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Extra Credit, Thursday Edition   Another Horrible Quarter for Citi
Apr 18 2008 9:13AM EDT

JetBlue Pushes PayPal Option

As we saw with Frontier, airlines are at risk not only from high jet fuel prices but also from their credit card companies, who have the right to unilaterally hold back a very large percentage of any airline's cashflow. I'm quite sure that's the reason that offers like this one are now appearing: if you pay for your JetBlue plane ticket with PayPal rather than a credit card, they'll immediately give you $20 cash back straight into your PayPal account.

The present offer is quite restrictive: they're doing this for the first 4,500 customers only, and only once per customer, and you need to fly in the next two months. But if it proves popular, and if their credit card company starts making growling noises, expect to see much more along these lines in future. (I suspect one reason for the restrictions is that the airlines have promised the credit-card companies that the cost of buying a plane ticket will not be contingent on the means of payment. But that promise has gone out the window for low-cost airlines in Europe, and it might not last forever in the US, either.)

Should consumers take JetBlue up on its offer? As a rule, no. The insurance you get by paying with a credit card is valuable; PayPal, debit cards, and the like are essentially cash, and come with no insurance at all. $20 cashback is attractive, and it's hard to put a dollar value on insurance, but it's definitely worth knowing what you're giving up when you take that route.

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