Airlines Shift Loyalty Focus to Credit Cards Over Flying for Revenue Boost

Major U.S. airlines are restructuring their frequent flyer programs to prioritize credit card spending over actual flights as a key revenue source. Banks now pay airlines billions annually for miles and loyalty partnerships, sometimes matching their operating income. The changes mean travelers without airline credit cards will earn fewer rewards, especially on budget tickets.

The airline industry is experiencing a fundamental shift in how carriers generate revenue and reward customer loyalty, with credit card partnerships now playing a central role in their business models.

Major U.S. carriers are overhauling their frequent flyer programs to emphasize credit card usage rather than traditional flight-based rewards. This transformation reflects how banking partnerships have become a crucial income stream, sometimes rivaling what airlines earn from their core operations.

United Airlines announced significant changes taking effect April 2, 2026, where standard members without the airline’s credit card will receive just 3 miles per dollar on qualifying flights, compared to at least 6 miles for cardholders. Additionally, passengers flying basic economy fares must have a United-branded card to earn any miles at all.

Similar adjustments are happening across the industry. American Airlines has eliminated both AAdvantage miles and Loyalty Points for basic economy passengers, while Delta Air Lines allows customers to count spending on its American Express partnership cards toward elite status qualification.

Financial filings from 2021 through 2025 reveal the substantial monetary impact of these banking relationships on airline bottom lines. Banks contribute billions annually to carriers through mile purchases and loyalty program payments, creating a revenue stream less vulnerable to traditional aviation challenges like fluctuating fuel costs and passenger demand.

This financial model gains particular importance as Middle East conflicts drive jet fuel prices higher, pressuring airline profit margins. However, it also creates new dependencies on banking strategies, credit market conditions, and potential regulatory changes affecting rewards program funding.

Industry analysts note that airlines are deliberately making rewards more difficult to obtain on their lowest-priced tickets while pushing credit card adoption.

“The value provided to frequent-flyer members has decreased over time,” stated Jay Sorensen, who leads consultancy IdeaWorks. His organization’s 2025 U.S. Domestic Reward Report discovered that reward “payback” – comparing cash ticket prices to award redemption costs – has dropped approximately 50% since 2019 as multiple airlines reduced or eliminated mile-earning opportunities on budget fares.

David Robertson from the Nilson Report cautioned that if mile redemption becomes too challenging, consumers might abandon airline credit cards entirely, potentially creating pressure from banks that purchase miles in large quantities.

Airlines dispute suggestions that credit cards are replacing flight activity as the primary route to earning rewards. Alaska Airlines loyalty executive Kevin Scott emphasized that non-cardholders “continue to earn meaningful value through flying.” He described co-branded cards as program enhancements rather than replacements for traditional earning methods.

The financial scale of these banking partnerships varies across carriers but represents substantial sums industry-wide.

Delta collected $8.2 billion from American Express in 2025, representing approximately 14% of adjusted operating revenue and roughly 1.4 times their adjusted operating income. A Delta representative explained that portions of this money become immediate revenue while other amounts are held until customers redeem their miles.

American Airlines reported $6.2 billion in 2025 payments from co-brand and additional partners, about four times their adjusted operating income. The carrier anticipates its new Citi credit card agreement will help close profitability gaps with competitors Delta and United.

At Alaska Airlines, loyalty-related revenue comprises roughly 16% of total revenue, with CFO Shane Tackett noting that co-brand partnerships help maintain stable financial results despite demand fluctuations.

These arrangements also create stronger ties between airlines and their banking partners, along with exposure to credit market cycles. Delta acknowledges that nearly all marketing agreement revenue comes from American Express, while Southwest Airlines indicates most of its sold points go to JPMorgan Chase.

Payments analyst Brian Riley explained that during economic downturns, banks typically reduce lending and cut co-branded card marketing efforts, slowing new account acquisition and impacting airline earnings within two to three quarters.

The credit card-focused loyalty approach faces challenges from merchants and legislators seeking to reform the fee structure supporting rewards programs. A bipartisan congressional measure called the Durbin-Marshall proposal would mandate increased competition in payment network routing, which supporters claim would reduce merchant expenses.

Airlines for America, an industry trade organization, warned this legislation could threaten airline credit card rewards, pointing to reduced debit card rewards following similar regulatory changes. The group maintains that consumers highly value airline loyalty programs.

Merchant and consumer advocacy groups disagree with this assessment. Dylan Jeon from the National Retail Federation noted that premium rewards cards carry the highest interchange fees, with merchants frequently passing these costs to consumers, meaning non-users effectively subsidize cardholders.

Industry experts indicate that elevated U.S. interchange fees help support generous rewards programs, with research demonstrating that fee caps in Europe and Australia reduced rewards, increased annual fees, and eliminated some card products entirely.

Additionally, President Donald Trump has suggested implementing a one-year 10% cap on credit card interest rates, which banking institutions and airline organizations claim could damage rewards programs.

Airline rewards programs have attracted regulatory attention as well. A U.S. Department of Transportation representative confirmed the department requested information about rewards programs and policies from American, Delta, Southwest, and United in 2024. All four airlines provided responses currently under departmental review.

John Breyault, public policy vice president at the National Consumers League, argued for enhanced disclosure requirements since airlines can modify earning and redemption values without providing customers clear advance warning.

“The modern airline is a gigantic rewards program that just happens to fly airplanes,” Breyault observed.