The New York Times - USA (2020-10-10)

The airlines of the United States
have extra-special status. How
special? Many of them may get a
second pile of coronavirus relief
money before citizens who can’t
afford to fly get another $1,200
check.
But as carriers have made
their case to legislators in recent
months, some have also been
pitching banks — using their
customers’ faith in free travel as
a kind of collateral.
United and Delta have been
using their frequent-flier pro-
grams as support for their efforts
to raise more cash with the help
of Goldman Sachs and other
banks. And the boasting the two

carriers have done as they’ve

raised billions of dollars amounts

to this: They and their lenders

think they have customers, over

100 million of us in each pro-

gram, right where they want us.

Take it from a Delta securities

filing from last month, which

called the foundational aspect of

frequent-flier programs “the

fundamental aspiration of earn-

ing a free flight.” Because of our

irrational desire for freebies,

Delta added, it can “manage

costs by modifying inventory

levels and value.”

In other words, the airline can

raise the prices of trips and

upgrades, in miles, at any time.

And it believes it can do so with

relative impunity from a pas-

senger revolt or from intense

protest by American Express

cardholders.

Even as the coronavirus pan-

demic has sapped the ability and

desire to travel, miles programs

are a winner for the airlines. In

the first half of 2020, Delta’s

passenger revenue fell 60 per-

cent, but the cash the airline got

from American Express’s pur-

chases of miles for its customers

fell less than 5 percent. Clearly,

nobody is expecting us to stop

collecting those SkyMiles.

United puts a different but no

less illuminating set of words

and numbers to our mile lust. It

goes into granular detail in its

pitch about its ability to “nimbly”

control its mile redemption costs

on “peak days.” That explains

why it’s so hard to use your miles

to get a great deal during school

vacations, Mardi Gras or other

occasions.

But perhaps the most illumina-

ting figure is this: United esti-

mates the value of its Mile-

agePlus program at $21.9 billion.

Over in the stock market, the

value of the entire airline — its

so-called market capitalization —

is only about half of that figure.

At least two factors are at

work here.

First, people continue to use

credit cards that offer miles as

rebates, instead of some other

incentive like cash back. Second,

few customers do the math and

realize that their miles may not

Frequent-Flier Programs Are Winning. Who’s Losing?

CONTINUED ON PAGE B5

Ron Lieber
YOUR MONEY

ROBERT

NEUBECKER

SATURDAY, OCTOBER 10, 2020B1

Y

TECH ECONOMY MEDIA FINANCE

3 ENERGY

Chevron’s recent acquisition

of Noble Energy has the

potential to unlock a natural

gas bonanza for Israel.

6 YOUR MONEY ADVISER

A lawsuit by home buyers is

challenging the system of real

estate commissions, calling it

confusing and expensive.

10 SPORTS

The Lightning’s Stanley Cup

revelry has proceeded as

normal, but the coronavirus

might derail one tradition.

When the federal government be-

gan the Paycheck Protection Pro-

gram in April, one rule was clear

to small-business owners bedev-

iled by its chaotic and messy

start: If most of the loan money

was used to pay employees, the

debt would be forgiven.

But as the program enters its

loan forgiveness phase, those

owners — and their lenders — are

finding out that although the prin-

ciple may have been simple, its ex-

ecution is anything but.

Many lenders have yet to start

accepting applications from bor-

rowers to have the loans forgiven.

They are waiting to see whether

Congress will pass a proposal to

automatically forgive debt of less

than $150,000, the bulk of the

loans made under the program.

Square, the mobile payments

company, lent Audrey Kramer

$5,600 in May to pay the only em-

ployee of Sweet Treat Stop, her

mobile food truck bakery in San

Francisco. She has been ready

since July to apply to have the

debt wiped away, but Square

hasn’t started taking applications.

It sent her an email this month

saying it was “waiting to release

our forgiveness application until

we get more information from

Congress.”

Ms. Kramer is grateful for her

loan — it helped her keep paying

her baker even as her sales

plunged — but she’s also eager to

be done with it. “We’ve been cau-

tious, and we’ve never carried any

debt at all on the business,” she

said.

On Thursday night, the Small

Business Administration, which

runs the program, released new

forgiveness forms and rules for

loans under $50,000. Such loans

make up nearly 70 percent of the

program. The new rules mean

Jessica Macklin, left, and

Léa Kujala, the owners

of Northwest Treatment,

a counseling center near

Portland, Ore., are waiting

for their bank to let them

apply for forgiveness of a

loan through the Paycheck

Protection Program.

WILL MATSUDA FOR THE NEW YORK TIMES

Small-business owners are flummoxed by how the loan forgiveness phase of the

Paycheck Protection Program will work, as lenders await clarity and guidance.

CONTINUED ON PAGE B4

Only Congress Can Cease

The Coming Nightmare

By STACY COWLEY

OAKLAND, CALIF. — Twitter took

steps on Friday to slow the way in-

formation flows on its network,

even changing some of its most

basic features, as alarm grows

that lies and calls for violence will

sweep through social media in the

weeks surrounding the presiden-

tial election.

The changes will temporarily

alter the look and feel of Twitter.

The company will essentially give

users a timeout, for example, be-

fore they can hit the button to re-

tweet a post from another ac-

count. And if users try to share

content that Twitter has flagged

as false, a notice will warn them

that they are about to share inac-

curate information.

Twitter also said it would add a

label to claims about who won the

election until it has been called by

authoritative sources.

The steps announced on Friday

are the most drastic in a series of

moves made by social media com-

panies in recent months to stem

the flow of misinformation in the

lead-up to the Nov. 3 election, and

are likely to draw the ire of Twit-

ter’s most famous user, President

Trump.

The companies are going to

considerable lengths to avoid a re-

peat of the 2016 election, when

Russian disinformation flowed

unchecked on Facebook, Twitter

and even YouTube, which is

owned by Google. Facebook and

Google have committed to ban-

ning political ads for an undeter-

mined period after polls close on

Nov. 3. Facebook also said a ban-

ner at the top of its news feed

would caution users that no win-

ner had been declared until news

outlets called the presidential

race.

In this election, much of the

false news on the platforms has

come from domestic sources and,

in some cases, elected officials.

That has forced the companies to

walk a careful line between stop-

ping false narratives because they

go viral and have a real-world ef-

fect while countering arguments

that they have become self-ap-

pointed censors.

“Twitter has a critical role to

play in protecting the integrity of

the election conversation, and we

encourage candidates, cam-

paigns, news outlets and voters to

use Twitter respectfully and to

recognize our collective responsi-

bility to the electorate to guaran-

tee a safe, fair and legitimate dem-

ocratic process this November,”

the Twitter executives Vijaya

Gadde and Kayvon Beykpour said

in a statement.

Twitter Set

To Change

Some Basics

Before Vote

More labeling along with

a slowing of retweets

to combat misinformation.

By KATE CONGER

CONTINUED ON PAGE B4

Temporary actions

that’ll probably affect

and anger Trump.

Odds are uncertain

and rules can change

at any moment.