Frequent flying isn’t so much of a thing right now, but loyalty programs are in many cases getting better as airlines fight to keep customers and generate sorely needed revenue after the coronavirus ransacked travel.

Introduced nearly 50 years ago, air miles are a way for the industry to make money. Aside from locking in repeat customers by helping them accumulate trips, airlines sell miles to credit-card companies, banks, hotels and other businesses for billions of dollars. This revenue source is crucial now that the pandemic has thrown aviation into crisis, and airlines are piling in with new offers such as bonus points and lowering thresholds to qualify for more perks.

Some are also increasing the number of points members earn from shopping, as well as expanding partnerships so there are more opportunities to rack up miles. That means it should take less effort to secure reward flights or upgrade to business class. Delta Air Lines Inc. is providing four times the usual amount of miles for purchases with American Express cards at U.S. supermarkets, while Etihad Airways PJSC is offering up to $400 and 5,000 miles for passengers who postpone flights scheduled before July 31 and has points deals for online shopping and cash-back offers with brands including KFC and Pizza Hut.

“These programs appeal to a carrier’s very best revenue-producing customers, so there is abundant need to keep these consumers happy,” said Jay Sorensen, a former Midwest Airlines executive who is now president of consultancy IdeaWorksCompany. “In the near term, consumers will see a windfall of cheap travel for redeeming points or miles.”

According to a 2017 study by Stifel Financial Corp., airlines can get up to 2.5 cents for every mile, so they are a rich source of liquidity. Banks then benefit from annual charges on credit cards and merchant fees when cards are used.

JetBlue Airways Corp. this month sold loyalty points to Barclays Plc for $150 million. The airline received $475 million from such deals in 2019, according to Stifel analyst Joe DeNardi. American Airlines Group Inc. got $4.3 billion and Delta reaped $4.2 billion last year, he said.

American Airlines said Tuesday its AAdvantage loyalty program -- “the biggest asset we have in the company” -- has a value of as much $30 billion, and that it is negotiating with the U.S. Treasury Department to use at least part of it as collateral for a multibillion dollar loan. Bloomberg News reported in April that the Treasury Department was in talks with some carriers about accepting loyalty programs as collateral as they rushed to raise funds.

Cathay Pacific Airways Ltd., which flew just 458 passengers a day in April, is extending Marco Polo memberships and unused mid-tier benefits -- access to business-class lounges, for example -- by 12 months. United Airlines Holdings Inc. has extended Premier memberships through 2022 and made it easier to qualify for reward flights and earn points. Emirates Airline is letting elite Skywards members maintain their statuses by fulfilling just 70% of their tier travel requirements, as well as giving 20% bonus tier miles. This comes as the world’s biggest long-haul carrier considers thousands of job cuts.

Miles Better
“It’s a good thing for consumers and for the airlines,” said Steve Saxon, a Shanghai-based partner at McKinsey & Co. “Being able to earn miles for everyday spending makes flight redemptions much more accessible” and carriers can get revenue for seats that might otherwise go empty, he said.

Emirates’ members account for almost 45% of the carrier’s commercial revenue, according to Nejib Ben Khedher, divisional senior vice president of Emirates Skywards. Abu Dhabi’s Etihad says loyalty programs help it “obtain valuable data on each guest which allows us to tailor their experience,” while Singapore Airlines Ltd. does “not take their loyalty for granted.” Singapore Airlines last week reported a record loss. Qatar Airways is offering a so-called status-match with some airlines, and planning new banking and hotel partners.

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