Airline credit cards have become a significant revenue stream for U.S. airlines, allowing them to offset losses from their core operations. These cobranded credit cards, partnered with major financial institutions like American Express, Chase, and Citi, generate income through annual fees, high-interest rates, and interchange fees every time a cardholder makes a purchase. Each time a customer uses their airline credit card, they earn points toward future travel, which the issuing bank buys from the airline using those interchange fees. This lucrative arrangement has proven essential for airlines, especially during tough financial times; for example, Delta Airlines received a $500 million pre-purchase of miles from American Express to avoid bankruptcy. The partnership between Delta and American Express is particularly noteworthy, with Delta expecting to net over $10 billion annually from this collaboration. However, while this system benefits major airlines, it creates an uneven playing field for smaller carriers, limiting their opportunities for similar revenue growth.
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