Concept of the day: a homeopathic cap table. It’s a cap table after a large number of funding rounds, often - down rounds, when the founder’s share becomes diluted over and over again to become miniscule. Hence the term “homeopathic”. And yes, it won’t work for the founder, either.
Five ways airline loyalty might look different in 2021
Mark Ross-Smith, Phocuswire
Airline frequent flyer / loyalty programs are worth more than the airlines themselves. So why not use this winning position to make bold moves?
Buy or start a new airline. Everything’s cheap now: planes, flight crews, airport services, capital. So the airline will maximize the value of the loyalty program, not the (traditionally) other way around.
Since extending status due to COVID reduces incentives to fly the same airline (less effort, less routes, etc.), there may be some intermediate membership levels to get people to some status benefits earlier (as they will fly less, but still want to get value).
A technology leader may be a better owner of the airline than a PE fund or a bunch of institutional investors. Big data, AI, other fancy acronyms and concepts surely can help the technology company put more flyers on seats.
Improving the “burn” component of the membership outside the travel space. Yes, many companies allow earning frequent flyer points / miles in cooperation with an airline, but what about, for instance, having dedicated checkout lines in supermarkets for top-tier flyers? How about lounge access at clubs? It can quite possibly become a new revenue stream.
Acquire new, non-airline businesses. Instead of partnering (i.e. selling miles to “partners”) the loyalty program can own some of the firms providing value to its members. This helps control the user experience, makes an attempt at a rudimentary ecosystem and keeps the money in the same holding.
The Diff, 2020-11-05
In the current market conditions bad news get “forgotten” increasingly faster than before. No longer such bad events (hurricanes, catastrophes, etc.) have a negative lasting impact on the companies’ valuations.
The faster recovery is a product of a cultural shift of how people respond to negative events. People become more fatalistic or thick-skinned in their responses to one-off events. Partially this is because of prioritization, partially – because such one-off events are more and more frequent, just different each time.
Commercially it’s very helpful from the company’s perspective (sales recover faster) and the shareholders’ perspective (share price recovers faster or doesn’t fall that much anyway). Partially this is due to better understanding of the real impact of bad events and whether it’s something truly relevant or just a loud (albeit irrelevant) signal.
This also has something to do with the sad fact that bad news sells better, hence the headlines have a bias towards negativity; it doesn’t take long to find out that the doom and gloom is nothing of the kind.
[MK: At the same time, the COVID hysteria has been massively fuelled by the media, which eventually got under the skin of many of even the biggest cynics. Whether the societal and psychological impact if COVID is something we’ll read about for the next ten years, it’s safe to say that the collective human psyche has enormously shifted towards numbness to minor distractions.]