U.S. airlines are increasingly relying on co-branded credit cards for revenue, shifting the focus of loyalty programs away from traditional flying. This trend is evident in how airlines reward travellers, with many programs favouring credit card spending over miles earned from flights. Major carriers such as United Airlines, American Airlines, and Delta Air Lines are adjusting their loyalty program rules to incentivise credit card use, making it harder to earn rewards on the lowest fares. United Airlines, for example, will soon offer enhanced mileage earning for cardholders, while restricting mileage accrual on basic economy tickets for non-cardholders.
Banks pay airlines billions annually for miles and other loyalty program benefits, sometimes surpassing operating income. This revenue stream provides stability amidst fluctuating jet fuel costs and airline margins. However, it also exposes airlines to risks associated with bank strategy, credit conditions, and regulatory changes affecting reward program funding. Jay Sorensen of IdeaWorks noted a decline in value for frequent flyer members, with reward “payback” significantly reduced since 2019 due to airlines cutting mileage earning on cheaper tickets.
While airlines maintain that credit cards enhance rather than replace traditional earning methods, the reliance on card partnerships is undeniable. Delta Air Lines, a major U.S. airline, received $8.2 billion from American Express in 2025, representing a substantial portion of its operating revenue. American Airlines reported $6.2 billion in cash payments from co-brand partners. Alaska Airlines also acknowledges the stabilising effect of its co-brand partnership during demand swings. Alaska Airlines provides passenger and cargo air transportation, while Horizon Air Industries offers scheduled air passenger service to destinations in the Pacific Northwest.
However, this credit-card-driven loyalty model faces challenges. Potential economic downturns could lead banks to tighten lending and reduce co-branded card marketing, impacting airline earnings. Furthermore, proposed legislation like the Durbin-Marshall bill in the U.S. Congress, aimed at increasing competition in payment-network routing, could jeopardise airline credit card rewards. Regulatory scrutiny of airline rewards programs is also increasing, with consumer advocates calling for stronger disclosure regarding changes to earning and redemption values.
