The importance of loyalty programs and ancillary revenue

Loyalty programs have become increasingly important for airlines, generating significant revenue through partner activities, particularly COBRA and credit cards. They play a major role in the finances of airlines, including Delta, United, and American. These programs have contributed to the profitability of airlines, with COBRA and credit cards generating about 25 billion in revenue for US airlines in 2023. However, there are concerns about the overemphasis on the cash leg of loyalty programs, leading to an imbalance among the three legs: communication, loyalty effect, and cash. The challenge lies in maintaining a balanced approach and ensuring transparency and value for program members.