8 ms·

It's insanely smart to reward business travelers personally based on how much their company spends. A lot of people working for big companies are completely pri

It's insanely smart to reward business travelers personally based on how much their company spends. A lot of people working for big companies are completely price insensitive, and might in fact choose a worse and more expensive flight if it means they get to accrue more miles.

nerdponx 3y ago
The ability to accrue miles/points/whatever for yourself is considered one of the offsetting perks of having to travel a lot of work. So strong reward programs for frequent business travelers is indirectly a product or service being offered by the airlines to companies that employ business travelers, which employers implicitly pass along to travelers as a form of soft compensation.
- BoiledCabbage 3y ago
  You have it backwards. Airlines aren't paying customers and companies are paying the payment forward to their employees. Employers are paying their employees and funneling it through airlines. At a deeper level airlines and business travelers have no real business relationship. Employers are buying a service, airlines are selling a service. Business travelers are the "cargo" that airlines are shipping. Businesses pay airlines to ship this cargo. Airlines have no relation to the cargo. Employers also pay the cargo (their employee) a wage. But they funnel part of that payment wage through airlines via miles. It's not much different than company sponsored health care, but it's company sponsored vacation/personal travel. It's an employer benefit, but not treated as one.
  - nerdponx 3y ago
    I think we're saying the same thing. What I was trying (poorly) to say is that the airlines offering the employers the ability to compensate their employees is indirectly a service that airlines offer to employers.
solarkraft 3y ago
It's funny that that's even possible. For my next business, I'll personally pay companies' decision makers to choose me as a supplier. Hell, why stop there? I'll also pay politicians and judges to rule in my favor!
- briffle 3y ago
  This isn't new at all. Why do you think those big companies have company "boxes" at major sporting stadiums? its certainly not so their rank and file employees can enjoy the game. or golf trips, fancy dinners, etc.
- itsoktocry 3y ago
  >For my next business, I'll personally pay companies' decision makers to choose me as a supplier. What you describe is one end of the spectrum (and probably illegal). But the line between that and good old discounting isn't very wide. discount -> p&l -> budget -> bonus
  - dylan604 3y ago
    Since when was business solely run on decisions that were bounded by what was legal?
- teaearlgraycold 3y ago
  > I'll also pay politicians and judges to rule in my favor! Now you're getting it!
  - joelfried 3y ago
    So is Justice Thomas.
    - djkivi 3y ago
      Why stop there? Lots of other "big guys" in politics.
    - 3y ago
pavlov 3y ago
> “reward business travelers personally based on how much their company spends” Shouldn’t this be taxed as income? A portion of the money paid by company A to company B goes directly to the employee of company A. It would be taxable if A paid its employee directly, so what difference does it make if there’s a benefit program operated by B in the middle?
- matsur 3y ago
  https://tax.thomsonreuters.com/blog/are-employees-taxed-on-their-personal-use-of-frequent-flyer-miles-earned-by-business-travel/ https://tax.thomsonreuters.com/blog/are-employees-taxed-on-t...
  - pavlov 3y ago
    Interesting, thanks. The guidance is from 2002. The airline reward programs have changed in the meantime. As the original article notes: ”In short, SkyMiles is no longer a frequent-flier program; it’s a big-spender program.” So I wonder if the IRS might come to feel that rewarding spend is different from rewarding miles flown. Unlike air miles, the benefit to the employee is in direct proportion to the money spent by their employer.
    - lotsofpulp 3y ago
      I doubt it. The IRS does not say cash back rewards from credit card spend is taxable income, which is as explicitly rewarding spending as you can get. https://www.investopedia.com/ask/answers/110614/are-credit-card-rewards-considered-taxable-income-irs.asp https://www.investopedia.com/ask/answers/110614/are-credit-c... > So, where do cash-back reward programs fit in? It varies. If a cash-back reward is credited directly to your credit card account, then the income is generally considered a nice rebate that comes with the benefit of using the card. If you actually receive a cash-back check directly, though, it gets a little trickier: It probably also would be considered a type of rebate, but it could technically count as income.
      - 3y ago
enkid 3y ago
Not just big companies, government travellers too. There's a reason military is allowed to board first.
- badcppdev 3y ago
  What's the reason? I assume this is a US thing?
  - enkid 3y ago
    The stated reasons is patriotism. The real reason is that the military buys a lot of airline tickets and the military member gets to choose from a list of flights from a variety of airlines.
    - bombcar 3y ago
      Military also are allowed more than the normal allowance of baggage and carry-on for the same reason. Families with children are also allowed to board early, because they slow down the boarding process otherwise.
  - callalex 3y ago
    It’s similar to tipping, once one guy starts doing it all the others look like assholes unless they start doing it too. A similar phenomenon happens sometimes in drive-through coffee shops: someone will pre-pay for the coffee of the person behind them in line, then that person is informed that a stranger paid for their coffee. There is then a social expectation to do the same thing for the next person in line to keep the chain of anonymous “charity” going. Nobody wants to be the asshole that breaks the chain. It’s certainly an odd phenomenon, but many people love it.
    - myroon5 3y ago
      https://www.youtube.com/watch?v=52LJaWDdG9c https://www.youtube.com/watch?v=52LJaWDdG9c
- 3y ago
adolph 3y ago
> It's insanely smart to reward business travelers personally based on how much their company spends. I wonder how long it will take the IRS to catch on and see this as a taxable benefit. It's like if significant business spending was done on Discover cards that paid its signer personally. Since it's been going on for years, maybe there is an exception written in law? Speaking of taxes, the guy who bought a billion yogurt cups to earn trillions of miles donated the yogurt and received a tax benefit: https://www.snopes.com/fact-check/pudding-on-the-ritz/ https://www.snopes.com/fact-check/pudding-on-the-ritz/
FireBeyond 3y ago
Sales, architects, consultants at my company (all the frequent fliers) lost their shit when we mandated the use of corporate cards for all travel. "Earning enough points to take my family on a free vacation each year is compensation for the time I'm gone"... "My wife and I get upgraded most trips we take because of this benefit"... Actual tone-deaf quotes at a time when we were laying people off (not to mention that corporate cards had been around for a while and had been 'encouraged'. And most other managers had already mandated their use. It's a perk. But when it's a perk only some people get, or get more of, you can't expect too much sympathy from everyone else when it's taken away.
- rrrrrrrrrrrryan 3y ago
  > when it's a perk only some people get They aren't comparing their situation to others within the company, but rather to individuals at other companies for whom this perk is widely available.
- g_sch 3y ago
  Back when I was in consulting, I used to think of it as a perk (as did many of my peers). Once the travel started to wear on my personal life, I ran the numbers and discovered the miles and points I was earning equated to only around $200-300 per month in cash equivalent value. It's really surprising to me how intensely some people will pursue relatively worthless airline miles. I suppose if you're going to be traveling anyway, you might as well pick them up. But if you have the choice, it's not really worth the trade-off.
  - ProfessorLayton 3y ago
    Yeah, I hate traveling for work, and if I could pick I wouldn't do it. Worse, I hate keeping track of every receipt and expensing every little thing post work travel. I'd take a company card any day.
  - somsak2 3y ago
    This is exactly why I'm often confused about cuts to these kinds of programs from companies. The downside of people frustrated with the cut cannot be worth it from a monetary perspective. Even if you reduced how many raises you were going to give out, I think people would care less than "I no longer get upgraded for flying"
ttegloma 3y ago
It’s not just a reward for the business travelers. My previous consulting company actually would want us to book our preferred airlines (even if they were more expensive, but only within a certain range) because in the event of an issue with the flight, the perks to rebook or get free checked bags etc actually saved the company/client money. I saw this for real when traveling with a coworker when they had status and I didn’t. One of our flights was delayed, leading to me being stranded overnight and have to get the company to pay an additional $300 to stay in a hotel, while my statused coworker was rebooked with priority on a flight home due to their status.

nerdponx 3y ago

The ability to accrue miles/points/whatever for yourself is considered one of the offsetting perks of having to travel a lot of work. So strong reward programs for frequent business travelers is indirectly a product or service being offered by the airlines to companies that employ business travelers, which employers implicitly pass along to travelers as a form of soft compensation.

BoiledCabbage 3y ago
You have it backwards. Airlines aren't paying customers and companies are paying the payment forward to their employees. Employers are paying their employees and funneling it through airlines. At a deeper level airlines and business travelers have no real business relationship. Employers are buying a service, airlines are selling a service. Business travelers are the "cargo" that airlines are shipping. Businesses pay airlines to ship this cargo. Airlines have no relation to the cargo. Employers also pay the cargo (their employee) a wage. But they funnel part of that payment wage through airlines via miles. It's not much different than company sponsored health care, but it's company sponsored vacation/personal travel. It's an employer benefit, but not treated as one.
- nerdponx 3y ago
  I think we're saying the same thing. What I was trying (poorly) to say is that the airlines offering the employers the ability to compensate their employees is indirectly a service that airlines offer to employers.

solarkraft 3y ago

It's funny that that's even possible. For my next business, I'll personally pay companies' decision makers to choose me as a supplier. Hell, why stop there? I'll also pay politicians and judges to rule in my favor!

briffle 3y ago
This isn't new at all. Why do you think those big companies have company "boxes" at major sporting stadiums? its certainly not so their rank and file employees can enjoy the game. or golf trips, fancy dinners, etc.
itsoktocry 3y ago
>For my next business, I'll personally pay companies' decision makers to choose me as a supplier. What you describe is one end of the spectrum (and probably illegal). But the line between that and good old discounting isn't very wide. discount -> p&l -> budget -> bonus
- dylan604 3y ago
  Since when was business solely run on decisions that were bounded by what was legal?
teaearlgraycold 3y ago
> I'll also pay politicians and judges to rule in my favor! Now you're getting it!
- joelfried 3y ago
  So is Justice Thomas.
  - djkivi 3y ago
    Why stop there? Lots of other "big guys" in politics.
  - 3y ago

pavlov 3y ago

> “reward business travelers personally based on how much their company spends” Shouldn’t this be taxed as income? A portion of the money paid by company A to company B goes directly to the employee of company A. It would be taxable if A paid its employee directly, so what difference does it make if there’s a benefit program operated by B in the middle?

matsur 3y ago
https://tax.thomsonreuters.com/blog/are-employees-taxed-on-their-personal-use-of-frequent-flyer-miles-earned-by-business-travel/ https://tax.thomsonreuters.com/blog/are-employees-taxed-on-t...
- pavlov 3y ago
  Interesting, thanks. The guidance is from 2002. The airline reward programs have changed in the meantime. As the original article notes: ”In short, SkyMiles is no longer a frequent-flier program; it’s a big-spender program.” So I wonder if the IRS might come to feel that rewarding spend is different from rewarding miles flown. Unlike air miles, the benefit to the employee is in direct proportion to the money spent by their employer.
  - lotsofpulp 3y ago
    I doubt it. The IRS does not say cash back rewards from credit card spend is taxable income, which is as explicitly rewarding spending as you can get. https://www.investopedia.com/ask/answers/110614/are-credit-card-rewards-considered-taxable-income-irs.asp https://www.investopedia.com/ask/answers/110614/are-credit-c... > So, where do cash-back reward programs fit in? It varies. If a cash-back reward is credited directly to your credit card account, then the income is generally considered a nice rebate that comes with the benefit of using the card. If you actually receive a cash-back check directly, though, it gets a little trickier: It probably also would be considered a type of rebate, but it could technically count as income.
    - 3y ago

enkid 3y ago

Not just big companies, government travellers too. There's a reason military is allowed to board first.

badcppdev 3y ago
What's the reason? I assume this is a US thing?
- enkid 3y ago
  The stated reasons is patriotism. The real reason is that the military buys a lot of airline tickets and the military member gets to choose from a list of flights from a variety of airlines.
  - bombcar 3y ago
    Military also are allowed more than the normal allowance of baggage and carry-on for the same reason. Families with children are also allowed to board early, because they slow down the boarding process otherwise.
- callalex 3y ago
  It’s similar to tipping, once one guy starts doing it all the others look like assholes unless they start doing it too. A similar phenomenon happens sometimes in drive-through coffee shops: someone will pre-pay for the coffee of the person behind them in line, then that person is informed that a stranger paid for their coffee. There is then a social expectation to do the same thing for the next person in line to keep the chain of anonymous “charity” going. Nobody wants to be the asshole that breaks the chain. It’s certainly an odd phenomenon, but many people love it.
  - myroon5 3y ago
    https://www.youtube.com/watch?v=52LJaWDdG9c https://www.youtube.com/watch?v=52LJaWDdG9c
3y ago

adolph 3y ago

> It's insanely smart to reward business travelers personally based on how much their company spends. I wonder how long it will take the IRS to catch on and see this as a taxable benefit. It's like if significant business spending was done on Discover cards that paid its signer personally. Since it's been going on for years, maybe there is an exception written in law? Speaking of taxes, the guy who bought a billion yogurt cups to earn trillions of miles donated the yogurt and received a tax benefit: https://www.snopes.com/fact-check/pudding-on-the-ritz/ https://www.snopes.com/fact-check/pudding-on-the-ritz/

FireBeyond 3y ago

Sales, architects, consultants at my company (all the frequent fliers) lost their shit when we mandated the use of corporate cards for all travel. "Earning enough points to take my family on a free vacation each year is compensation for the time I'm gone"... "My wife and I get upgraded most trips we take because of this benefit"... Actual tone-deaf quotes at a time when we were laying people off (not to mention that corporate cards had been around for a while and had been 'encouraged'. And most other managers had already mandated their use. It's a perk. But when it's a perk only some people get, or get more of, you can't expect too much sympathy from everyone else when it's taken away.

rrrrrrrrrrrryan 3y ago
> when it's a perk only some people get They aren't comparing their situation to others within the company, but rather to individuals at other companies for whom this perk is widely available.
g_sch 3y ago
Back when I was in consulting, I used to think of it as a perk (as did many of my peers). Once the travel started to wear on my personal life, I ran the numbers and discovered the miles and points I was earning equated to only around $200-300 per month in cash equivalent value. It's really surprising to me how intensely some people will pursue relatively worthless airline miles. I suppose if you're going to be traveling anyway, you might as well pick them up. But if you have the choice, it's not really worth the trade-off.
- ProfessorLayton 3y ago
  Yeah, I hate traveling for work, and if I could pick I wouldn't do it. Worse, I hate keeping track of every receipt and expensing every little thing post work travel. I'd take a company card any day.
- somsak2 3y ago
  This is exactly why I'm often confused about cuts to these kinds of programs from companies. The downside of people frustrated with the cut cannot be worth it from a monetary perspective. Even if you reduced how many raises you were going to give out, I think people would care less than "I no longer get upgraded for flying"

ttegloma 3y ago

It’s not just a reward for the business travelers. My previous consulting company actually would want us to book our preferred airlines (even if they were more expensive, but only within a certain range) because in the event of an issue with the flight, the perks to rebook or get free checked bags etc actually saved the company/client money. I saw this for real when traveling with a coworker when they had status and I didn’t. One of our flights was delayed, leading to me being stranded overnight and have to get the company to pay an additional $300 to stay in a hotel, while my statused coworker was rebooked with priority on a flight home due to their status.