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For years, the fate of U.S. airlines has hinged on fares, fuel prices and the number of passengers filling cabins. Now, an increasing percentage of their cash comes from co-branded credit cards, and it’s increasingly showing up in the way loyalty programs reward travelers.
United Airlines UAL.O announced last month that starting April 2, 2026, non-cardholders will only earn 3 miles per dollar spent on eligible tickets, while cardholders will earn at least 6 miles. The airline also said members must have an eligible United Card to earn miles on basic economy tickets.
American Airlines AAL.O has stopped awarding AAdvantage miles and loyalty points for basic economy tickets. Meanwhile, Delta Air Lines DAL.N is allowing customers to qualify for elite status by paying with co-branded American Express cards.
A Reuters review of filings by major U.S. airlines from 2021 to 2025 revealed why. Banks pay airlines billions of dollars a year in miles and other payments related to loyalty programs, which in some years rivals their operating profits.
That money is not tied to much in ticket sales, a distinction that has taken on new relevance as conflicts in the Middle East have sent jet fuel costs skyrocketing and squeezed airline margins. But at the same time, airlines will be exposed to political decisions that could change bank strategies, credit profiles and how reward programs are funded.
Cheapest fares, few benefits
Airlines are rewriting the rules of their loyalty programs to emphasize credit card usage, making it harder to earn rewards on the lowest fares.
“The value provided to frequent flyers has diminished over time,” said Jay Sorensen, director of consulting firm IdeaWorks. The airline’s 2025 U.S. Domestic Award Report found that award “reward” (the link between cash fares and award prices) has fallen by about half since 2019, as several airlines have reduced or eliminated mileage accrual on the cheapest tickets.
David Robertson of the Nilsson Report said some consumers may abandon airline cards if they find mile redemptions unaffordable, potentially leading to pressure from banks to buy miles in bulk.
Airlines reject the idea that airline tickets will replace airline tickets as the primary means of earning rewards. Alaska Airlines ALK.N loyalty chief Kevin Scott said non-cardholders “continue to capture meaningful value through flying.” He said co-branded cards are meant to enhance the program and not replace traditional income.
billions of dollars from banks
How payments are reported to credit card partners varies by airline, but the amounts are large across the industry.
Delta Air Lines received $8.2 billion in cash from American Express AXP.N in 2025, representing about 14% of its adjusted operating revenue and about 1.4 times its adjusted operating profit. A Delta spokesperson said some of the cash will be recognized as revenue immediately, while some will be deferred until the miles are redeemed.
American Airlines reported $6.2 billion in cash payments from co-brands and other partners in 2025, about four times its adjusted operating income. The airline hopes its new co-branded credit card deal with CitiCN will help close the profit gap with rivals Delta Air Lines and United Airlines.
Royalty revenue accounts for about 16% of Alaska’s total revenue, and Chief Financial Officer Shane Tackett told Reuters the co-branding partnership helps stabilize performance through fluctuations in demand.
However, this business ties airlines more closely to partner banks and credit cycles. Delta Air Lines Inc. said nearly all of the cash from its distribution agreements came from American Express, and Southwest Airlines Co. LUV.N said most of the points it sold would be donated to JPMorgan Chase & Co. JPM.N.
Payments analyst Brian Reilly said depressed banks will tighten lending and reduce marketing of co-branded cards, slowing new account growth and hitting airlines’ profits within two to three quarters.
political pressure
Credit card-driven loyalty models are also facing pressure from merchants and lawmakers to overhaul the fee systems that fund rewards. A bipartisan bill in the US Congress, known as the Durbin-Marshall proposal, would require more competition in payment network routing, which supporters say would reduce costs for merchants.
The industry group Airlines for America warned that the bill could jeopardize airline credit card benefits, citing the hit debit card benefits took after similar regulatory changes, and said consumers value airline loyalty programs.
Vendors and consumer groups disagree. Dylan Chong of the National Retail Federation said premium loyalty cards have the highest redemption rates, and merchants often pass those costs on to consumers, meaning non-users help subsidize users.
Analysts say high exchange fees in the U.S. are funding big rewards, and research shows caps in Europe and Australia have reduced rewards, raised annual fees and caused some cards to disappear.
Separately, President Donald Trump has proposed capping credit card interest rates at 10% for one year, a measure that banks and airline groups argue could harm rewards programs.
regulatory oversight
Airline reward programs are also subject to regulatory scrutiny. A spokesperson for the U.S. Department of Transportation said the agency has asked American Airlines, Delta Air Lines, Southwest Airlines and United Airlines for information about their rewards programs and policies in 2024. All four have responded and their responses are under consideration.
John Blayault, vice president of public policy at the Consumer Federation of America, said stronger disclosures are needed because airlines can change the amount earned or redeemed without giving clear advance notice to customers.
“Today’s airlines are huge rewards programs that just happen to fly planes,” Brehaut said.
Reporting by Rajesh Kumar Singh in Chicago. Editing: Matthew Lewis
