Regarding airlines and the money that they make, the common assumption is that most of their profits come from the regular airfare tickets they sell. However, it's quite the opposite, and the airline loyalty programs bring in the cash. 

The Problem For Airlines

In 2023, the net profit across all airlines globally from airfare was around $9.8 billion according to the International Air Transport Association (IATA). The actual net profit margin, however, was only 1.2%, which is incredibly low if you compare it to a company such as Apple, which declared a $19.9 billion profit in just one quarter of 2023. 

Another global company, Starbucks, reported $23.83 billion for the financial year ending June 30, 2023, another significantly larger profit than global airlines combined. When everything is calculated down, the average profit-per-passenger is about $2.25, barely enough to buy a cup of coffee. 

So Where Does the Real Money Come From?

Ancillary revenue is things that come outside of the base airfare and can vary depending on what airline you fly and what the customer is willing to spend money on. You might pay for seat assignment, or check a bag to your destination. Maybe you want to buy a drink or snack onboard. All of these things are extra revenue generators for airlines, but the biggest ancillary gains from airlines come from their loyalty programs. These programs reward flyers in the form of points or miles, and the default way of gaining these is by flying on the airline itself.