$7.8 Billion in Airline Rewards Gets More Flexible

AI summary of the source article

Major U.S. carriers including American Airlines, Delta Air Lines, United Airlines, and Southwest Airlines are enabling customers to combine loyalty points with cash at checkout, making rewards divisible into smaller increments. As of June 30, these four airlines held roughly $33.4 billion in loyalty-related deferred revenue and liabilities. Under these programs, banks and commercial partners purchase points upfront to distribute to credit card holders, delivering immediate cash to airlines before travel is booked. Flexible redemption lowers barriers for consumers who lack sufficient points for full award tickets, while helping airlines recognize billions in passenger revenue from their outstanding loyalty obligations.

Why it matters

Flexible cash-plus-points models unlock value for consumers with smaller balances while helping airlines recognize revenue from billions of dollars in outstanding loyalty obligations funded by banking partners.

Key facts

• American, Delta, United, and Southwest carried about $33.4 billion in loyalty-related deferred revenue or liabilities as of June 30.
• American Airlines is introducing an option for AAdvantage members to combine miles with cash when buying tickets at checkout.
• A PYMNTS Intelligence report found that 26% of cardholders with redemption difficulties lacked enough rewards for desired purchases.