How do airlines make money from Frequent Flyer Programmes?

Frequent Flyer Programmes (FFP), is a loyalty programme aimed at keeping its members loyal to one airline. This strategy helps them maintain or enhance airline market share and a constant source of revenue.

FFP members, generally businessmen, are a reliable source of revenue streams, buying expensive tickets in comparison to the ‘price sensitive travellers’ who choose airline offering cheapest tickets.

Airlines usually operate around 80% seat factor, leaving about 20 % empty seats to reward FFP members as and when they become qualified. Empty seats are anyway perishable and do not cost airlines anything other than bit of fuel and catering.

Frequent Flyer Programmes are more popular and effective in Airlines Alliances

http://www.lan.com/en_us/sitio_personas/offers/usa/frequent_flyer.html

https://www.quora.com/How-do-airlines-make-money-from-Frequent-Flyer-programs/answer/Muhammad-Afsar-Malik?srid=utEKR