Airlines Make More Money Selling Miles Than Selling Seats — Here's How

In the current landscape of American aviation, the most profitable part of an airline is often not the cabin, but the wallet. For major carriers like Delta Air Lines, the relationship with financial institutions has become a primary engine of growth. In 2023, Delta reported collecting $6.8 billion from its partnership with American Express, a figure that reached approximately $8.2 billion in 2024, according to reporting from TheStreet. For these carriers, passenger flights are increasingly serving as the foundational infrastructure for a multibillion-dollar financial services business.

This shift marks a fundamental change in the industry’s economic model. For decades, airlines focused primarily on load factor—the percentage of seats filled on a flight. Today, the priority for management is the expansion of high-margin revenue streams that diversify income beyond ticket sales. This strategy effectively insulates airline profits from the historical volatility of jet fuel prices and labor costs, decoupling the bottom line from the traditional risks of flight operations.

The Minting of a Private Currency

To understand how an airline functions as a bank, one must look at the mechanics of frequent-flyer programs. Miles have evolved from simple loyalty rewards into a private currency. Airlines generate these rewards and sell them in massive bulk quantities to banks like American Express, JPMorgan Chase, and Citigroup.

Source: TheStreet / Delta Financial Results, 2026

The mechanics of this system are highly lucrative. Banks purchase miles from an airline at a discount. The bank then distributes these miles to cardholders as rewards for everyday spending on groceries, gas, and retail. When a traveler eventually redeems those miles for a flight, the airline provides a seat that might have otherwise remained empty, or one that it values at a lower internal cost.

The spread between what the bank pays for the mile and what it costs the airline to fulfill the reward represents significant profit. In 2024, Delta’s $8.2 billion in cash from American Express provided a critical buffer for the company’s financials. Without these financial partnerships, the basic economics of the industry would be under severe pressure. According to a 2024 analysis by Visual Approach Analytics, no major U.S. network airline would have achieved an operating profit that year solely by moving people and cargo. Delta’s 10.5 percent operating margin, for instance, would have shifted to a 2.5 percent loss without its loyalty revenue; United’s 8.9 percent margin would have swung to a 1.9 percent deficit.

“No network airline made money moving people and things in 2024,” said Courtney Miller, an analyst at Visual Approach Analytics. “All large airlines result in a negative operating profit margin when you back out loyalty revenues.”

The Valuation Paradox

This financialization has created a scenario where a loyalty program is often worth more than the airline that operates it. During the pandemic, when global travel came to a near-standstill, airlines stayed afloat by using their frequent-flyer databases as collateral for billions in loans. Investors began to view the business through a new lens: while the airline itself is a low-margin operational reality involving expensive aircraft and fluctuating fuel prices, a loyalty program is a light-asset, high-margin software and marketing business.

By 2024, the valuation of Delta’s SkyMiles program was estimated at approximately $31 billion. At various points, the valuation of such programs has rivaled or exceeded the total market capitalization of the airlines themselves. In essence, market data suggests the flight operations and routes are sometimes viewed as a secondary component to a highly successful credit card marketing business.

American Airlines reinforced this trajectory in late 2024 when it signed a new 10-year exclusive agreement with Citigroup to anchor its rewards ecosystem through the mid-2030s. SEC filings show the airline reported $6.1 billion in cash remuneration from its card partners in 2024, a 17 percent increase from the previous year.

A Global Expansion

While the United States is the primary market for this trend, the model is being adopted globally. In Europe, International Airlines Group (IAG), the parent company of British Airways and Iberia, has turned its “Avios” points into a major profit center. IAG Loyalty’s profits doubled between 2019 and 2024, with the group issuing hundreds of billions of points annually.

“The biggest drivers of the Group’s increase in operating profit for 2024 were Iberia and British Airways… with IAG Loyalty profit now double what it was in 2019,” said Luis Gallego, CEO of IAG, in a performance review. The group’s loyalty arm operates at margins that far exceed those of traditional aviation activities, providing a stable source of cash that allows for continued investment in new, more efficient aircraft.

The Consumer Cost: Devaluation and Complexity

For the consumer, the rise of the airline-as-bank introduces new challenges. Because airlines control both the supply of miles and the “price” of the seats they can buy, they have the authority to devalue the currency. This functions as a form of private inflation that exists outside the regulation of central banks.

As airlines issue more miles to sell to banking partners, the purchasing power of those miles can drift downward. There is also the financial concept of “breakage”—miles that are earned by consumers but never redeemed. For an airline, an unredeemed mile is a liability on the balance sheet that eventually converts to profit if it remains dormant.

This tension has drawn the attention of federal regulators. In 2024, the U.S. Department of Transportation and the Consumer Financial Protection Bureau (CFPB) held a joint hearing to investigate what they described as “bait and switch” tactics in loyalty programs.

“Credit card companies promise upfront benefits for signing up and using their rewards card, but often bury complex terms in the fine print for using the rewards,” Rohit Chopra, Director of the CFPB, said during the inquiry. The bureau noted that customer complaints regarding rewards programs surged compared to pre-pandemic levels, focusing on the difficulty of redeeming points and the sudden expiration of rewards.

Who Really Pays for the Rewards?

While airlines and banks benefit from high levels of consumer spending, the cost of “free” travel rewards is often distributed across the broader economy. When a consumer swipes a premium rewards card, the merchant—whether it is a local grocery store, a neighborhood pharmacy, or a gas station—pays an interchange fee.

These fees are significantly higher for premium travel rewards cards, often ranging from 2 to 3 percent, compared to the much lower fees associated with basic cards or debit cards. To maintain their margins, these “Main Street” businesses generally raise prices for all customers to cover the cost of the swipe fees.

This creates an invisible transfer of value. A shopper paying with cash or a standard debit card for their weekly groceries is effectively subsidizing the first-class upgrade or “free” international flight of the person in line ahead of them swiping a high-end travel card. This dynamic represents a redistribution of costs from lower-income consumers to the frequent-flyer class.

The Future of the Flying Bank

The aviation industry appears committed to its financial identity. Analysts at Morgan Stanley have noted that travel rewards remain a primary driver of growth in the credit card sector, suggesting that these partnerships will continue to deepen.

We have entered an era where the flight itself is often a secondary product—a physical manifestation of a digital financial transaction. The airline of the future functions as a high-end marketing and financial firm that operates a fleet of aircraft to support its currency.

For the passenger in the cabin, the experience remains defined by the physical realities of travel: the seat, the service, and the schedule. But in the corporate headquarters of major carriers, that passenger is primarily a participant in a vast, global ledger—a customer who is often more profitable to the airline when they are on the ground swiping a card than when they are actually in the air.