American’s Hub Problem Is A Credit Card Problem

The Credit Card Is the Product Now

We have made this point clear many times but it came up in the news just this week with a new twist and bears repeating. Delta pulled in $8.2 billion from American Express in 2025. That is 14% of the airline’s adjusted operating revenue and 1.4 times its adjusted operating income. American Airlines reported $6.2 billion from co-brand partners, which is four times its adjusted operating income. Read that again. The money flowing in from banks buying miles dwarfs what these carriers earn from actually flying people around.

At some point we have to stop calling these companies airlines. They are loyalty platforms and credit card affiliates that happen to operate airplanes. And if that is what they are, the playbook for where they fly and which cities they prioritize should look completely different.

Doug Parker Said the Quiet Part Out Loud

Former American Airlines CEO Doug Parker recently walked through this exact math on the Airlines Confidential podcast. He explained how the roughly $6 billion that Citibank sends to American each year gets allocated based on which routes see the most miles redeemed. But Parker pointed out the flaw in that thinking: if New York customers are driving the credit card spend, you want that revenue attributed to the flights those customers care about, not scattered across the network based on where they happened to burn their points.

That distinction matters enormously. It means a route to New York could look unprofitable on a traditional airline P&L but could be wildly valuable when you account for the credit card revenue those New York cardholders generate. Parker essentially admitted that American got this math wrong in cities like New York, Los Angeles, and Chicago. This also makes a case for why American is so desperate to stay relevant in Chicago and why United wants to push them out so badly that the judicial system had to step in and halt United from forcing a larger share of gates at O’Hare.

Delta and United Already Get It

Delta and United are not building out New York because JFK and Newark are wonderful places to connect passengers through. They are building out New York because the metro area has among the highest median household incomes in the country and some of the most aggressive credit card spending patterns in the US. Households earning over $150,000 a year use credit cards at three times the rate of those under $25,000 (due in part to access to credit and in part due to disposable income, and education about the credit market and product benefits.) A premium cardholder base in a wealthy metro generates outsized bank payments regardless of how many seats you fill.

Delta has leaned into this harder than anyone, expanding its ultra-exclusive Delta One Lounges at JFK and targeting $10 billion in annual Amex revenue by 2029. United, partnered with JPMorgan Chase, has expanded premium seating capacity by 46% since 2019 and now makes fliers without its co-branded card earn half the miles per dollar compared to cardholders. Both carriers understand that the real product is the person with the card, not the person in the seat.

American’s Hub Problem Is a Cardholder Problem

Now look at American. Its two largest eastern hubs are Philadelphia and Charlotte. Philadelphia is a solid Northeast market, but it is not New York. Charlotte is an efficient connecting hub, but the metro’s household income and discretionary spending trail far behind Washington, DC, where United has built a fortress at Dulles. American has a presence in both New York and DC, but not the kind of dominant position that locks in the high-spend cardholder base that Delta and United enjoy.

In fact, Washington DC is the easiest comparable market in this battle of have, and have-nots. American has a sizable presence in the most convenient location to the Capitol, Reagan National (DCA.) But because of the airport operations and proximity, it has limited growth and range and can never become what United has built in the consultant capital of the world, Northern Virginia, at Washington Dulles. Those flights are longer haul international vs distance-limited narrowbodies at DCA. Even in a case where American is significant and in the right market, it still faces a growth limiter that United does not.

Chicago tells a similar story. American has a major hub at O’Hare, but United does too, and United has been more aggressive about tying its premium product and card incentives to that market. The battle for Chicago is not really about gate count or on-time performance. It is about which carrier captures the most cardholders in a metro where the spending power justifies the fight. Hub origin travelers won’t settle for a connection, and their credit card spend goes along with that decision. They won’t fly Delta from Chicago with a stopin Atlanta when they can be there three hours earlier on one flight even if the route is cheaper on Delta.

Where Should Airlines Grow Next?

If you are running a credit card affiliate that happens to fly planes, you should be looking at wealthy metros where no single carrier dominates. Boston is the obvious one. The metro has a median household income north of $117,000, a massive base of professionals in finance, biotech, and education, and no true hub carrier. JetBlue runs about 130 daily flights from Logan and is adding European routes, but JetBlue does not have the co-brand credit card infrastructure that Delta, United, or American could deploy. A major carrier that went all-in on Boston could tap an enormous cardholder market. American has tried to expand, so has Delta, but not in an all-out assault approach.

San Diego is another interesting case. The metro’s median household income is around $130,000, home prices just crossed the million-dollar mark, and no single carrier has a dominant share. From a cardholder perspective, San Diego looks better than several cities where airlines already operate hubs.

Then there is Nashville. It is growing fast and attracting wealth, but is it premium enough yet to justify a hub play based on cardholder metrics rather than connecting traffic? Maybe not today, but the trajectory is worth watching. Austin may have been exactly this kind of bet. A booming, high-income tech market where a carrier could establish presence cheaply and build a cardholder base before the competition catches on. But American abandoned Austin and Delta flew away too leaving Southwest as the last dominate carrier.

The Tiny Airport Play

If Parker’s logic holds, it does not just reshape the hub conversation. It flips the script on small airports too. Think about places like Naples, Florida, West Palm Beach, and Santa Barbara. These are tiny airports surrounded by some of the wealthiest zip codes in the country. A traditional airline looks at those markets and sees low passenger volume, short runways, and limited connecting potential. A credit card affiliate looks at them and sees a goldmine of premium cardholders who spend six figures a year on their co-brand cards.

This is where upstarts like Breeze Airways could quietly become the biggest fish in a very rich pond. Breeze does not need to win Chicago or New York. It needs to be the dominant carrier at a dozen affluent small airports where the per-capita card spend dwarfs what you would find at a mid-tier hub. The same logic applies to San Jose over San Francisco. San Jose sits in the heart of Silicon Valley where household incomes and discretionary spending outpace nearly every metro in the country, yet it plays second fiddle to SFO. A carrier that thought like a credit card company rather than an airline would look at San Jose and see one of the best cardholder acquisition markets in the US.

Conclusion

The airline industry has quietly become the credit card affiliate industry. When your bank partnership generates multiples of your operating income, the old logic of hub placement and route profitability no longer applies. Delta and United figured this out and went after the richest card markets in the country. American is still trying to make Philadelphia and Charlotte work with a model that prioritizes connecting passengers over cardholders. The next frontier is not about finding underserved routes. It is about finding underserved wallets. Whether it is Boston, San Diego, or a handful of tiny airports in the wealthiest corners of the country, the winners will be the carriers that stop thinking about where people fly and start thinking about where people spend. Breeze has the small passenger load equipment with the legs to make long haul routes work. This could be an incredible goldilocks opportunity for Breeze’s expansion.