Just a few weeks ago when news broke of a strong Presidential appetite to bailout US airlines, many policymakers and staffers on Capitol Hill asked select airline bloggers and aviation industry analysts, including myself, to outline what they see as things airlines should offer in return for $25 billion in taxpayer money, despite years of stock buy backs.

Gary Leff at View From The Wing was invited a step further, co-authoring a policy paper which pointed out deficiencies in the idea of a blank check bailout, and how airlines could dig a lot deeper into their own pockets, or rather hidden assets, before government funds or bankruptcy would even be remotely necessary.

Specifically, Leff pointed out that airlines haven’t always been so forthcoming with just how incredibly valuable their loyalty programs are, and that before a government should step in, airlines could always dip into their favorite revenue source: selling miles to banks.

US airlines alone make billions in points sales to banks annually.

When you earn points on an airline credit card, or transfer your credit card points to an airline, the bank is paying an airline for that transaction. They love it.

Lufthansa First Class Wine And ChampagneApparently, the policy paper was well received, or at the very least – eye opening – to policy makers and that’s now prompted the US Treasury to ask a few questions before handing over a check with hardly any stipulation, much to the chagrin of airlines and their shareholders, who were hoping for a handout.

According to Reuters, The US Treasury has now sent airlines eight questions they must answer about their collateral, with four specifically in relevance to loyalty program assets. The Treasury is strongly considering loyalty programs as collateral for any funds.


– Overview of loyalty program

– Details on whether the loyalty program is encumbered or unencumbered

– Estimated value of the loyalty program

– Historical cash flow of the loyalty program

– An overview of all unencumbered aircraft, engines and spare parts

– The estimated value of the unencumbered assets broken down by asset class

Yep, the loyalty programs may actually be more valuable than the airlines, the planes or flying people to places around the globe and the US Treasury is exploring the notion of these programs we engage with daily as collateral for the funds.

Airlines are a vital part of the global economy and will be even more vital in a recovery, but allowing funds to be released without greater guarantees for job security, or at least a guarantee taxpayers will benefit is just foolish.

Congrats to all around great guy, Gary Leff, and co-author Veronique De Rugy on this fantastic contribution to the process. Should airlines put these programs up as collateral?

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