Here's Bryan Hobart on the bizarre economics of loyalty programs. Some learnings:

Loyalty programs are the most valuable asset many airlines own. Delta would have a negative market value if not for its loyalty program:

The Financial Times pegs the value of Delta’s loyalty program at a whopping $26 billion, American Airlines at $24 billion, and United at $20 billion. All of these valuations are comfortably above the market capitalization of the airlines themselves — Delta is worth $19 billion, American $6 billion, and United $10 billion. In other words, if you take away the loyalty program, Delta’s real-world airline operation — with hundreds of planes, a world-beating maintenance operation, landing rights, brand recognition, and experienced executives — is worth roughly negative $7 billion.

Airline-branded credit cards are one of the ways loyalty programs make money for their owners. The airline sells loyalty points (e.g. Avios for British Airways) to the bank, the bank in turn rewards the points to customers in return for spending on the credit card. This encourages customers to spend more on the card and also to avoid switching cards, which makes money for the bank.

Loyalty programs depend heavily on how extensive the airline's network is. Shutting down routes can significantly impact the value of the loyalty program; customers choose programs that can take them to places they want to go to.