Delta Air Lines believes co-branded credit card dynamics have changed

Delta Air Lines expects to garner roughly USD3.5 billion in additional revenue this year from its co-branded credit card with American Express, and much of that benefit stems from a change in the relationship between airlines and credit card companies.


Summary:

  • Delta Air Lines expects to garner roughly USD3.5 billion in additional revenue this year from its co-branded credit card with American Express;
  • The US major claims customer loyalty has been monetised in new and creative ways through the airline’s relationship with American Express;
  • But the relationship has changed over the past decade from airlines chasing credit card companies for the loyalty benefits to the complete reverse today;
  • The changing dynamics have been “an incredible value driver for airlines,” says Delta’s CFO – co-branded credit card revenue should reach USD4 billion by 2021.

Recently, Delta CFO Paul Jacobson stated customer loyalty has been monetised in new and creative ways through the airline’s relationship with American Express.

“If you go back 15 years, airlines chased credit card companies, because we wanted the loyalty that the card provided attached to the airline,” Mr Jacobson explained.

But now that’s almost completely reversed today, he concluded. “…what credit card companies and issuers want is the loyalty that airlines have and the airline engender attached to those cards”.

The changing dynamics have been “an incredible value driver for airlines, and one of the ways we can utilise our brand to create more durability and sustainability in the business,” said Mr Jacobson.

According to The New York Times, the number of Delta branded cards American Express issued between 2014 and 2017 grew nearly 60%.

Delta believes its co-branded credit card revenue should reach USD4 billion by 2021.

“Those are all revenues coming from sources outside of the vagaries of the air traffic and passenger demand curve. It’s coming and it continues to grow in popularity and that’s why we’re being able to post the type of results in strong partnership with Amex,” concluded Delta president Glen Hauenstein at the end of 2017.