Airline companies are now credit card companies.

Once upon a time, airlines made money from flying airplanes. This seems pretty obvious, yes? You purchase a ticket. They deliver you to the destination and, hopefully, make some profit in the process. This is no longer true. Today, the biggest airline profits are not from flying but from selling loyalty cards to banks who then give out credit cards as confetti. 

Your boarding pass might say ‘passenger,’ but behind the scenes, you’re really just a data point with spending potential. The flight becomes almost irrelevant in this model. The real action is taking place between banks and airlines. It’s all about the billions that are being traded for your loyalty. 

Miles not miles traveled.

Airlines used to offer loyalty programs as a way of saying thank you. For flying a lot they would give you benefits. The system was set up to give you a free flight, if your cards were played correctly. But then it flipped. Now, those points are what you’re selling.

They don’t only offer them to travelers, but they also sell them to banks in bulk. These banks bundle them up into credit card deals and sell them to customers looking for rewards.

Flights allow you to earn points faster and spend money faster. They appear to be secondary.

• Delta and American Express’s The partnership brings in billions of dollars more than what some airlines bring in from ticket sales.
• This isn’t a side dealIn some cases, they are lifelines. It’s the sale of loyalty rewards that keeps airlines profitable and not flights.

 It’s amazing how inconspicuous and hidden this is. You tap your card, earn your miles and somewhere an airline made money. This is no longer a loyalty program, but a financial product that has wings. 

The airline credit card: How it works 

It’s interesting to note that the revenue stream for your free flight comes from someone else. Banks don’t just randomly choose points when they offer signup bonuses or set targets of 50,000 miles per year or 80,000.

• The airline sells them directly to the customer 
• Offers a fraction as perceived value. 
• This is logged as an immediate revenue by the airline.
• Before a single motor is turned on, money, real money, has changed hands.

It’s amazing how easy it is to set up this setup. 

• The airlines You can earn billions of points at almost no cost.
• The banks get customer acquisition bait
• The cardholderThese Redemption dates seem to be getting further away every year.

For a concrete example, you may notice that seat availability is limited, taxes and fees are increasing, and redemption blackouts are becoming more common. The system still works because points are equated to freedom, upgrades, or elite perks.

You may even be lucky if it is just a middle seat for another country. What is the best part of these airlines? The best part is that loyalty points are never complaining, don’t strike, don’t require fuel and don’t even need inflight snacks. They just sit there quietly on the balance sheet making everything look good. 

What does this mean to passengers?

A passenger might fly a few times a month, use credit cards with the brand name, and accumulate miles. But then, the free flight would cost twice as much in points, plus another $200 in taxes.

It’s not a real thank you when you see the seat that you want is taken, or the dates do not match. You’re then told to check back again.

The system was not designed to exclude anyone, but has evolved over time into prioritising those who spend money rather than those who travel. Some people who don’t fly out but have high credit card balances end up with better perks than those that have flown.

The airlines are fine with it because they don’t care where you go. They only care about how much you spend. The airlines are fine with this because the money, regardless of whether you fly, is already in their bank. 

The larger picture 

It’s easy to think that you are just flying, spending a few hours up in the air, but this is not the case. A profile and a potential conversion used to be all that was needed. Now, it is a marketing funnel.

You can still change the perks, and you can even earn the status upgrades, but notice the next time you board – you’re not just on the plane; you’re the product.