I generally agree with the article's premise and conclusions, but the lead in is not true:
> They make more money from mileage programs than from flying planes—and it shows.
Delta reported 5% of its revenue came from its loyalty programs in 2022 (2.5B of 50B according to 2022 10k). Although in the June annual shareholder meeting, it expected >6.5B in AMEX remunerations in 2023 with a long term goal of 10B.
American Airlines may have been closer to 10% (4.5B of 49B according to 2022 10k). I can't quickly find any public data on it's long term goals.
Both still well short of "more money" than from flying planes.
I don't know the details of the industry but that is revenue ignoring expenses. Presumably it is orders of magnitude more expensive to fly the planes than manage a rewards system.
I expect the author is saying that if your split each up into profit, the profit is greater on the rewards program than the flying part.
The points are not "free" to airlines, though. (Without looking at every airlines 10k, at least one mechanism is to): Account for them as a liability on the balance sheet as "deferred revenue." They then recognize the revenue when the points are redeemed, meaning they incur the same blended Cost per Available Seat Mile (CASM) as a purchased ticket. That's in addition to the significant costs of managing a loyalty program (IT, Partnerships, Legal, etc.)
> They make more money from mileage programs than from flying planes—and it shows.
Delta reported 5% of its revenue came from its loyalty programs in 2022 (2.5B of 50B according to 2022 10k). Although in the June annual shareholder meeting, it expected >6.5B in AMEX remunerations in 2023 with a long term goal of 10B.
American Airlines may have been closer to 10% (4.5B of 49B according to 2022 10k). I can't quickly find any public data on it's long term goals.
Both still well short of "more money" than from flying planes.