Funding & Finance

US Airlines Don’t Make Money From Planes

In September 2020, with its planes grounded and its revenue in freefall, Delta Air Lines needed cash. Fast. The

By Conor Healy

April 13, 2026

US Airlines Don’t Make Money From Planes

In September 2020, with its planes grounded and its revenue in freefall, Delta Air Lines needed cash. Fast. The airline was burning through $27 million a day. So it did what any rational company would do in a crisis: it put up its most valuable asset as collateral for a $9 billion loan.

That asset was not its fleet of aircraft. Not its airport gates or its route network or its maintenance facilities. It was a points programme. Specifically, SkyMiles, the frequent flyer scheme that tens of millions of Delta passengers use to collect miles when they fly or swipe a co-branded credit card at a grocery store.

Bankers and bond investors handed over $9 billion against the promise of being repaid from the revenues of a loyalty scheme. Delta’s planes, in the eyes of the financial markets, were worth considerably less.

This was not a quirk of the pandemic. It was the moment the curtain got pulled back on one of the most counterintuitive business models in modern commerce: the major American airlines are not primarily in the business of flying people from one place to another. They are in the business of selling frequent flyer miles to banks. The planes are, in a meaningful financial sense, the marketing department.

Who Is Actually Buying the Miles

The answer is not passengers.

When a passenger earns miles for a flight, the airline issues those miles and carries the liability on its balance sheet. But the far larger source of miles in the modern system is not flying at all. It is credit card spending. Banks and credit card companies, particularly in the United States, purchase miles in bulk from airlines and distribute them to customers as rewards for spending money on co-branded cards. Every time a cardholder buys groceries, books a hotel, or fills up their car, the bank pays the airline for the miles that appear in the cardholder’s account.

This is a cash-upfront transaction for the airline. The bank pays immediately. The airline records a liability, the obligation to eventually provide a flight or other redemption, but the cash has already landed. And because airlines control how many miles a redemption costs, they can manage that liability carefully. Award seats on popular routes cost more miles. Award seats on half-empty flights cost fewer. The airline effectively sets its own exchange rate.

The profit margins on this business are extraordinary by airline standards. American Airlines has reported margins of around 52% on its AAdvantage loyalty programme in certain periods. The overall airline industry, in a good year, operates on net profit margins of around 1 to 2%. Selling miles to banks is, by any measure, a better business than selling seats to passengers.

The Numbers

The scale of the credit card payments flowing into American airlines is not widely appreciated outside the United States, where this model has reached its most extreme form.

Delta Air Lines received $6.8 billion from American Express in 2023 alone, as part of its co-branded SkyMiles card partnership. To put that figure in context: Delta’s CEO told investors that roughly 1% of the entire US economy flows through Delta’s co-branded credit cards. The airline is not an exaggeration when it describes American Express as one of its most important business relationships. It is simply accurate.

United Airlines’ MileagePlus programme was valued at $22 billion when United disclosed the figures in 2020. At that point, United’s entire market capitalisation, every plane, every gate, every route, was worth around $10 billion. Investors were, in the words of one financial analyst, assigning negative value to the part of United’s business that actually flies aeroplanes. The loyalty programme was worth twice the airline it belonged to.

In 2020, when Delta used SkyMiles as collateral, demand from investors was so strong that the original $6.5 billion offering was upsized to $9 billion. The four largest US airlines, at the start of 2020 before the pandemic hit, had loyalty programmes with a combined estimated value of $77 billion. The airlines themselves were worth considerably less.

Why This Could Only Happen in America

For readers outside the United States, some of this will require context. The US credit card market operates on significantly higher interchange fees than most of the world. When an American consumer pays with a Visa or Mastercard, the merchant pays a fee that averages around 2% of the transaction. In Europe, interchange fees are capped at 0.3% for consumer cards under EU regulation. In Australia, the Reserve Bank has capped them at 0.5%.

That fee difference is everything. It is what funds the rewards. American banks can afford to buy billions of dollars of airline miles to put on their credit cards because the merchant fees generate the revenue to pay for them. European banks cannot, which is why the British Airways Avios programme, the Lufthansa Miles and More scheme, and Emirates Skywards, while significant businesses, have never reached the point where the programme eclipses the airline in financial value. The economics are structurally different.

This is also why every attempt to import the US super-loyalty model into other markets has run into regulatory walls. The business depends on merchants subsidising consumer rewards through high transaction fees. Markets that have capped those fees have, intentionally or not, also capped the size of their airline loyalty programmes.

What You Are Worth to Your Airline

Most passengers do not know this next part about themselves.

The major US airlines have, over time, fundamentally reoriented their loyalty programmes away from rewarding flying and toward rewarding spending. United, Delta, and American all shifted to revenue-based earning models, where the miles you earn are determined by how much you paid for your ticket rather than how far you flew. The implicit message is clear: the valuable customer is the one who spends money, not the one who travels frequently.

The shift exposes what the airlines think their loyalty programme members actually are. They are not primarily travellers to be rewarded for loyalty. They are credit card holders to be retained. Research by the airlines shows that their most profitable customers, in terms of total value to the business, are not necessarily their most frequent flyers. They are the people who put large amounts of everyday spending on co-branded cards and occasionally fly business class. The airline wants your mortgage payment on its credit card more than it wants you in its seats.

When Delta CEO Ed Bastian mentioned that 1% of the US economy runs through Delta credit cards, he was not talking about people flying to Atlanta. He was talking about people buying school supplies in Ohio.

The Catch

None of this means the airlines have solved aviation. Flying remains a brutally difficult, capital-intensive, cyclically volatile business. Fuel costs spike unpredictably. Labour disputes are expensive and frequent. Aircraft are extraordinarily costly to buy, finance, and maintain. Margins in the actual flying business are thin enough that multiple major US carriers have been through bankruptcy more than once in the last thirty years.

The loyalty revenue does not eliminate these problems. It subsidises them. Without the billions flowing in annually from American Express, Chase, and Citibank, the economics of operating a major network airline in the United States would be considerably more precarious than they already are. The planes are not a loss leader, exactly, but they are the foundation that gives the loyalty programme its value. Without the flights, the miles are worthless. Without the miles revenue, some of the flights would not be financially viable.

The airline needs the loyalty programme to make money. The loyalty programme needs the airline to have something worth earning miles for. Both sides of the business are parasitic on the other in ways that make neither one fully comprehensible on its own.

The Devaluation Problem

Miles are a currency that the issuer can devalue at will, and the issuer has been doing exactly that. Airlines have raised the number of miles required for redemptions repeatedly over the past decade, introduced dynamic pricing on award seats so that the cost of a flight in miles fluctuates with demand, restricted access to partner airline awards, and quietly eliminated the fixed award charts that once let passengers plan around a predictable value. According to one analysis, the average annual devaluation of frequent flyer miles runs at around 15%. The US dollar inflates at roughly 2 to 3% per year. Miles depreciate five times faster.

This is not a coincidence. It is a feature of the business model. Airlines sold miles to banks for cash upfront. The redemption liability sits on the balance sheet. Every time the airline raises the number of miles needed for a flight, it reduces that liability. Devaluation is, from the airline’s financial perspective, profit recognition.

Passengers collecting miles for a dream trip in two or three years are accumulating an asset whose value is controlled entirely by the entity that issued it, has no regulatory protection, and has historically declined significantly over time. The airline industry has, in effect, created a private currency and convinced hundreds of millions of people that saving it is a good idea.

The planes fly. The miles accumulate. The banks pay. And somewhere in the gap between the ticket you bought and the miles you earned, the most profitable part of the airline industry is quietly running a financial services business with your loyalty as the product.