Wall Street sees airlines as less than the sum of their parts: Carriers’ valuations are below those of their own frequent-flier programs, data disclosed during the pandemic suggest. But this isn’t necessarily a clear buy signal for investors.
Issuing miles to frequent fliers, who then exchange them for flights and perks, is a great business. Research shows that customers end up paying more than they would without the loyalty scheme—a 2011 paper found a premium of between 5% and 6%—and the airlines often get to fill seats that…
