Ask most people what business Delta Air Lines is in, and they'll say the obvious thing: flying planes. That answer is increasingly incomplete. In 2024, Delta's co-branded credit card partnership with American Express generated roughly $7.4 billion in revenue. That figure is larger than the airline'sentire operating profitfor the year, which came in at around $6 billion. American Airlines pulled in $6.1 billion in cash from co-branded cards and other loyalty partners, a program anchored by Citi, with Barclays and others alongside it. United recognized on the order of $2.9 billion in loyalty and marketing revenue tied to its co-brand partnership with JPMorgan Chase, and its true co-brand value is higher still, since a large share of what Chase pays is deferred rather than booked immediately. These aren't side hustles. In most cases, they are the difference between an airline turning a profit and posting a loss. Strip out loyalty and credit card revenue, and the picture gets bleak fast. By one widely cited analysis, without that money American Airlines would have posted roughly a -8.3% operating margin in a recent year, United around -1.9%, and Southwest a devastating -19.9%. Not a single major U.S. airline would have been reliably profitable purely on the business of flying people from one place to another. Those specific percentages come with a caveat worth stating plainly: they depend heavily on loyalty accounting. Airlines book mileage revenue using deferred-revenue and "breakage" assumptions, which are estimates of miles that will never be redeemed, and different assumptions move the numbers around. So treat the exact figures as informed estimates rather than hard numbers pulled straight from a filing. Thedirection, however, is not in dispute and is repeated across the industry: strip out the loyalty machine and the core airline is, at best, a break-even business. Delta's own numbers illustrate the point. Executives have described quarters where credit card revenue is the swing factor between an operating loss and a healthy double-digit margin, the reason a quarter that would have been red on flying alone lands comfortably in the black. That's not a bonus on top of a healthy business. In effect, thatisthe business. The mechanics are almost embarrassingly simple once you see them. Airlines generate frequent flyer miles essentially out of thin air, at near-zero marginal cost, and sell them in bulk to banks like American Express and Chase. The banks then give those miles away to cardholders as spending rewards. Every time someone swipes a co-branded airline credit card at a grocery store or a gas station, roughly $2 of every $100 spent flows to the card issuer as interchange, split broadly between funding the mile rewards and the bank's own profit. (Real interchange rates run anywhere from about 1.5% to 3.5%, with premium travel cards at the higher end.) Crucially, the airline gets paid for the miles it sells regardless of whether the cardholder e
