Michael Ballings, assistant professor in the Department of Business Analytics and Statistics, talked to WalletHub and Mic for an article on airline loyalty programs.
From the article:
Airlines obviously don’t set up frequent flyer programs to be nice. They put them into place because they get consumers to spend more than they would otherwise, Michel Ballings, a business professor at the University of Tennessee, wrote for WalletHub.
That’s because your desire to earn points can cloud your bottom line. “Even if airlines would offer cash back (just like major credit cards), the clearest reward available, consumers would still be disadvantaged because it would motivate them to spend more,” he writes. “This is a strange psychological technique, but it works.”