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Delta Encouraged by Continued Credit Card Spending

Delta Encouraged by Continued Credit Card Spending
Joe Cortez

Delta Air Lines says their SkyMiles loyalty program is starting to show its value, despite the fact that flyers are concerned about traveling due to the COVID-19 pandemic. Speaking at the Cowen 2020 Global Transportation and Sustainable Mobility Conference, executives for the Atlanta-based airline say their co-branded cards with American Express are driving more value than expected.

The U.S.-based airlines have always taken pride in the value of their loyalty programs. Earlier this year, United Airlines sought to finance a loan based on the data in their frequent flyer program.

Delta Air Lines says the strength of their SkyMiles frequent flyer program is showing in a much different way throughout the COVID-19 pandemic. Speaking at the 2020 Cowen Global Transportation and Sustainable Mobility Conference, Delta executive vice president and chief financial officer Paul Jacobsen pointed to credit card spending as a positive indicator for the airline.

SkyMiles “Is Showing a Lot of Value” Despite COVID-19 Pandemic

During his presentation, Jacobsen was asked by moderator Helane Becker from Cowen & Co. about how Delta is looking at their loyalty program. With overall passenger demand at all-time lows, Becker asked if the loyalty paradigm is changing, and how it might be affecting the Atlanta-based carrier.

“How are you thinking about the Loyalty program?” asked Becker. “Does that [the mix of leisure and business travelers] make the loyalty program less valuable? Or is the revenue being made up on people using their credit cards? I mean how should we be thinking about Loyalty in an era where the high value customer may not be traveling?”

In response, Jacobsen said the SkyMiles program was actually “showing a lot of value” for the airline. Looking at the entire American Express portfolio of credit card products, the CFO said Delta’s cards have held up among the best. Furthermore, when the pandemic comes to an end, the continued spending on Delta co-branded credit cards shows that the American public is eager to fly when they feel it is safe to do so.

“If I thought the pandemic was going to last three years, and I wasn’t really going to be able to fly anywhere, I would probably shift my spend away from accruing miles and put it on somewhere else,” Jacobsen told the conference. “If I believe that this is going to pass, and that like we were talking about, you want to get out of the house and you want to go on a vacation, and you want to get back to Europe and you feel like that’s coming either through a vaccine or through herd immunity, whatever it is, you’re going to keep storing up miles now. And that’s what we see.”

Even though spending habits have changed, the airline says people are still using their Delta credit cards to make purchases, which is a strong indicator for their future business. According to Jacobsen, the airline believes their loyalty business will always be resilient, even when there’s a downturn of passengers affecting airline revenues – exactly like what has happened during the novel Coronavirus outbreak.

Delta Continues to Roll-Out Safety Initiatives to Encourage Travel

Although Delta is encouraged by the continued performance and indicators of their loyalty program, they are continuing to do everything they can to encourage passengers to pay for airfare and travel aboard their aircraft. In August 2020, the airline announced they would continue to mandate face mask usage and block middle seats through the end of the year.

In addition, the airline has partnered with cleaning companies to provide hand sanitizer stations throughout aircraft. The stations will slowly get installed on their fleet, starting with their 111 Boeing 757-200 aircraft.

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