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Comment by Nican | Hacker News Reader

I remember reading about how the major airlines now are more of a "bank that happens to have planes," due to the loyalty programs being worth significantly more than the airline. Delta Air Lines earned $8.2 billion from American Express in 2025, surpassing ticket sales revenue. [1]

I primarily use my favorite's airlines credit card because it gives me perks such as priority seating, and free checked bags. I am pretty certain that the credit card fees (that is passed on to the merchant) does not come close to the value that I gain for my credit card loyalty. It is a stupid game that I am forced to play, because the credit cards also provide other benefits, such as fraud protection.

I am wondering right now if "Spirit Air 2.0" even has a fighting chance if they are not able to subsidize operating costs by also being a credit card company.

[1] https://www.thestreet.com/personal-finance/delta-air-lines-m...

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>Delta Air Lines earned $8.2 billion from American Express in 2025, surpassing ticket sales revenue.

Just to be clear, that isn't what the article says. It says more than what "most" airlines generate in ticket sales. Not Delta, or any major US carrier. As interesting as that sounds, it couldn't logically make sense and it only represents about 15% of Delta's revenue. It's not even a straightforward revenue stream, it works for profitability because they are able to book most of the revenue immediately and able to mark down the future expense because of how loyalty rewards are obligated.

Yes, but how does stating the obvious - that airlines make almost all their money from flying planes, and that different lenses of the loyalty program's intrinsic value is accounting parlor tricks, and that the main reason they like the credit cards is because it drives people to fly with their loyal choice more - how does that drive more listeners to your podcast? Checkmate, reasonable guy.

This isn't really a bad thing. Any company that monetizes credit cards can only do so because of their real, core product. They aren't really just banks like people claim. If they didn't fly people places reliably the whole thing collapses.

It's really just a surprising morph of their economic model in the post regulation era.

> It is a stupid game that I am forced to play

You are not forced to play it. That is a just story you tell yourself. You can make a different choice.

All loyalty programs are stupid. People waste their time on 1-2% savings. It is insane.

2% savings on all of your consumer spending isn't insignificant, when compounded over time.

Many studies show that consumers spend more when using credit cards, compared to both cash and debit cards, and it's not obvious to me that the 2% will win out.

In the case of air travel where you're, presumably, going to travel either way, I think it can work out. But it only works out if you travel A LOT. Even a moderate amount of travel means you don't win out with the cost of membership.

There are no-fee 2% cards out there

That's one free round trip international flight per year in a lot of cases. Plus sometimes other benefits like theft insurance, warranty extension, phone insurance, etc.

You're subsidizing everyone else if you're not trying to get the best loyalty program.

> You're subsidizing everyone else if you're not trying to get the best loyalty program.

Quite the mentality...

Welcome to capitalism. Do you refuse to buy items on sale at the grocery store because they are subsidized by the more premium items? Do you refuse to buy the rotisserie chicken because it’s a loss-leader priced to get you into the door?

You’re taking a 2%+ loss on every purchase if you’re not playing the game. But you better carry debit cards and cash because some vendors charge extra for credit cards, and some charge extra for using cards at all!

Quite the mentality...

No, the loyalty programs are earning the company money by you wasting money on expensive airlines or by selling your data.

And you are wasting so much time on small gains.

Refusing to play is the best strategy here.

> I primarily use my favorite's airlines credit card because it gives me perks such as priority seating, and free checked bags.

That's a reason to have an airline credit card, it's not a reason to use it (other than for purchasing that airline's tickets)

This sort of reminds me of a gas station that only sold gas at the pump. No convenience store, no smokes, no snacks, no cokes. I think it was Swifty? I know it was yellow signage.

Anyway, point is they failed and went under and my recollection is that just selling gasoline alone was not profitable. The extra coin comes from selling snacks, beer, smokes, etc.

I used to work for a company with about 1200 gas station/convenience stores. They tracked "Light product break even". Basically the profit to earn on fuel to make the store break even. It was like 2 cents per gallon most of the time. So they could be super competitive on fuel and still be profitable. It was pretty crazy to see that.

And it was Swifty - definitely a no frills experiences!

> how the major airlines now are more of a "bank that happens to have planes"

Here is a decent video explaining it https://www.youtube.com/watch?v=ggUduBmvQ_4

This loyalty program is the business is oversold imo, done to death by every content creator. It's the data, the data blah blah

The $8.2billion from American express pays basically is buying tickets and ticket extra, it buys them some points, lets ignore multiples for now, it buys them 8.2billion points, which they give to customers which then buys tickets.

If Spirit accepts USDC instead it wouldn't be that much different.

> I am pretty certain that the credit card fees (that is passed on to the merchant) does not come close to the value that I gain for my credit card loyalty.

Generally it's the interchange fees that fund reward programs (charged between banks), not the merchant fee.

https://stripe.com/au/resources/more/interchange-fees-101-wh...

> charged between banks

It generally depends on the contract the merchant has with payment provider:

- some have relatively high merchant fees to cover for interchange fees

- others (generally called IC+) have the merchant pay the IC fee plus some other (generally much smaller) fee to the payment provider

In both cases it's the merchant that ends up paying them. It's not a concidence that in Europe (where there are caps to IC fees) the fees that merchants pay are generally lower.

re: "bank that happens to have planes"

this isn't unique to airlines. this applies to all exceptionally mature companies/industries who believe there is no more room for growth. any significant profit they make gets paid out as dividends to investors who then put the money elsewhere instead of reinvesting into the company

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