Credit Cards – The Airlines’ Golden Goose

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Credit Cards – The Airlines’ Golden Goose

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For many airline miles or loyalty programs, the member can earn frequent flyer miles two ways, by actually travelling on the airline or using airline branded credit cards to purchase items. Airlines sell miles to credit card companies for 1.5 to 2.5 cents per mile. Big credit card companies buy billions of miles to hand out to their customers for purchases they make with airline–branded cards. Other companies such as car rental firms, hotels and magazine sellers also purchase air miles to use as customer incentives.

The selling of miles have become a financial boon for the major airlines. Joseph DeNardi, a senior airline analyst with Stifel Financial Corp. in Baltimore stated that “Airlines are earning upwards of 50 percent of [income] from selling miles to a credit card company, which we believe is a great business to be in.”

The selling of miles is a very lucrative deal for the airlines. It is also a pretty stable source of income even when there is a downturn in the economy.

 

Resources

http://theweek.com/speedreads/691388/credit-card-companies-buy-billions-airline-miles

https://www.bloomberg.com/news/articles/2017-03-31/airlines-make-more-money-selling-miles-than-seats

 

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