>what the actual harm is in airlines being "quasi-banks"
The word "air" in "airline" implies that the main purpose of the business is to move passengers and freight via aircraft. If the main purpose of the business is to generate credit card swipe fees it will probably not do a good job at moving passengers and freight through the air since that part of what it does doesn't generate most of the profits. And we've seen this already with the onerous fees and packed planes that are the standard model now ... because each airline has a captive population that flies it because that is where their points are.
Are the fees because of lock-in from credit card points, or are they just airlines squeezing as much money out of customers as possible? I'm not convinced it's the former in the slightest. It's also worth noting that much of these onerous fees and cramped accommodations are not applied to their high mileage customers who by your logic are the most locked in.
The word "air" in "airline" implies that the main purpose of the business is to move passengers and freight via aircraft. If the main purpose of the business is to generate credit card swipe fees it will probably not do a good job at moving passengers and freight through the air since that part of what it does doesn't generate most of the profits. And we've seen this already with the onerous fees and packed planes that are the standard model now ... because each airline has a captive population that flies it because that is where their points are.