The thought experiment at the core of Sumit Singh recent commentary in Simple Flying (https://lnkd.in/gnBJTeq5) is an interesting one – could a loyalty currency replace a traditional fiat currency under the right circumstances? It’s possible, of course; all currencies are exactly as legitimate and valuable as the market makes them, and just as we transitioned from using shiny metals to paper notes to ones and zeroes as agreed-upon signifiers of value, it’s conceivable that loyalty points could one day take up that same role. We simply don’t think it’s very likely, even at the circumscribed scale that Singh and the head of Emirates’ Skywards loyalty program envisioned. In fact, this limited scope makes the idea of Skywards becoming equivalent to cash dubious. The commentary describes Skywards’ ambition as “replacing [ing] traditional forms of currency in its own ecosystem,” presumably meaning the travel ecosystem in markets served by Emirates or perhaps Dubai more broadly. To support this, the article cites that Skywards points are accepted as payment at The Dubai Mall, Dubai Duty-Free, Atlantis The Palm, and (some) Hilton hotels. But you’d have to add a lot more brand names to that list to make Skywards a viable currency, and the mechanisms for doing that are fading, not ascending. In the heyday of coalition loyalty, when Plenti and Air Miles headlined consumers’ imaginations and investors’ valuations, it was more plausible that one of these giant, multi-brand currencies could rival the acceptance and day-to-day utility of dollars and Euros. Plenti is long gone, Air Miles restructured, and those days have passed. We know this is an incredibly complex and challenging undertaking from our work with travel loyalty technology companies that develop fungible, flexible loyalty currencies that unlock value for the brands they serve. So Skywards should be lauded for their technical expertise and their currency’s impressive penetration. But until the general public stops thinking about how much actual money their loyalty programs can save them, no loyalty currency will come close to cash. Do you ever think of your points and miles as cash equivalents? Or do you share our skepticism that loyalty points will be the next evolution of currency? #loyaltycurrency #fiatcurrency #pointsascash #FFPs #loyaltypoints #loyaltypoints #loyaltyprograms #airlinetrends #airlineloyalty #emiratesskywards
Simple Flying
7mo
Thank you for sharing our article, we appreciate it! ✈️ - L
No!
Fractional Executive | No Code Developer | Creative
7moYes it could, in certain markets. It would take a few years and a lot of challenges, most notably regulatory, but possible if done right.