Co-brand credit card agreements are big deals, both for credit card issuers and airlines. In many ways airlines have the upper hand with these deals — credit card companies obviously want the rights to issue co-brand credit cards, and airlines can shop around.
Amex and Delta have had a strong partnership dating back to 1996, and it has just been announced that this is being extended. American Express and Delta have renewed their agreement through the end of 2029.
Often we see these partnerships extended by a few years at a time, so to see a renewal of over a decade is significant. As part of this renewed agreement, they’ll be leveraging shared strengths while continuing existing features, including (as they describe it):
- Ongoing investment in industry-leading benefits for Delta SkyMiles Credit Cards from American Express
- Complimentary access to the award-winning network of Delta Sky Clubs around the world for Delta Reserve Card Members and Platinum Card Members from American Express
- Delta participation in the Membership Rewards program from American Express, allowing those points to transfer into the SkyMiles Program
- Delta as an American Express Card-accepting merchant
None of this is terribly surprising, though the length of the contract renewal is significant.
What I find most interesting, however, is how they expect this partnership to grow. Delta expects their benefit from the relationship to double to nearly $7 billion annually by 2023, up from $3.4 billion in 2018.
WOW. Let that sink in for a moment. In a few years Delta expects to make twice as much per year from their credit card agreement as they do right now.
Just to put those amounts of money into perspective, in 2018 Delta reported pre-tax income of $5.1 billion.
In 2018, Delta carried about 180 million passengers. Not that there’s necessarily a consistent correlation between those flying Delta and those using their credit card products, but if you divide $7 billion by 180 million passengers, that’s the equivalent of about $39 per passenger.
Again, I’m not suggesting that’s a direct correlation, but rather am sharing that just to provide some context for how significant these amounts are.
Bottom line
It’s not surprising to see Delta and Amex renew their partnership, given that United has a partnership with Chase, and American has a partnership with both Citi and Barclays.
To me the most interesting thing here is that Delta expects their revenue from their credit card agreement will double in the next few years. It’s unknown how much of that is attributed to better terms with American Express rather than growth in their offerings, but that sure does make me curious about what they have planned in the coming years.
@Kevin B
On the contrary, AMEX would welcome a devaluation. There would be a shock at first, like any devaluation. But that is for both card holders and flyers. Then once the market settles the new change as normal, it will be business as usual but now you have to use AMEX even more to get the same rewards.
Think of it this way, if AMEX raise the MQD waiver to 30k, a lot of...
@Kevin B
On the contrary, AMEX would welcome a devaluation. There would be a shock at first, like any devaluation. But that is for both card holders and flyers. Then once the market settles the new change as normal, it will be business as usual but now you have to use AMEX even more to get the same rewards.
Think of it this way, if AMEX raise the MQD waiver to 30k, a lot of people will now spend that extra 5k. Say what you want, Skymiles/Delta are still better than other legacies. Redemptions might not be as good but the overall program and flight is still better.
The combo of Reserve and Platinum cards both give great value just for the companion passes, and then miles and MQM status. Also lounges. Easy to hit Platinum status. Regular upgrades out of main hubs. Value is much more than 1c. I have saved almost $2000 in no change fees this year alone. Great customer service, too. Cheers!
I'd love to know if these deals ever limit Delta's ability to devalue the miles, because presumably a major devaluation would reduce the cobranded credit card usage.
Unbelievable. Who in their right mind would choose a co-branded Delta card that transfers to 1c Sky Pesos, over, say, a plain 2% cash-back card?... Perhaps transfers from a premium Amex card earning from 5x purchase categories makes sense, but anything else is clearly a losing proposition for users.... While I respect Delta's delivery of its core product and its operational merits, the DL/Amex mileage / credit card partnership program is clearly, and effectively, a...
Unbelievable. Who in their right mind would choose a co-branded Delta card that transfers to 1c Sky Pesos, over, say, a plain 2% cash-back card?... Perhaps transfers from a premium Amex card earning from 5x purchase categories makes sense, but anything else is clearly a losing proposition for users.... While I respect Delta's delivery of its core product and its operational merits, the DL/Amex mileage / credit card partnership program is clearly, and effectively, a scam.
Not sure how much they can grow the partnership when Amex only allows one welcome bonus per product per lifetime, and is ban-happy on welcome bonuses even for people who haven't had a given product. Something has to give.
Delta devalue miles = more profit from AMEX.
AMEX is selling Silver Medallion 'lite' for $95 a year.
All economy flight is now $30 more expensive. Hint : They make $60 extra for using AMEX companion pass.
If you have a hard earned Diamond medallion you would be pissed.
AMEX made miles worth less.
AMEX made fewer awards available.
AMEX made Skyclubs crowded.
AMEX made getting Diamond easy through...
Delta devalue miles = more profit from AMEX.
AMEX is selling Silver Medallion 'lite' for $95 a year.
All economy flight is now $30 more expensive. Hint : They make $60 extra for using AMEX companion pass.
If you have a hard earned Diamond medallion you would be pissed.
AMEX made miles worth less.
AMEX made fewer awards available.
AMEX made Skyclubs crowded.
AMEX made getting Diamond easy through spend. No $250k spend isn't much for many business.
AMEX made Silver/Gold worth less (choice benefit gift)
AMEX made it harder for upgrades.
You see, AMEX screws DL loyal customers. DL monetize every single thing.
The problem I see is on Amex's side. Unless Amex got Delta to suddenly reverse a half dozen years worth of destroying the value of Skymiles, the clear winner is Delta. Delta will do as they have done for years by making the spend on Amex cards worth less every year. Accordingly, Amex gets to pay more for a product that's worth less. At some point, people will realize just what an awful value proposition...
The problem I see is on Amex's side. Unless Amex got Delta to suddenly reverse a half dozen years worth of destroying the value of Skymiles, the clear winner is Delta. Delta will do as they have done for years by making the spend on Amex cards worth less every year. Accordingly, Amex gets to pay more for a product that's worth less. At some point, people will realize just what an awful value proposition the Delta card is and switch over to a card with actual value. Then Delta can feel the pain of their own shortsightedness. Meanwhile, the customer and Amex get the short end of the stick.
please don't confuse the word benefit with profit...
@V
The DL reserve gives you Skyclub access and a companion certificate. AMEX Plat gets you Skyclub/Centurion but you'll rarely see a Centurion lounge if you fly DL. SEA is the only DL hub with a centurion lounge, but it also has one of the nicest Skyclubs in the system. So for $100 less in annual fees, the DL card can easily earn you double the value with the companion certificate. Many DL elites also...
@V
The DL reserve gives you Skyclub access and a companion certificate. AMEX Plat gets you Skyclub/Centurion but you'll rarely see a Centurion lounge if you fly DL. SEA is the only DL hub with a centurion lounge, but it also has one of the nicest Skyclubs in the system. So for $100 less in annual fees, the DL card can easily earn you double the value with the companion certificate. Many DL elites also use the DL reserve for the MQM bonus to maintain status each year.
Happy to see amex Plat access for ten years!
@Carl: Where do you get this from? I have never heard this before and find it unthinkable that Delta would forgo having a business-class lounge because of a credit card agreement.
FNT Delta Diamond: DL’s agreement with AX prohibits DL from offering premium lounges, as that would compete with Centurion. Granted, AX doesn’t currently offer any of these in DL hubs, but that could change.
They SHOULD just buy
This is an insane amount of money to spend for Amex to buy pennies from delta for which Amex customers will get exactly that, 1 cent of value per mile. They just buy real pennies, not delta branded ones!
That is astounding that 2/3 pre-tax profit in 2018 from Amex.
No wonder airlines love these relationships
Overall Delta experience seems to me to be in steep decline. Inflight experience still solid but lounges / credit cards are not competitive. Customer service is truly horrible. Unresponsive and generally hostile. Delta in cyclical decline??? Why would anyone double down on relationship with their credit cards?
I think you missed the main point of an airline/credit card relationship.
Airlines make significant $ selling miles to the credit card companies - often up to 40% annual revenue.
Credit card companies meanwhile obviously are profitable and make do with annual fees and charging interest on those poor souls who can’t/won’t pay off balances every month
As far as unequal lounge access regarding delta reserve and Amex platinum, I think it makes no...
I think you missed the main point of an airline/credit card relationship.
Airlines make significant $ selling miles to the credit card companies - often up to 40% annual revenue.
Credit card companies meanwhile obviously are profitable and make do with annual fees and charging interest on those poor souls who can’t/won’t pay off balances every month
As far as unequal lounge access regarding delta reserve and Amex platinum, I think it makes no sense why one would get the delta reserve card over Amex platinum
Easy for Delta to milk twice as much value from their credit card agreement: DEVALUE SKYMILES BY 50%!
No new benefits nor perks. I don't understand why American Express cardholders get to access Delta's Sky Club lounges but Delta-branded American Express cardholders can't access American Express lounges. It's unfair. Meanwhile, the Sky Club lounges are still overcrowded and Delta lags behind both American and United in premium lounges and premium dining options.