Airlines Raised $$$-Billions via Frequent Flier Programs. Delta Alone Raised $9 Billion via SkyMiles as Collateral. How?

by Wolf Richter
Wolf Street

“You’re the Collateral.” Separating the assets (including you) from the liabilities (your miles), and pledging the assets.

Airlines, in their mad scramble to pile up enough cash to survive the ongoing collapse in air passenger travel, have resorted to every imaginable way of raising cash: issuing shares, shanghaiing taxpayers into giving them $25 billion, issuing bonds, borrowing from banks, selling their planes for cash and leasing them back, and what not. The biggest single way of raising cash has become borrowing by pledging their frequent flier programs as collateral.

And yes, dear member of a frequent flyer program, you guessed it, that collateral is you. Not you in flesh-and-blood – though airlines would resort to that too if they could figure out how – but everything around you, the huge body of personal and marketing data that frequent flier programs amass, and you as a marketing target for Corporate America, such as purveyors of credit cards for which you are a high-value target.

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