Comments by "seneca983" (@seneca983) on "How Airlines Quietly Became Banks" video.

"What exactly is the bank going to do with the loyalty program to turn it into $20 billion?" I suppose they can still be paid of any outstanding points that are spent (even if no one could earn any more points)?
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"I now find the experience dehumanizing and demeaning" However, being less luxurious allows flying to be cheaper. A lot of people prefer to better afford flying over receiving a better experience at a higher price.
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@chancerobinson5112 We can observe that a lot of people choose to travel in economy class even though business class and first class are available. Clearly, the extra comfort isn't worth the extra cost for many (though for some it is).
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"airlines have a lot of debt" This is a fair point but the market cap figures still imply that the markets value all the assets of the airlines other than the loyalty programs billions of dollars below their liabilities. I still find that surprising.
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@BChandl13 "No it doesn't make sense. You are taxing the recipient of the goods when they aren't receiving cash" It does make sense. There is no rule that only cash and not other benefits should be taxed. "Company cars used for business purposes are not taxed in the states." But if the employee or their family can use it for other purposes too then it is a taxable fringe benefit.
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@mzaite A lot of people go on holidays with a plane (well, maybe not during a pandemic, but you know what I mean) so clearly they want to travel. Also, a lot of them don't want to pay for business or first class so clearly the extra comfort isn't worth the cost for them.
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@nicholaspalmer5957 I wasn't talking about enterprise value because I was talking about assets minus liabilities.
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@lugovoiarena "I think you are comparing Enterprise Value of the Mile+ Programme..." If that $21.9 billion is the enterprise value, then yes, sort of. "You would need to apply leverage ratio pro-rata to figure out equity value of the Mile+ Programme." But I wasn't interested in that figure here. I just stated that to me it's striking that United's all other assets are worth over $10 billion less than all their liabilities. Yes, here I'm including any debt by Mileage Plus Holdings in United's liabilities but the figure is still quite surprising IMHO.
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@johnniesalomon1942 It was PolyMatter though others have made videos about it too (but not Sam).
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@lugovoiarena ""Accounting" total assets figure would not capture the multi-billion valuation of the Mile+ programme." I don't understand what you're saying here. Is this a response to something I said or something else? "we had a company which had zero debt, and the market equity value (based on London market quotations) was significantly less than the available cash balance" I don't think the same is true for the airlines. Their management is likely better than this example (and in any case it would still be a striking result).
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"Making goods and services for consumption is hard, time-consuming, and subject to fluctuating demand. Trading papers is far easier." The airlines still do produce the service and their banking business wouldn't work if they didn't.
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@otm646 "Cards are a convenience, they should be charged at a premium because of that." I'm not sure I agree. You can turn this around and say that they're a convenience for the vendor and therefore should be charged at a discount.
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@rickrank321 "the airline claws back all the points the person previously accrued" But if a person has accrued points from using the services of partnered companies then the airline gets paid for those points. In that case the airline, or a bank that has seized the loyalty program to cover a loan, doesn't have an incentive to claw back the points.
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