American Express paid Delta $8.2 billion in cash in 2025. Reuters, working through the airlines’ own disclosures in a March 13, 2026 analysis, put that at 14 percent of Delta’s adjusted operating revenue and about 1.4 times its adjusted operating income. American Airlines took in $6.2 billion from its co-brand and other partners the same year, roughly four times its adjusted operating income. Once you know those numbers, how airline miles work stops being a mystery and starts being a supply chain.
The mile does not begin with you. It begins as inventory the airline creates and sells wholesale to a bank. You are the third party in the transaction, and the last one to touch the product.
The Mile Is Manufactured, Not Earned
A frequent flyer mile is not a receipt for a flight you took. It is a unit of account the airline invents, in whatever quantity it likes, at a marginal cost of essentially nothing. Creating a billion miles requires a database entry.
The airline then sells those miles, in bulk and for real money, to a bank that wants something to hand its cardholders. Delta sells almost all of its to American Express. Southwest sells most of its points to JPMorgan Chase. The bank distributes them to you at a rate it sets, funded by interchange fees on your purchases and by the annual fee you pay. That is the whole loop, and it explains something that puzzles people: why an airline would give a person who never flies more miles than a person who flies constantly. The bank’s customer is worth more than the passenger, because the bank pays cash on delivery.
United made that hierarchy official this year. Starting April 2, 2026, a MileagePlus member without a United credit card earns 3 miles per dollar on eligible flights, while a cardholder earns at least 6, and most basic economy tickets earn nothing at all without a card or elite status. American had already stopped granting miles on basic economy fares. The programs are being repriced around the card, not the seat, because the card is where the revenue is.
Your Miles Are a Debt the Airline Gets to Reprice
Here is the part almost no explainer covers, and it is the part that determines what your balance is actually worth.
When an airline sells miles to a bank, it cannot book all that cash as revenue right away. Accounting rules require it to split the payment. Part is compensation for use of the brand and the customer list, recognized immediately. The rest represents a promise of future travel, and that portion sits on the balance sheet as deferred revenue, a liability the airline carries until you redeem. Delta reported an aggregate SkyMiles deferred revenue balance of $9.3 billion at the end of 2025, against roughly 35 million award tickets redeemed during the year. Award travel accounted for about 12 percent of the miles Delta flew.
Notice the shape of that obligation. It is denominated in miles, not in dollars or seats. The airline owes you 60,000 SkyMiles. It does not owe you a flight to Denver. What a flight to Denver costs in miles is a price the airline sets, changes whenever it likes, and is under no obligation to publish in advance. Delta abandoned fixed award charts more than a decade ago, and the other major programs have moved the same direction.
So the liability is fixed in units the debtor mints, and settled at an exchange rate the debtor controls. There is no other consumer financial product built quite like this. A gift card balance is denominated in dollars, and state law governs what happens to it. A checking account balance is a dollar claim insured by the federal government. A mileage balance is a claim on a private company, in a private currency, priced by that company, and it can be worth 20 percent less next Tuesday without anyone sending you a letter.
Breakage Is Why a Devaluation Shows Up as Profit
The accounting has one more feature worth understanding, because it explains the incentive.
Airlines do not carry a liability for every mile outstanding. They estimate how many will never be redeemed and exclude that share from the obligation. The industry term is breakage: miles issued, paid for by a bank, and never claimed by anyone. Every mile that dies unspent is money the airline collected and will never have to deliver against.
Follow the mechanism. If a program raises the number of miles a ticket costs, some members can no longer afford the trip they were saving for. If it tightens expiration, some balances vanish. In both cases the estimated redemption rate falls, the breakage estimate rises, and part of what was sitting in deferred revenue moves into recognized revenue. A devaluation is not merely a cost the airline avoids in the future. Under the estimates that drive the accounting, it can improve reported results in the period it happens.
Which is why writing an angry email about a program change tends to go nowhere. The member is describing a broken promise. The airline is describing Tuesday. A company that mints the currency, sells it wholesale, sets the redemption price and books a gain when fewer people redeem is not going to talk itself out of letting that currency drift, and no clause in the program terms requires it to.
Regulators took an interest. On September 5, 2024, the Department of Transportation ordered the four largest U.S. airlines to turn over records on their rewards programs, asking specifically about devaluation of earned rewards, hidden and dynamic pricing, and extra fees. The Consumer Financial Protection Bureau, which supervises the banks funding the arrangement, backed the inquiry publicly. Two years on, no rule has come of it, and United’s April 2026 repricing suggests the programs read the outcome as permission.
Once You Know How Airline Miles Work, the Cash Back Card Usually Wins
Published 2026 valuations put major U.S. airline miles somewhere between 1.2 and 1.7 cents each, with Delta SkyMiles near the bottom of that range and American AAdvantage near the top. Those are estimates of what a typical redemption returns, not a rate you can cash out at.
Put $2,000 a month on a co-brand card that earns 1 mile per dollar on general spending. That is 24,000 miles a year. At 1.2 cents a mile, you have accumulated about $288 of travel value. The same $24,000 on a flat 2 percent cash back card returns $480, in dollars, with no expiration and no exchange rate. For the miles to break even against the cash, each one has to be worth 2 cents, well above what the program typically delivers on a domestic economy seat. Add a $150 annual fee and the miles are further behind still.
The card can still be the right choice, but for a different reason than the one on the marketing page. A free checked bag on four round trips a year, at $35 a leg, is worth about $280. That benefit is denominated in bags, not in a currency the airline reprices. The miles are the part of the offer whose value the issuer controls; the bag is the part it does not.
All of which points to one rule for holding a balance. Miles are not savings. They are inventory in a currency whose issuer has an audited reason to want each unit worth slightly less next year than it is worth today. Earn them against a trip you already intend to take, redeem inside a year or two, and stop saving toward a business class seat in 2031. American Express and JPMorgan buy these things by the billion and price them carefully before handing them to you. Knowing how airline miles work mostly means knowing which side of that trade you are standing on, which is the same question sitting underneath who actually funds card rewards in the first place.