Airlines cash in on loyalty credit cards

Airlines are inundating customers with credit-card offers, hoping to widen a lucrative and steady revenue stream as they rely more on income beyond fares. Every major US carrier earned more from credit-card and loyalty programs in Q2 than during the year-earlier period, financial disclosures show. For many airlines, those increases outpaced overall sales growth. Much of the revenue comes from the credit cards associated with loyalty programs, though the programs don’t necessarily require customers to have a credit card. “It is amazing how much it continues to grow,” said Kurt Stache, senior VP for marketing, loyalty and sales at American Airlines Group. Revenue from American’s loyalty program grew 7% to $1.4b in Q2, while overall revenue at the world’s top airline by traffic rose 4%. The loyalty program accounted for 12% of the carrier’s overall sales, roughly flat from a year earlier. Banks buy miles from airlines and award them to people who sign up for new cards and cardholders who make purchases on everyday items. The more cardholders spend, the more miles they rack up—and the more cash the issuing banks pay the airlines. Cards not tied to a particular airline work in a similar way, but the banks pay airlines when holders convert points to miles. Story has more.<br/>