The prevailing theory among loyalty wonks these days is that the next generation of travelers cares less about loyalty and more about brand and personalization. But last week, that logic faltered.

Surf Air is a subscription-based airline that operates flights out of a handful of West Coast cities. The concept is great: Pay a monthly subscription fee and fly anywhere in the airline’s network as much as you want. But the concept also relies on reaching a critical mass of travelers and earning their business — which is to say, convincing wealthy travelers to defect from mainstream air carriers.

Last week, Surf Air got into hot water with a former flight operator that alleged that it owed the company $3.1 million. This follows news that the carrier recently switched partners and is now on its third company operating flights. A lawsuit has been filed in New York to help settle the debt.

There’s no direct correlation between the lawsuit and the company’s financial health, of course. But a $3.1 million lawsuit can’t help any startup’s bottom line.

It’s not unlikely, too, that Surf’s fare model was just ahead of its time. Sure, it could have to do with the fact that Surf Air’s subscription fees are $1,950 a month or that its network is only limited to California and a handful of other West Coast cities. But the fact remains: Traditional air carriers, routes, and loyalty programs exist the way they do for one big reason — they work.

— Grant Martin, Business of Loyalty Editor

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Skift Business of Loyalty Editor Grant Martin [gm@skift.com] curates the Skift Business of Loyalty newsletter. Skift emails the newsletter every Monday.

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Photo Credit: A Surf Air plane takes off from a regional airport in California. Subscription-based Surf Air's troubles beg the question of whether the traditional model of airlines and fare pricing can ever be disrupted. Surf Air