Why Airline Loyalty Programs Are So Successful (And Are They Worth it For You?)

If you don’t have an airline loyalty account, you’re behind the curve. To the average flyer, it’s the promise of a free flight. You sign up, start earning miles, and suddenly, you’re on a mission to collect enough for that dream vacation.

But have you ever wondered why these programs exist in the first place? After all, if the airline is just giving away seats, it's not really profitable for them… or is it?

Spoiler alert: Airline loyalty programs aren’t just a cute bonus for travelers. The whole idea is an ingenious cash cow that is a multi-billion dollar business of its own, and invaluable to the cutthroat profit margins in the world of commercial aviation.

They’re not just tools to retain customers. A lot of the time, these programs are even more valuable than the core flight operations!

For example, a report published in 2024 revealed that American Airlines market cap was at $11.4 billion, while their AAdvantage loyalty program was valued at $24 billion. In 2023, Delta Air Lines received $6.8 billion in revenue from American Express on its co-branded Delta Amex card (that accounts for roughly 1% of the entire US GDP).

Wild, right? Let’s unpack this.

Loyalty programs, whether we’re talking airlines, coffee shops, or streaming services, are all based on one simple idea: if you reward people for sticking with you, they’re more likely to come back.

It’s the perfect blend of behavioral psychology and marketing. Give people points, miles, stars, or stamps, and suddenly you’ve gamified the whole experience. We want to stay loyal because we feel like we’re earning something, even if we’re not always sure how valuable it actually is.

With airlines, this becomes even more powerful. Travel is expensive, it’s emotional, and it’s aspirational.

So when a program says, “Stick with us and you’ll get free flights, upgrades, and maybe even lounge access,” you’re hooked.

Here’s where things get really interesting.

These loyalty programs are sometimes more valuable than the airlines themselves. No exaggeration. When COVID hit and airlines were scrambling for cash, what did they do? They used their loyalty programs as collateral to secure billions in loans.

Doesn’t make sense, right? How does an incentive to stick with a single airline translate into loans?

The US carreirs dominate the top 10

This is where the puzzle starts to come together and the big picture starts to make sense.

Airlines partner with credit card companies (think Chase, American Express, Citibank) to offer co-branded cards. You’ve seen them: “Earn 50,000 miles when you spend $3,000 in 3 months!”

For example, a Super Elite member with an American Express Aeroplan Reserve card ($599 annual fee) receives substantially more value than one with no card or a basic card. This card provides 3 points per dollar spent on Air Canada, compared to 2 points with competing cards, along with valuable benefits like the Companion Pass.

Meaning you can earn miles even when you’re not flying. Just keep on spending the way you would, and as long as you’re using a specific card, you’re racking up miles for things as simple as buying dinner.

According to a 2019 report by Skift, over 60% of airline miles were being earned through non-flier activities!

When you use that card, the bank pays the airline for the miles it gives you. And they don’t pay pennies. In fact, banks buy billions of dollars worth of miles from airlines every year to distribute via these cards. It’s a win-win

• Banks get a rewards system to hook customers.


• Airlines make massive profits selling “imaginary” miles - and since a lot of the times they’re selling seats that wouldn’t have been filled anyway, they’re not losing money.


• Travelers feel like they’re earning toward a free trip.

It seems like the gift that just keeps on giving.

But if you’re thinking that this may be a little too good to be true, you’d be spot on. Here’s where things start getting a little murky.

That depends on who you ask.

For frequent flyers and savvy point collectors? It can be a goldmine, especially if you know how to redeem miles for maximum value (think international business class seats or partner airline redemptions).

But for the average traveler? Not always.

With the rise of dynamic pricing, many redemptions now cost way more miles than before. Suddenly, that “free” flight feels more like a coupon than a reward.

Also, the rules keep changing. Programs devalue their points, restrict availability, and move the goalposts—all without warning. So if you’re not actively playing the game, it’s easy to lose out. We actually wrote a whole article about how airlines prey on people to lock them in. You’re so caught up in trying to score those precious few miles needed to secure a free vacation that you don’t even realise you’re being preyed on.

If current trends continue, here’s what we’re likely to see:

• More dynamic pricing: Fewer fixed award charts, more “whatever the algorithm feels like” pricing. It’s like a moody ex that tells you one thing, then completely changes their mind the next day.


• Miles = cash equivalents: Less opportunity for insane value redemptions, more like applying store credit.


• Even deeper bank partnerships: Expect more credit card offers, more aggressive marketing, and new ways to earn miles without flying at all.


• Increased focus on personalization: Airlines using data to offer targeted rewards and upsells based on your behavior.

In short, loyalty programs will keep growing—but not necessarily in a way that’s better for you. Airlines have realized the real value isn’t just in flying people around—it’s in keeping you in their ecosystem.

Little known fact: United Airlines actually has seven status teirs.

Here’s the thing. As long as customers see the value in riding the gravy train of loyalty programs, they’re not going anywhere. And airlines and banks make too much money to let them go easily.

But you have to make sure that in the process of chasing miles, you’re not paying more than you would have otherwise.

And if you’re smart about it, that dream vacation really could be only a few miles away. All you have to do is stay tuned, and we’ll tell you all about how you can game the system.