Ganesh Sitaraman

And then the third change I really think about as one that Virgin America did in the 2000s, and that was recognizing that once you have these complicated fare structures, What's really important to the airline is not that you flew on the airline five times, but how much money you spent. So what really might matter is just... the spend, not the number of flights.

And then the third change I really think about as one that Virgin America did in the 2000s, and that was recognizing that once you have these complicated fare structures, What's really important to the airline is not that you flew on the airline five times, but how much money you spent. So what really might matter is just... the spend, not the number of flights.

And so Virgin created a points system, a loyalty program that rewarded money spent rather than the amount of miles you flew or the number of flights you took. And so these three shifts, I think, really fundamentally transformed the points loyalty reward system into the kind of thing that it is today in which airlines are increasingly moving to spend money

And so Virgin created a points system, a loyalty program that rewarded money spent rather than the amount of miles you flew or the number of flights you took. And so these three shifts, I think, really fundamentally transformed the points loyalty reward system into the kind of thing that it is today in which airlines are increasingly moving to spend money

And so Virgin created a points system, a loyalty program that rewarded money spent rather than the amount of miles you flew or the number of flights you took. And so these three shifts, I think, really fundamentally transformed the points loyalty reward system into the kind of thing that it is today in which airlines are increasingly moving to spend money

criteria rather than mileage or number of flights criteria. And that's a really big shift from how these programs started. In some ways, they're not really frequent flyer programs at all. They're big spender programs.

criteria rather than mileage or number of flights criteria. And that's a really big shift from how these programs started. In some ways, they're not really frequent flyer programs at all. They're big spender programs.

criteria rather than mileage or number of flights criteria. And that's a really big shift from how these programs started. In some ways, they're not really frequent flyer programs at all. They're big spender programs.

It's a bit complicated, but here's a simplified version. The airlines create points really out of nothing, and then they sell them for real money to banks that have co-branded credit cards. And so the banks pay the airlines for these points. And then the banks award points to cardholders for spending money on the card.

It's a bit complicated, but here's a simplified version. The airlines create points really out of nothing, and then they sell them for real money to banks that have co-branded credit cards. And so the banks pay the airlines for these points. And then the banks award points to cardholders for spending money on the card.

It's a bit complicated, but here's a simplified version. The airlines create points really out of nothing, and then they sell them for real money to banks that have co-branded credit cards. And so the banks pay the airlines for these points. And then the banks award points to cardholders for spending money on the card.

The cardholders can redeem those points with the airline for flights using these kind of web portals that we've all used. And The banks and credit card companies make money off of the swipe fees that the cardholders use every time they pay for something. So the result is that airlines in some ways are kind of like banks or quasi-banks almost.

The cardholders can redeem those points with the airline for flights using these kind of web portals that we've all used. And The banks and credit card companies make money off of the swipe fees that the cardholders use every time they pay for something. So the result is that airlines in some ways are kind of like banks or quasi-banks almost.

The cardholders can redeem those points with the airline for flights using these kind of web portals that we've all used. And The banks and credit card companies make money off of the swipe fees that the cardholders use every time they pay for something. So the result is that airlines in some ways are kind of like banks or quasi-banks almost.

If you think about the Federal Reserve, airlines issue currency, the points, and they get to decide how much that currency is worth and what it can be spent on. That is a very different system than figuring out how to fly planes.

If you think about the Federal Reserve, airlines issue currency, the points, and they get to decide how much that currency is worth and what it can be spent on. That is a very different system than figuring out how to fly planes.

If you think about the Federal Reserve, airlines issue currency, the points, and they get to decide how much that currency is worth and what it can be spent on. That is a very different system than figuring out how to fly planes.

for customers and for the country, it's not so obvious that this is a great deal because it might feel like a free bonus when you're paying for a flight or something with points. But the challenge is that every time you swipe that credit card, it, in a way increases prices across the economy. And the reason is because a credit card company takes a cut of every one of these sales.

for customers and for the country, it's not so obvious that this is a great deal because it might feel like a free bonus when you're paying for a flight or something with points. But the challenge is that every time you swipe that credit card, it, in a way increases prices across the economy. And the reason is because a credit card company takes a cut of every one of these sales.

for customers and for the country, it's not so obvious that this is a great deal because it might feel like a free bonus when you're paying for a flight or something with points. But the challenge is that every time you swipe that credit card, it, in a way increases prices across the economy. And the reason is because a credit card company takes a cut of every one of these sales.