How Airlines Are the Ultimate Financial Powerhouses (And How You Can Benefit Too)
When you think of airlines, you think of flights. But here’s a little-known fun fact:
Their real money? It’s not coming from tickets but from their incredibly lucrative rewards programs and partnerships with banks.
Let’s break it down
The True Value of Airlines:
In 2023, airlines generated over $110 billion from ancillary products like baggage fees, seat upgrades, and most importantly their rewards programs.
Their actual operating profit? Only $43 billion. The difference is staggering.
Delta Airlines made $6.8 billion just from its co-branded credit card partnership with American Express.
At an investor event this year, American Airlines projected that 80% of their revenue in 2024 will come from loyalty programs and premium cabin ticket sales.
This is where you come in—their most valuable customers are the ones using the right cards to earn these rewards.
Why Leverage Matters:
You don’t need to increase your spending to travel for free. By using the right travel rewards card for your everyday purchases—groceries, dining out, utilities—you can accumulate points that translate into free flights, hotel stays, and upgrades.
It’s about being intentional with your spending to maximize rewards – CardPointers automates this. Here’s the key:
More spend = More points = More trips.
However, this doesn’t mean spending recklessly—it’s about putting your existing expenses on the right cards to reap the benefits.
Who Pays for Your Free Travel?
Credit card companies use rewards to acquire new customers, and these rewards are subsidized by people who use non-rewards credit cards, those who carry a balance and pay interest, and those still using debit cards.
You can be a benefactor, but it takes knowing which card to use and how to maximize its value.
The Travel Rewards Journey:
Most people fall somewhere on a spectrum when it comes to using credit cards. As you read through, think of this as a quick self assessment on your travel rewards journey —identify where you are currently, and where you’ll want to be within the next year.
Unaware: This group uses cash or debit cards for everything. They don’t realize the opportunity they’re missing out on.
Aware but Avoidant: Many people fall here. They’ve heard of credit cards but avoid them because of misinformation like “credit cards lead to debt” or “they’re bad for your finances.” A lot of people in this group simply don’t understand how to use credit cards responsibly.
Aware but Using the Wrong Credit Card: Maybe they picked a card based on a flashy commercial or a recommendation from a friend. It’s better than no card, but they’re not optimizing their rewards.
Using the Right Card but Redeeming Poorly: This group has a good travel rewards card but isn’t maximizing its value. They’ll spend 100,000 points on domestic economy flights when they could be using those same points for international business class. The majority of cardholders are stuck here.
Maximizing Points Like a Pro: At this level, cardholders are intentional about which cards they use for which purchases, accumulating points strategically. They know how to redeem for optimal value—flying business or first class on points, staying in luxury hotels, and getting the most bang for their buck.
This is the level of expertise at Freemium Traveler.
Only 8% of people using travel rewards transfer points to partners — the most effective way to redeem your points for maximal travel value.
Where you book matters, how you book matters – do it the Freemium Traveler way.
For example, getting to Paris does not have to use up all your points.
You don’t have to become an expert if you don’t want to—that’s what we’re here for.
Take Action:
Our expertise is in optimizing daily spending and maximizing your redemptions. We do the heavy lifting while you enjoy incredible travel experiences without the hassle.
If you’re ready to move up the travel rewards journey and start flying for free(ish), or if you’re already collecting points but aren’t sure how to maximize them, Freemium Traveler can help. We’ve mastered the art of leveraging credit cards for optimal travel rewards, and we can help you do the same—without increasing your spending.
Let us handle the complexities while you enjoy the rewards.
Join the few and become a Freemium Traveler.
Key Takeaways:
Airlines make most of their revenue from rewards programs, not ticket sales.
You can leverage your daily spending to earn free(ish) travel—without spending more money.
Most people are missing out on maximizing their travel rewards. Don’t be one of them.
Freemium Traveler is here to help you navigate the rewards landscape and make the most of your points.
That’s all for this week!
Stay tuned for more travel tips, strategies, and insights in next week’s Leverage Letter.
Thank You,
Ade O
The Leverage Letter