By Rajesh Kumar Singh
CHICAGO, March 13 (Reuters) – For years, the fortunes of U.S. airlines have been dictated by fares, fuel bills and how many passengers fill their cabins. Now, a growing share of their cash comes from co-branded credit cards, and that is increasingly showing up in how loyalty programs reward travelers.
United Airlines said last month that, starting April 2, 2026, regular members without its card will earn only 3 miles for every dollar spent on eligible flights, while cardholders will earn at least 6. The airline also said regular members will need a qualifying United card to earn miles on basic economy tickets.
American Airlines has stopped giving AAdvantage miles and Loyalty Points on basic economy tickets. Delta Air Lines, meanwhile, lets customers use spending on its co-branded American Express cards to help qualify for elite status.
A Reuters review of filings by major U.S. airlines from 2021 through 2025 shows why. Banks pay carriers billions of dollars a year for miles and other payments tied to their loyalty programs — in some years rivaling operating income.
That money is less tied to ticket sales, a distinction with fresh relevance as the Middle East conflict sends jet-fuel costs sharply higher and squeezes airline margins. But it also leaves airlines more exposed to bank strategy, credit conditions and political decisions that could change how rewards programs are funded.
CHEAPEST FARES, FEWER REWARDS
Airlines are rewriting loyalty-program rules to emphasize credit-card spending, making rewards harder to earn on the lowest fares.
“The value provided to frequent-flyer members has decreased over time,” said Jay Sorensen, head of consultancy IdeaWorks. Its 2025 U.S. Domestic Reward Report found reward “payback” — linking cash fares to award prices — has fallen by about half since 2019, as several airlines cut back or eliminated mileage-earning on their cheapest tickets.
David Robertson of the Nilson Report said that if redeeming miles feels out of reach, some consumers may abandon airline cards, potentially prompting pressure from banks that buy miles in bulk.
Airlines reject the idea that cards are replacing flying as the main path to rewards. Alaska Airlines loyalty chief Kevin Scott said non-cardholders “continue to earn meaningful value through flying.” Co-branded cards, he said, are meant to enhance the program, not replace traditional earning.
BILLIONS FROM BANKS
Airlines report credit-card partner payments differently, but the sums are large across the industry.
Delta received $8.2 billion in cash from American Express in 2025 — about 14% of adjusted operating revenue and roughly 1.4 times adjusted operating income. A Delta spokesperson said part of that cash is recognized as revenue immediately, while some is deferred until miles are redeemed.
American reported $6.2 billion in 2025 cash payments from co-brand and other partners, roughly four times its adjusted operating income. The airline expects its new co-brand credit card agreement with Citi to help narrow its profit gap with rivals Delta and United.
At Alaska, loyalty revenue made up about 16% of total revenue, and CFO Shane Tackett told Reuters the co-brand partnership helps stabilize results through demand swings.
But the business also ties airlines more closely to bank partners and the credit cycle. Delta says nearly all of its marketing-agreement cash comes from American Express, while Southwest Airlines says most points it sells go to JPMorgan Chase.
Brian Riley, a payments analyst, said banks in a downturn tighten lending and cut co-branded card marketing, slowing new-account growth and affecting airline earnings within two to three quarters.
POLITICAL PRESSURE
The credit-card-driven loyalty model also faces pressure from merchants and lawmakers seeking to overhaul the fee system that helps fund rewards. A bipartisan bill in the U.S. Congress known as the Durbin-Marshall proposal would require more competition in payment-network routing, which supporters say would lower merchant costs.
Trade group Airlines for America warned the bill could jeopardize airline credit-card rewards, citing the hit taken by debit-card rewards after a similar regulatory change, and said consumers value airline loyalty programs.
Merchants and consumer groups disagree. Dylan Jeon of the National Retail Federation said premium rewards cards carry the highest interchange rates, and merchants often pass those costs on to consumers, meaning non-users help subsidize users.
Analysts say high U.S. interchange fees help fund rich rewards, and research shows caps in Europe and Australia reduced rewards, raised annual fees and led some cards to disappear.
Separately, President Donald Trump has proposed a one-year cap on credit-card interest rates at 10%, a move banks and airline groups say could hurt rewards programs.
REGULATORY SCRUTINY
Airline rewards programs have drawn regulatory scrutiny as well. A U.S. Department of Transportation spokesperson said the department asked American, Delta, Southwest and United in 2024 for information about rewards programs and policies. All four responded, and their replies are under review.
John Breyault, vice president of public policy at the National Consumers League, said stronger disclosure is needed as airlines can change earning and redemption values without giving customers clear advance notice.
“The modern airline is a gigantic rewards program that just happens to fly airplanes,” Breyault said.
(Reporting by Rajesh Kumar Singh in Chicago; Editing by Matthew Lewis)
