Loyalty & Rewards

Major US Airlines Grow Loyalty Program Revenue

Airlines

As airlines seek income beyond fares, carriers are turning to credit card offers to broaden their revenue streams. In the second quarter, major carriers in the U.S. earned more from loyalty and credit card programs than they did in the same period the prior year, The Wall Street Journal reported.

“It is amazing how much it continues to grow,” Kurt Stache, senior vice president for marketing, loyalty and sales at American Airlines Group Inc., said. In the case of American Airlines, loyalty program revenue rose by 7 percent to $1.4 billion in the second quarter. By contrast, revenue at the airline increased by only 4 percent.

In terms of the workings of the programs, banks purchase miles to give to new cardholders, as well as customers who make purchases. With cards that aren’t tied to a single airline, however, banks pay for the miles when their cardholders convert their points.

The news comes as airline passengers who want to pay in cash might find themselves spending more. American Airlines, which stopped accepting cash payments for snacks and drinks on flights in 2010, also wants to eliminate cash for checked or overweight bags, as well as other fees.

“There’s a very small chance somebody is actually using cash,” Ross Feinstein, a spokesman for American Airlines, told The Arkansas Democrat Gazette. “There’s a cost to handling the cash, holding it and depositing it. All of our hubs are cashless.”

American isn’t the only airline moving in this direction. In fact, Allegiant Air and Frontier Airlines are already both entirely cashless. “We accepted cash at ticket counters until September of 2010,” Krysta Levy, a spokeswoman for Allegiant, said. “We no longer accept cash at our counters or on board our aircrafts for purchases.” In addition, Delta’s website shows more than 50 airports at where cash is no longer accepted.

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