When Delta shifted from distance-based earning to revenue-based earning in 2015, people thought they were getting ripped off. Mileage runs died overnight.
We all got healthier, though.
But eleven years later, it’s clear: we’re the ultimate beneficiaries of revenue-based loyalty programs.
Here’s why.
Revenue-Based Earning Created Segmentation and Efficiency, Which Created Value
Under the old system, high-paying customers were effectively penalized, while low-paying customers generated the same (or greater) mileage liability for airlines despite generating far less revenue.
For example, an infrequent traveler who purchases a $150 ticket could earn 3,000 miles, while a business traveler spending $1,000 on the same route would also earn 3,000 miles. Both travelers created the same liability on the books despite generating vastly different revenue.
That was the inefficiency, regardless of whether those miles were later redeemed or expired as breakage, which creates no meaningful engagement for the airline.
The same dynamic was even more apparent among elite flyers. As a college student, I could spend weekends doing $150 mileage runs and earn 10,000 miles. I did exactly that, even holding elite status with nine airlines in a single year. Meanwhile, a business traveler paying $2,000 for a ticket could earn the same number of miles, or even fewer without elite status.
Both of us then competed for the same award seats and upgrades, meaning airlines were effectively using revenue from their highest-paying travelers to subsidize the mileage-running hobby of someone like college-era me.
MARCHELLO74 / ISTOCK
Revenue-based earning changed that. It allowed airlines to:
Reward high-value travelers who spend more
Reduce mileage liability from infrequent flyers
Once airlines stopped issuing as many miles to low-revenue flyers, they had more room to monetize miles elsewhere without diluting their value.
So where did that efficiency go?
Selling more miles to banks for sign-up bonuses and card spending, generating additional revenue and engagement
Offering more segmented co-branded credit card products to appeal to different types of travelers
That’s the quiet benefit: airlines generate more revenue relative to the mileage liability they create, while consumers gain more ways to earn.
Revenue-based earning modernized the system. Paired with dynamic award pricing, it’s one of the biggest reasons points and miles have become an everyday travel currency rather than something people only earned through flying or struggled to redeem.
Segmentation didn’t just help airlines. It helped create a system with bigger bonuses, more earning multipliers, and more ways to accumulate miles without flying.
