Greg Rosalsky

The perks are easier to redeem and the status feels worth chasing.

Exactly.

And Severin actually goes a step further and he makes this argument that actually these loyalty programs, they're a big problem for a healthy competitive market because it means airlines aren't just competing on the price or the experience of getting from point A to point B. Now you have all these like weird loyalty incentives for consumers to like ignore competitors.

Loyalty programs play a huge role in allowing airlines like Delta and American and United to leverage their network size in ways that have nothing to do with actually offering higher quality service.

Yeah, they still had them, at least until everything got much more expensive.

But then the cost of everything just starts exploding.

Like since the pandemic, we're talking higher energy costs, higher material costs, higher labor costs.

There's a pilot shortage.

Like there's a whole bunch of issues in the industry.

And my sources told me that the budget airlines have just had a much harder time absorbing these costs.

I spoke with Henry Hartevelt.

He's a longtime industry analyst.

And he's like, yeah, the bread and butter of budget airlines is budget ticket prices.

But when your costs go up, your fares have to go up.

And if your costs go up too much, you're less able to offer the dirt cheap fares that your customers expect you to offer.

Yeah, the demand side, the price sensitive consumers themselves, they've been struggling.

I don't think this is a secret either.

Like high inflation, higher interest rates, a cooling labor market, this long run trend of growing inequality.

All this has been reshaping American spending patterns.

And it's been hurting businesses that cater to low and middle income Americans.