Originally Posted by
FriendlyPilot
Absolutely yes.
That revenue would still go to those airlines. It just would come from the passengers directly instead of the banks. A person who uses miles to buy a ticket don't just do it because they are bored. They do it to solve a problem. Without the cards they'd just pay. Every day thousands of people decide whether to use miles or pay cash to fly or upgrade. Without the miles, they just pay. The credit card miles are nothing more than a loyalty program that ties them to a specific airline.
It would be like saying that the big 3 don't make any money on economy seats, that its breakeven and all the profit comes from first class. Or that if you only count window and aisle seats the airlines are breakeven, but the middle seat revenue is the profit. You can't just parse the revenue that way because its all baked into the same bag of income and expenses, just like credit card "revenue". Also there is a cost to carry those passengers who use miles, so its not "all profit".
Bottom line is that its not relevant because almost every airline has some credit card deal, but all airlines do not offer the same route network choices. If you want to fly from Boston to Tokyo, you really only have 3 choices of US airlines, regardless of what airline credit card you happen to have.
I disagree with nearly every point you’ve made here. In DL case for instance it is reported that there is a 57% profit margin on the points they sell to the credit card company. Points that are then part of the benefit to the consumer who use the credit card on things other than traveling on DL. The points bought by the credit card companies absolutely exceed those that could be sold by normal earnings of a regular traveler buying tickets. Not to mention how many of those points are actually used for the purpose of travel vs. sitting in a random account for years and years? Kind of like gift cards which get thrown in a drawer and are never used. I’d like to see the numbers of loyalty points awarded vs used in a year. If DL made 7b on credit card partnerships last year I’d venture to speculate only that they would’ve done barely half that in revenue without the program.