Alan Weiss' The Uncomfortable Truth

SHOW NOTES: The airlines’ major frequent flyer programs began with American Airlines back in 1981 (thought Texas International Airlines had one in 1979). Everyone quickly followed. Travelers fell in love because they were earning free trips without paying anything extra for the ticket. You may feel the travelers were and are silly. Well, the average major airline today has a liability of about $7-10 billion if these points were all cashed in. Although there are attempts to squelch this with blackout periods and restricted seats available, this is none the less a very real monster under the bed. However, many people never cash them in or they the points may expire. Airlines and hotels figure the points won’t all be used. This is called “breakage,” believe it or not, and it’s the monster-slayer. Another example of this is the US Postal Service, which prints about $14 billion in postage stamps each year. But it’s estimated that over half of this amount is never used for postage because it goes into collection