> "Frequent flyer" programs started as an under-the-table way to bribe corporate flyers to take one airline over another: that is, you tell your employer you want to fly Delta, your employer books you on Delta, you get a kickback.
This is a little bit more complicated.
Part of the reason that airlines used to award miles based on distance flown and not on how much you spend is that they weren't trying to incentivize business travelers.
For most business travelers, the company usually has a corporate contract requiring employees (or strongly incentivizing them) to fly on a given carrier. Otherwise, business travelers will book according to schedule (non-stop vs connecting, timing). Business travelers are also often "hub captives" -- if you're in Atlanta, you're taking Delta. As such, they often don't have discretion, so it doesn't make sense to pay incentives to a group who has no choice but to use your product.
For paid luxury travelers, they're going to be picking based on product.
The expensive fare flyers aren't going to be incentivized to the same extent as the low fares flyers by frequent flier programs. These high fare flyers pretty much pay for the flight.
So what was the deal with frequent flier programs? Once the flight is paid for, any incremental passenger you can get into the back of the bus is pure profit, and they're the most likely to engage with your ancillary products like paying to check a bag, buying food, and buying alcohol.
Historically, the idea was to convince a leisure traveler to take a 1-stop American flight instead of the non-stop on United because of the AAdvantage credit card.
Prior to the pandemic, however, load factors were so high, airlines found they didn't need to incentivize people to fly, so they decimated the value of their programs, and started awarding miles based on amount spent, and capped it per ticket. This was a large net reduction in amount of miles awarded.