four big banks and supermarkets, effectively building its own self-sufficient economy.
These partners are involved in Qantas cash flow and buy their frequent flyer program.
According to Credit Suisse, Qantas's frequent flyer program generates profits of more than $400m a year, while the value of the award business is $4 billion.
As one hapless customer found out, Qantas also set a maturity date for points.
Stephen Wren has been a loyal customer of Qantas for 18 years and has a strong sense of pride in the Australian company.
Wren has accumulated 300000 points, enough to allow him to travel around the world in business class.
However, he was disappointed to find that if he did not spend or earn points in 18 months, those points would expire.
Dr. Webber stressed that it was in the interests of airlines to allow customers to expire their points.
"they do want these points to expire, and they have a strong incentive to let them expire. Once the points expire, the airline will not incur the cost of these credits. "