According to google DL made an astonishing 50% profit margin on a nearly 7B in 2023 and roughly 10B in 2024 credit card revenue.

If delta had a crappy product and a crappy network and unreliable service, their credit card program wouldn't be printing money for them. The CC doesn't make money in a vacuum, and it's not some magic thing that gives them an advantage over the competition. It is the result of providing a desirable product and service.

You’re correct, but they certainly don’t hurt the company or how they proceed with that acquired wealth.

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.

It would be interesting to see what would happen if loyalty programs didn’t exist in terms of passengers not being shackled to a given alliance and free to chose their flight based on other factors. I’d wager smaller ULCCs/LCCs would have a much better chance of growth and market penetration. But the chances of that happening would be slim to none.

ULCC loyalty programs already exist. Like Frontiers’ unlimited travel for a flat fee. Don’t know how many are lining up for that though. Sounds gimmicky and painful to endure.

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.

Yes but if loyalty programs didnt exist then passengers would look more closely at product/price offerings and not be so shy about flying an airline where they dont have triple black medallion crystal status and need to fly to maintain it. Frontier flies to some unique routes not widely served by legacies, so maybe a passenger would chose them vs flying a legacy to a nearby city and renting a car for example.

Paywalled article:
"JetBlue Leases 20 DCA Slots to AA?"
https://x.com/Enilria6/status/1879202200590987681


Does anyone know anything about this? To me, IF a merger does happen, AA has always felt like the most likely candidate

Basically I think their profit margins would go to near zero, plus or minus.

Eventually they'd adapt the business model though, higher fares, anciallary charges, etc.