Like I say around here: Harvard University is a hedge fund with some educational activities on the side; airlines a loyalty program with associated shitcoin tokens, moonlighting as a transportation service.

"Selling miles to banks has represented the entire profit at American Airlines, suggesting that they otherwise lose money moving passengers from one place to another on their planes."

I joined my first frequent flyer program—American AAdvantage—before a trip to Australia in 1991. Sadly, I let those miles expire. Five years later I was out of college, flying regularly for work, and reading all the materials airlines used to send in the mail. Poring over the terms and conditions, I saw where I could earn 5,000 MileagePlus miles for buying four sodas in four different restaurants. I picked up 40,000 British Airways miles for getting someone at a Jaguar dealership to fill out a form saying my family and I had test driven a car. I went to a Bosley hair loss consultation for 10,000 Delta SkyMiles (I had a lot more hair back then). I bought Emmi cheese and enough magazine subscriptions to fly on the Concorde.

Growing up, I used to fly back and forth between my home in New York and where my dad lived in California. I would look at the first-class cabin longingly, thinking I would never be able to afford to sit there (and that I couldn't fathom spending so much even if I had the means).

A Private Fiat Currency—and a Temptation To Inflate. Now we have a private currency—like bitcoin!—but even more anarchist in that there's code but it doesn't serve as law.

Airline miles are issued by private companies. They can be redeemed for flights, upgrades, car rentals, hotels, merchandise, and more. Miles can be earned not just for travel with the airline, but also for online shopping, gas station fill-ups, credit card spending, real estate transactions, and much else. Since consumers value the currency, airlines are able to sell it to third parties to reward their own customers. Thus, the larger airline frequent flyer programs have their own unregulated currencies that are useful not only within their own business but across businesses, albeit in a mostly closed and controlled ecosystem. They can cancel your miles if you sell them or if you use them in a way they forbid.

While some loyalty programs have devalued their points because the programs were set up too generously and nobody realized it before it was too late [...] mostly frequent flyer miles become consistently less valuable for much simpler monetarist reasons. As when the Federal Reserve expands the money supply faster than the economy grows, you get airline loyalty price inflation—it's either that or shortages, where the airline just has to tell customers "no" when they want to redeem their miles.

Banks pay airlines for miles, and they rebate a portion (sometimes all) of the credit card swipe fees to consumers to encourage transactions on their product. That helps them generate charge volume and attract consumer lending. Customers who pay their bill in full each month come out the best: They get the rebate without giving the bank interest on revolving balances. Lower card swipe fees mean less valuable rewards. Durbin wants to redistribute money from banks and consumers to retailers, and consumers don't want to give up their miles. So, Durbin wants to say that those miles aren't actually such a great deal for consumers after all. His efforts culminated, near the end of Joe Biden's presidency, in a regulatory probe into the inner workings of loyalty programs. It's not clear yet where that effort will go under President Donald Trump.