Do Frequent Flyer Programs Make Money for Airlines?

Dec 16, 2010

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Absolutely! The airlines are raking it in with their frequent flyer programs. I just read the Delta Investor Day presentation (great reading for any airline dorks) and on slide 15 it shows a chart with ancillary revenue sources: Cargo: $900 million, Commercial Aviation Services $1.5 billion, SkyMiles $1.6 Billion, Unbundled Ticketing aka fees $2.1 billion.

Yes- Delta raked in $1.5 BILLION dollars last years from the SkyMiles program. They do this by selling gajillions of miles to partners, like their bestie American Express, who hawks SkyMiles like they are going out of style (like with this 45k bonus offer).

So when people make doomsday comments like “The frequent flyer game is coming to an end- it’s too good to be true”, I just chuckle Are you kidding me? The airlines are laughing their way to the bank. However, I don’t feel bad, because I’ve learned how to maximize the value of my points and I’m laughing my way around the world in the first class cabin. Are you?

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