How Much Do Credit Card Companies Pay For Airline Miles?

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I’m always fascinated by the business side of miles & points. Loyalty programs can be a huge profit center for airlines, and the more we know about the business side of these programs, the better we can understand the evolution of credit card rewards.

While airlines have SEC filings that reveal some information, for the most part we’ll never learn the real nitty-gritty of how much things cost. For example, a few years ago I published a story about how much airlines pay for partner award tickets. In other words, when you redeem United miles for an ANA first class ticket, how much is United paying ANA? For the most part these reimbursement rates were really low, though that doesn’t come as much of a surprise.

In this post I wanted to discuss a different topic that’s along similar lines. I don’t have any inside information here, but rather am sharing my thoughts based on a development we saw today. I’m sure I’m not the only one who has wondered how much the major credit card issuers pay when we convert one of their points currencies into airline miles or hotel points.