Credit Card Partnerships Reshape U.S. Airline Loyalty & Profits

U.S. airlines are fundamentally shifting their business model to rely on revenue from co-branded credit cards, a move that is reshaping loyalty programs and becoming a primary driver of profits. This pivot toward financial partnerships provides a stable, high-margin income stream, insulating carriers from the volatility of ticket sales and fuel costs. For example, Delta Air Lines received $8.2 billion in cash from its partner American Express in 2025, an amount that exceeded its adjusted operating income.

This strategic change alters the core contract with travelers, making it more difficult to earn rewards through flying alone. United Airlines announced that starting April 2, 2026, members without its co-branded credit card will earn half the miles of cardholders on eligible flights. Similarly, American Airlines has eliminated mileage earning on its basic economy fares, pushing customers toward higher spending or card adoption.

The Financial Transformation

Filings from major U.S. airlines highlight the scale of this financial transformation. According to its Q4 2025 financial results, Delta’s $8.2 billion remuneration from American Express represented about 14 percent of its adjusted operating revenue. American Airlines reported $6.2 billion in 2025 payments from co-brand and other partners, a figure roughly four times its adjusted operating income for the period. The carrier expects its new agreement with Citi to further close the profitability gap with its primary rivals.

Even for smaller carriers, the impact is significant. At Alaska Airlines, loyalty revenue accounted for approximately 16 percent of its total revenue in 2025. CFO Shane Tackett noted that these partnerships help stabilize financial results during fluctuations in travel demand. However, this model also increases airlines' exposure to the credit cycle. During economic downturns, banks typically tighten lending and reduce marketing for co-branded cards, which could impact airline earnings within several quarters.

Devaluation and Passenger Impact

For frequent flyers, the emphasis on credit-card spending has led to a tangible devaluation of miles earned through travel. According to the IdeaWorks 2025 U.S. Domestic Reward Report, reward "payback"—a metric linking ticket prices to the value of award redemptions—has fallen by about half since 2019. "The value provided to frequent-flyer members has decreased over time," said Jay Sorensen, president of IdeaWorks.

Airlines maintain that credit cards are meant to enhance, not replace, traditional loyalty. Kevin Scott, loyalty chief at Alaska Airlines, stated that non-cardholders "continue to earn meaningful value through flying." However, consumer advocates argue that the system lacks transparency. "The modern airline is a gigantic rewards program that just happens to fly airplanes," said John Breyault, vice president of public policy at the National Consumers League (NCL), who calls for clearer rules on how airlines can change earning and redemption policies.

Regulatory and Political Headwinds

The growing importance of loyalty programs has attracted scrutiny from lawmakers and regulators. A bipartisan proposal in Congress, known as the Credit Card Competition Act or the Durbin-Marshall bill, aims to increase competition in payment processing. The airline industry group Airlines for America (A4A) has warned the measure could threaten the viability of rewards programs, launching a campaign to Protect Our Points.

Conversely, the National Retail Federation (NRF) supports the bill, arguing that premium rewards cards carry high interchange fees that merchants pass on to all consumers. Separately, a proposal from President Donald Trump to cap credit-card interest rates at 10 percent for one year could also squeeze the bank revenues that fund these partnerships.

The U.S. Department of Transportation (DOT) is also examining the programs. In 2024, the agency requested information from American, Delta, Southwest, and United about their loyalty program policies and is currently reviewing the responses.

Context and Precedents

This is not the first time payment regulations have impacted consumer rewards. In 2010, the Durbin Amendment to the Dodd-Frank Act capped debit card interchange fees, which led to the widespread elimination of debit card rewards programs. Airlines cite this as a direct precedent for what could happen to credit card rewards if the Durbin-Marshall bill passes.

Recent airline actions also provide context for the potential risks of alienating loyal customers. In September 2023, Delta's attempt to overhaul its SkyMiles program by shifting almost entirely to a spend-based model for elite status sparked a severe customer backlash, forcing the airline to partially roll back the changes. This event demonstrates the delicate balance carriers must strike between maximizing loyalty revenue and maintaining customer engagement.

What Comes Next

The industry is moving toward several key milestones. On April 2, 2026, United Airlines' new, two-tiered mileage earning structure is confirmed to take effect, further differentiating rewards for cardholders and non-cardholders. Later that year, the findings from the DOT's probe into loyalty programs are expected to be released, which could lead to new disclosure requirements or regulations.

Why This Matters

This strategic pivot transforms airlines into quasi-financial institutions, where a significant portion of profit is generated from selling miles to banks rather than selling seats to passengers. While this creates a more resilient business model, it also ties the industry's fate to banking regulations and the credit cycle. For travelers, it signals a permanent shift where loyalty is increasingly defined by credit card spending, not just miles flown.

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