Frequent-flier programs are becoming one of the most prized assets in aviation.
Loyalty programs are now indispensable to some airlines, generating healthy profits in good times and blunting losses in downturns. By one estimate, the programs are worth hundreds of billions of dollars globally, accounting at times for a large share of the value of the companies that run them.
The loyalty ecosystem is fueled in large part by credit card spending, particularly in the United States, where it is widespread and most major airlines work with banks to issue cards tied to frequent-flier programs. Three of the biggest U.S. carriers — American Airlines, Delta Air Lines and United Airlines — earn billions of dollars annually from cards and loyalty programs, revenue that has been vital to their success.
“A very large share of the profits are directly attributable to the loyalty program,” said Evert de Boer, managing director at On Point Loyalty, a consulting firm. “If you were to take away the loyalty programs, it would have a huge impact on the big U.S. carriers.”
The programs have reinforced the hold that the biggest U.S. airlines have on air travel, providing an edge over smaller or low-fare airlines, some of which are losing money. The loyalty programs have helped those large carriers attract and retain customers, who often book with their favored airline because of the perks even if they sometimes pay more.
But the cards that underpin those programs have also attracted critics. Restaurants, retailers and some lawmakers want to overhaul and effectively lower the fees that make loyalty programs particularly profitable for U.S. banks and airlines. For now, those efforts at change have had limited success in Congress.
American Airlines started the loyalty arms race in 1981 when it created its AAdvantage frequent-flier program. United announced a similar offering, MileagePlus, within days, and many major competitors soon followed suit. Over time, the rewards began to behave more like currency as airlines issued branded credit cards and sold loyalty points to other businesses.
Starting in the 2010s, the major U.S. airlines made two big changes that analysts said made the programs even more profitable. The airlines now primarily reward customers for how much money they spend rather than how many miles they fly. And the airlines have let prices of tickets booked with points fluctuate more based on supply, demand and other factors.
“These programs are businesses,” said Thomas O’Toole, an associate dean for executive programs at the Kellogg School of Management of Northwestern University and a former chief marketing officer at United Airlines. “They are very strategic businesses, and they are very rational businesses.”
In a 2023 report, Mr. de Boer and a colleague estimated that Delta’s SkyMiles program was the world’s most valuable loyalty plan, worth about $28 billion. Investors value Delta itself at around $40 billion, based on its stock price.
The loyalty program at American is worth about $24 billion, while United’s is worth $22 billion, according to the report. At Southwest Airlines, which started as a low-fare airline but has become one of the country’s biggest carriers, the loyalty program is worth around $9 billion.
The airlines share little publicly about their loyalty programs, but American and Delta each received about $7 billion from frequent-flier programs last year and United about $6 billion, according to an analysis of financial filings by Jay Sorensen, who runs IdeaWorksCompany, a consulting firm that works for airlines and other aviation businesses.
Those programs are supported in part by the millions of people who use airline credit cards and then earn airline points for spending. The banks that issue those cards buy those points from the airlines in bulk, typically spending many billions of dollars every year.
“What really changed the dynamics of these programs is the arrival of credit cards,” Mr. Sorensen said.
Banks recoup that money by charging interest and fees to card users and from fees paid by retailers, restaurants and other merchants every time customers pay with credit cards. For the banks, airline cards bring in many customers who fly and spend a lot.
Last year, consumers spent about $186 billion on Delta-branded credit cards, according to an analysis of securities filings of American Express, the airline’s credit card partner. That was about 12 percent of global spending on cards issued by the bank.
Delta said in a financial filing that cash sales of loyalty points to American Express were $7.4 billion in 2024, an 8 percent increase from the year before.
Many travelers love the cards and loyalty programs. By earning status, they can board planes early, enter airport lounges and enjoy other perks. Racking up points for dream vacations or seat upgrades is a powerful motivator, too.
Those benefits create what Dwight James, Delta’s senior vice president of loyalty, calls “an emotional bias” toward the airline.
“The ability to earn currency and the utility it brings you becomes something that is really worth attaching to,” he said. “We want it to be seamless, we want to take the cognitive stress of travel out of the equation, we want to be a one-stop shop.”
The appeal of status and perks has helped make air travel less of a commodity business for the biggest airlines. A small but sizable share of points also go unused, experts said.
Joe McFarren, who lives in Minneapolis with his wife and daughter, used to be dismissive of loyalty programs, but that changed a few years ago when he started flying regularly for his job at a tech firm. Now, he goes out of his way to fly on Delta, which dominates flights at his local airport. He has attained the airline’s highest customer status, which he often uses to upgrade seats for his family on long international trips.
“You land, you’re not super groggy, you actually had decent sleep on the plane and you can kind of get right into it,” he said. “That’s the singular thing that I use to kind of gun for status.”
Loyalty programs have become so valuable that during the pandemic, American, United and Delta each used their programs as collateral to borrow billions of dollars. The companies were struggling because they had to ground many planes and others flew largely empty.
In an interview with The New York Times, Luc Bondar, the president and chief operations officer of United’s MileagePlus, said, “What that did was open the eyes of the industry, of the executive leadership, to think about the program differently, as a source of stability but also as a platform for different types of value creation and growth.”
Even when people aren’t flying much, they use airline credit cards and loyalty programs. During the recession in 2008 and 2009, for example, United’s overall revenue dropped 19 percent, but its loyalty revenue fell only 2 percent, the airline said in a 2020 presentation to investors.
Of course, consumers’ love affair with loyalty programs may not last forever. If airlines make it too hard to redeem rewards or get perks like seat upgrades or access to airport lounges, customers could defect.
Regulation may also threaten the loyalty business. A decade ago, the European Union placed caps on the fees that credit card companies can charge merchants — now set at 0.3 percent of the transaction amount. The United States does not cap those fees, about 1.8 percent of an average purchase, most of which funds the rewards distributed to customers, according to a recent report from the Federal Reserve Bank of New York.
A bipartisan group of senators has called for changes to those so-called swipe fees. Their legislation is backed by restaurants and retailers but opposed by banks and airlines. The odds of its advancing are uncertain with Republicans in control of Congress and President Trump in office, given the antipathy of many conservatives toward regulation.
Many analysts say they expect airline loyalty programs to keep growing and evolving.
Some airlines are already dabbling in things far afield from travel. United, for example, said last year that it would start offering its customers media content, experiences and various products and services from other brands. Delta has established partnerships with Starbucks and Uber that allow its customers to earn points by buying lattes and booking rides.
Loyalty points have become such a valuable currency that many businesses are eager to join programs with many users. IAG, which owns British Airways, Iberia and other European airlines, created a stand-alone business for its loyalty program, Avios. That program has become popular enough that two airlines that IAG does not own, Finnair and Loganair, have signed up to use it.
Mr. Bondar, the United executive, said his airline thought it could still do a lot more with its MileagePlus program. “We’re going to continue to build these out in ways that create resilience for the airline and relevance for the customer.”
Niraj Chokshi is a Times reporter who writes about aviation, rail and other transportation industries.
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