US airline loyalty programs can provide buffer from possible recession

US airlines relied on loyalty programs for revenue during the pandemic, and industry executives and experts said income from them should hold up if the economy slips into a recession. Launched more than four decades ago to build airline brand loyalty, the programs have become a cash-generator for carriers through sale of miles to third-party partners, mostly credit card-issuing banks that award the miles to their own customers. The more customers spend, the more miles they earn and the more partners pay to airlines. Non-flying activities now account for more than half of all miles earned in major loyalty programs, noted Evert de Boer, managing partner at consulting firm On Point Loyalty, making airlines more resilient to economic swings. The share of revenue generated by loyalty programs shot up to 16% in 2021 from about 12% in 2019 at the big five US carriers - Delta Air Lines, American Airlines, United Airlines, Southwest and Alaska Airlines, according to data from consultancy IdeaWorksCompany. People curtailed flying during the pandemic, but still spent on airline loyalty credit cards, said JetBlue vice president Chris Buckner. He and other executives expect that trend to continue if a slowing economy cuts travel demand. "Credit card spending isn't going away," Southwest Airlines vice president Jonathan Clarkson said. Delta generated $5.7b in cash sales last year from American Express and other partners - equal to 14% of 2022 passenger revenue, according to Reuters calculations.<br/>