How Credit Cards Secretly Make The Airline Industry Big Bucks

When airline companies and banks establish a relationship, it benefits both industries’ revenue streams.

By Laura RiceApril 4, 2017 11:08 am

Airlines for America, the trade group that represents the industry, predicts a record-setting spring season for air travel. This is good news for Fort Worth-based American Airlines and Dallas-based Southwest. Justin Bachman, a Dallas-based airline reporter for Bloomberg, says that airline credit cards may play a bigger role in airline profits than many travelers may realize.

When airline companies and banks establish a relationship, airlines will sell miles to banks that they then offer to customers who sign up for their airline credit cards. The system benefits both industries’ revenue streams – although the exact amount is not often disclosed by airlines.

“This is probably the single biggest piece of protection, or insurance in a way, that [airlines] have because the banks are going to keep paying these billions of dollars in deals for these miles,” Bachman says. “The whole thing works as long as people want the miles and there’s no evidence that anybody is ready to abandon these things.”

What you’ll hear in this segment:

– How much airlines make on seats sold to banks

– How banks benefit from establishing airline credit cards

– Why airlines won’t disclose how much the credit cards drive their revenue

– How this benefits consumers

Written by Emma Whalen.