How loyalty programmes fuel airline profits

If you thought airlines made money only when planes are full, think again. US carriers generate billions by selling miles in bulk to banks and credit card issuers. These deals offer a predictable, high‑margin revenue stream that isn’t tied to ticket sales or fuel costs. In fact, some analysts estimate American Airlines derives around 80% of its profitability from loyalty members and premium tickets, not from economy fares.

• Loyalty programmes acted as a financial lifeline during the pandemic when travel demand collapsed—airlines kept cash coming in by marketing miles to banks.
• By partnering with major issuers, airlines avoid the operational cost of empty seats while still monetising customer loyalty.

At a time when profit margins on tickets are razor thin, loyalty has become the most profitable part of the business.

Regulatory scrutiny and competition

It’s not all smooth flying. The U.S. Department of Transportation has launched investigations into frequent flyer programmes following complaints about opaque pricing and misleading advertising. Lawmakers have also proposed capping interchange fees on credit card transactions—legislation that could dramatically cut the revenue airlines earn from co‑branded cards.

Meanwhile, competition in the loyalty space is fierce. Alaska Airlines, Delta, American, JetBlue and United continually tweak earning and redemption charts to attract high spenders, while smaller carriers explore creative ways to stand out. New technologies like blockchain‑based rewards platforms are even being explored as the next frontier.

If you’re not yet a member, it’s easy to join. Sign up for Alaska’s Mileage Plan here or enrol in United’s MileagePlus here to start earning miles towards your next trip.

Bottom line

The next time you hear about an airline posting a billion‑dollar profit, remember that loyalty programmes and their credit card partnerships are doing much of the heavy lifting. These schemes have become financial engines in their own right—so savvy travellers should maximise them, while regulators weigh the balance between consumer protection and corporate profit.