There's no question that co-branded credit cards are important to airlines. The difference in redemptions between JetBlue and Southwest seems to be in line with how much each leverages their co-branded credit cards. Southwest's standard sign-up bonus is 25,000 and is upped to 50,000 several times a year. Compared to JetBlue's 20,000 offer, there a many more points flowing for Southwest which would naturally result in more redemptions. Add in Southwest's frequent double point promos and relationships with complimentary companies (e.g. Rapid Reward points for hotel stays) and there are many more opportunities for Southwest customers to earn points. Given Southwest's consistent positive financial results, it is clear that this strategy pays off in the long run.
The note about JetBlue closing a line of credit with American Express and opening one with Citibank is particularly interesting. Guess we will see in the coming month's what is in store.