What matters is the incentive structure (win, get profits!) and price signals (“Shut up and take money!”) provided by markets. Improving technology is downstream of those forces.
Every business once it gets out of its rapid growth phase seems to want to become a bank. Car companies are all about loans now, "X" is an attempt to turn social media into banking (and not the first), Google and Apple are both into payments and other financial services, and the list goes on and on.
Either the market has an endless appetite for banking or capitalism does not in the end deliver what markets want.
You say that as if you cannot buy a car or an airline ticket. In fact you can, because airlines fly planes and sell tickets on them, and car manufacturers make cars and sell them.
It may be cute to say “X is a bank”, but an airline is not a bank. Besides the obvious facts that you cannot withdraw money from an account or pay your bills, if they didn’t fly planes the points would be ~worthless.
The fact that they don’t profit from those activities is a market economy working as intended*. Cars and flights are easily substitutable goods, you’d expect to see the profit competed down to ~nothing.
*Arguably there is getting to be too much consolidation in the airline industry, and also legal limits on airport gates act as a huge barrier of entry for new competition.
I suspect in the end, the financial component of any business has the highest margins, so business seeks it like a plant growing towards the sun.
To do the "actually send passengers from LAX to ORD" part of running an airline you have to pay for pilots, gate agents, planes, the world's smallest cups of flat ginger ale...
But shuffling around frequent flyer miles as a psuedo-currency? No actual tangible expenses there, just some obligations that end up on some future quarter's balance sheet.
> Either the market has an endless appetite for banking
I don’t like it but I think it’s clear this is the case. The demand for “buy now, pay later” seems to be huge, even if it costs more in the end, even for seemingly trivial amounts of money for regular purchases. But I really have no idea how much things like affirm on Amazon actually get used, maybe no one else is using it either.
Kinda? The era of technological or business innovation for large airlines may basically be over. If you take that bet you want the airline you invest in to focus on financial wheeling and dealing to ensure they save a few pennies on fuel in 2035 or earn a few more pennies on affiliate credit card spend in 2027.
So you're admitting that innovation isn't downstream from market incentives in this case, but financial wheeling and dealing is. I'm glad we are on the same page.
I'm admitting there isn't much innovation left in pure airlines. The customer has spoken, they want cheap flights. Some are willing to pay for legroom, some are willing to pay for luggage, [insert a bunch of other things] but will do without for cheaper tickets. It is very hard to find any more innovation that hasn't already been found in this space. Airlines are working on the things grandparent named because it works to consumer wants: lower prices.
I think part of the problem with air travel is it’s hard to know what you’re actually getting. The seating chart doesn’t visualize leg room or cleanliness or the details of the seat design on that particular flight. If there were reliable indicators of these things, people might choose to pay more for some of those.
One consequence of giving everything a discrete price is that it drives customers to consume all services they pay for completely.
If you say "I can take two checked bags, it's included in the fare", I'll probably only take one because I only need one for the duration of my trip. But I'll feel good knowing if I decide I see something awesome while on my vacation, I can take it home without too much care for penalty fees.
But if you say "Each checked bag is $50", people will pack everything up to and including an entire 1996 Toyota Corolla into their free carry-ons, exhaust the available space, and the airline has to say to the economy class late-boarding group 'everyone after this line has to check their bag anyway, but we won't charge you the $50."
As an added plus, the price awareness reduces the quality of the travel experience-- you end up asking "can I fit another souvenir in my little free bag", and often deciding against it, because it's insanity to spend $50 in bag fees for a $10 book.
Most of the spending of the middle class, and all of the spending of the working class, is already spoken for.
If you want to make money from the middle class, you have to do better at something than whoever is doing it now.
If you want to make money from the rich, you just have to dream up some new twist on their wants (sure, it has to be executed reasonably well, but you're not competing in the same way).
So sure, most of the money that changes hands does so via the daily/weekly/monthly spending of regular people. But that's not where the big money is unless you come up with a truly mass market new thing. The big money is in providing for the wants of the rich, because the marginal utility of what they spend on wants is so low to them.
Or you make what the middle class spends money on. This is generally an easier path. Making something unique can make money, but generally it is safe to assume if nobody else is making it, it is because nobody wants it -not that you are the first with a new idea.
If the middle class spends money on it, then in general, someone is already making it, has established customers, distributors etc. This is a high barrier to entry.
For what it's worth, I (mostly) disagree with your detractors in the other comments and agree with your sentiment (I think).
Markets care about "aggregate
demand". Rich people can be lucrative individual customers because they have more to spend and often less price sensitivity. But they have limited capacity for consumption in many areas; they only eat three meals a day and only fill so many airline seats at once. The middle class and even lower classes have much higher capacity for consumption and are worth targeting - think McDonald's or even Google (advertisers want all the eyeballs they can get, even if they prefer wealthy ones)
Wealth (i.e. net worth) isn’t the relevant statistic for how much the market “cares” about a particular demographic. Aggregate disposable income is.
A young doctor with $100k in med school loan debt is part of that “bottom 50%” of wealth but nonetheless an extremely attractive target for “the market”.
By default, company executives are beholden to the shareholders (i.e. the wealthy).
In a healthy competitive market, they're also reactive to customer desires, but when they're presented with the opportunity to decrease competition through consolidation or other means, it's blatantly obvious where their true loyalties lie.
