More than thirteen million people have British Airways accounts that allow them to collect Avios points. Add on the membership of fellow-Avios-earning airlines such as Qatar, Finnair, Iberia and Aer Lingus, and you’re looking at a user base that could be as high as fifty million.
To put that in context, Barclays, the largest bank in the UK by customer numbers, has a base of over 20 million people. Whilst you can’t buy a house using Avios points (although you can earn points by selling your house) or have your salary paid into your Finnair account, the distance between the world of finance and frequent flyer schemes has never been narrower, and it will only reduce.
Why points are critical to airlines.
Historically, the frequent flyer mile or point was a way to reward regular travellers. When you flew, you earned miles (usually based on the distance you travelled and the cabin you were in), and eventually you would have enough miles to redeem for a free flight.
Frequent flyer programmes were built around the business market. Airlines will usually earn more from companies than individuals: there’s a greater demand for last-minute, higher-priced flights, and travellers would often be seated in the more premium cabins. Business travellers had to be somewhere, so all the airline had to do was be front of mind.
Offering miles or points to business travellers meant that you could get them to choose your airline for their business travel, and then reward them personally with a free flight in the future. Airline miles exist in a grey area that, for all intents and purposes, is ignored by HMRC.
The introduction of the co-branded credit card
The Financial Services and Airline industries have been intertwined for longer than you might think. Back in 1934, an “Air Travel Card” was launched, offering a 15% discount on flights booked with select US airlines, gaining wider acceptance in the 1940s. It is more recently that these tie-ins have become much more visible.
Visit an airline’s website or sign up to become a customer, and you’ll see offers for cards featuring the airline’s branding, or be emailed them. These cards have become more feature-packed and nuanced, offering multiple ways to earn valuable rewards: in almost all cases, points, but also additional items that add further value for customers.
These features, or bonuses, differ based on the airline. BA offers one of the most generous tie-ins, at least outside the United States. The British Airways cards allow you to earn companion vouchers, which act like a two-for-one offer, meaning two people can fly for the equivalent Avios of one person.
The importance of the interchange fee
Like all things, when you gain something, someone else loses, or at least has to pay for it. If you’re wondering how you can earn points (and more) by paying for your weekly shopping at a supermarket, the answer is simple: the supermarket.
When you pay using a card, be it a credit or a debit card, fees are associated with that transaction. In almost all cases, the consumer doesn’t pay any more than what the price sticker says on the object you’re buying, the retailer will pay a different fee depending on the card you use.
The lowest fees are associated with debit cards, which are typically capped at 0.2% of the total transaction amount. Credit cards are higher with a cap at 0.3%, however American Express has a get-out clause. In brief, they are considered a third party, and they can charge much more. If the card is a business card, then there is no cap on the fees.
This cap dictates what the card issuer can use to reward the customer, which is why the rewards that Amex can offer are much higher than other card issuers.
In the US these interchange fees are much higher, and there is, at the time of writing, no cap. That’s why you’ll see much larger rewards in the US for cardholders.
To go back to the original question: who loses? The answer is in fact, everyone. All consumers will carry the burden of costs that retailers have. That’s the fixed costs of running a store, like rent, insurance and staff, but in the context of this article, it will also be the fees that a retailer pays to third parties. If you go into a shop and buy an item using a card that rewards you with points, then you are gaming the system, whereas a consumer paying using a standard debit card will be losing out.
The mechanics of points disbursement
If you do have a card that gives you points when you spend, where do these points come from? In simple terms, the company that gives you the points will purchase them from the airline. Sometimes in real-time, but often in bulk in advance. Buying in bulk will give them volume discount, and the airline is comfortable with this as they get a single cash injection.
A consumer can buy points directly from an airline at between 1.2p and 1.6p. It’s estimated that financial services companies can buy points for as low as 0.5p. (The real value you get from a point is around 1p, and there are some good third-party guides to what an Avios point is worth.
These cash injections can also help airlines when times are more challenging. American Express paid British Airways’ loyalty division (IAGL) £750m in 2020 when airlines were struggling during the global pandemic. Take a step back, and this is effectively a low-interest loan.
So in effect, everyone, except the retailer, wins. The airline has a source of cash that is relatively predictable. They can leverage this process in times of need, undercutting the cost of borrowing money. The consumer gets points that they can use to get flights for a reduced cost, and all of this comes from a fraction of a percentage being levied at the till or on a website transaction.
The switch to revenue based earning.
The days of earning miles based on the distance you flew is almost completely gone. Airlines started switching to revenue-based awards, meaning that the points you earned were based on how much you paid rather than how far you travelled. British Airways made the switch back in 2025, to much disgruntlement.
The way you spend your miles is still based on distance, however there are noticeable moves to create a more dynamic way of pricing. Qatar, for example, will sometimes offer flights that are double the number of points you would normally need, when there is limited availability. Other airlines have, for many years, operated peak travel dates where the number of points needed is marginally higher.
There’s no doubt that airlines will, at some point, move to even more dynamic pricing for customers when it comes to spending points. Ultimately, airlines would prefer that customers use their miles on routes that have lighter loads, or during times when there are fewer passengers.
Giving away a seat that never would have been sold for cash is much better than allowing a customer to reserve it, then denying someone else from paying for it with money.
The points on the balance sheet
If you have billions of your frequent flyer points out there in the market, unredeemed, then you have a future liability. Points do sit on airlines balance sheets, and you would assume with some ratio’ing to account for points going unused forever, or in extreme cases simply disappearing.
Airlines do have time limits on points, meaning that they can expire, however this is deeply unpopular with consumers, and the rules very much tilt in their favour. British Airways, for example, expire Avios points 36 months after the last transaction on the account, You simply need to have any transaction take place for all of your points to remain active.
What consumers usually don’t consider, and airlines absolutely do, is devaluation. In December 2025 British Airways changed the goalposts for their flights, increasing the number of points that you need to use. These devaluations allow BA to effectively reduce the financial impact of the points out there in the market, and they are not alone. Most manjor airlines have devalued in the last three years.
The merging of modern life and points collecting
The ways in which you earn points is changing on an almost monthly basis. You can now earn Avios when you sell or rent a property. You can earn points directly from Avios when you buy an Apple laptop, or when you buy a pizza (and this is on top of any points you’d earn when you use a co-branded credit card). A mortgage through Barclays will give you points every month, and you can earn thousands of points when you renew your insurance each year. It has become easier than ever to earn points, and it is now seen by companies as a valuable way to get new customers and to keep them.
We are in the golden age of collecting points, and whilst the impact on consumers is highly visible (the volume of adverts that feature co-branded cards is at an absolute peak), the impact on airlines is even more critical, but less discussed. Delta Airlines’ SkyMiles programme was valued at $22bn, whilst United Airlines MileagePlus was estimated at being worth $22bn.
IAG Loyalty, the division of British Airways parent company IAG that handles points, generates upto £300m in operating profit each year. That is likely to rise, and rise again.