Frequent flyers know credit cards can be a big revenue generator for airlines. But Delta Air Lines is revealing just how much money a co-branded partnership can be worth. During Delta’s Q1 earnings call, the carrier revealed $3 billion in revenue from their agreement with American Express.
Frequent flyers love credit cards as much as their favorite frequent flyer programs for their ability to drive big rewards over time. Airlines love them too because the right partnership can turn into a major financial tailwind and recurring revenue stream.
Delta Air Lines is a prime example of how a co-branded credit card can benefit shareholders. MarketWatch reports the airline drove $3 billion in revenue from cards issued by American Express last year – and are on pace to do the same in 2018.
The numbers were revealed during the airline’s first quarter earnings call. While going over the airline’s financial performance, Delta president Glen Haustien noted the progress Delta made from their credit card partnership alone.
“Last year, the Delta-American Express co-brand portfolio had record acquisitions, and we just had another record quarter,” Haustein said on the call, according to a transcript from Seeking Alpha. “Co-brand spend was up 14 percent which helped drive $85 million of incremental value from our American Express agreement this quarter, and we’re on track to deliver $3.3 billion in total contribution for the full year.”
But that wasn’t the only impressive revenue point from cards alone. Executives went on to note that between January and March 2018, American Express opened over one million new Delta SkyMiles credit card accounts between their four products. When combined with other non-traditional revenue operations, including cargo transportation and repair services for other airlines, the unit drove over $1 billion in revenue during the quarter for the Atlanta-based carrier.
The move to seek stable monetary value from frequent flyer programs comes as flyers reduce their ancillary spend aboard aircraft. Ed Bastian, chief executive at Delta, said that leveraging credit card partnerships and the loyalty program can help the company achieve stability now and into the future.
“One of the things I think’s real important is that we’ve aimed to provide better transparency and disclosure around…looking into the loyalty arrangement and the profitability that it drives,” Bastian noted on the call, according to the Seeking Alpha transcript. “And hopefully the marketplace is seeing that, that we’ve got a more sustainable and durable base revenue stream that’s a bit – I wouldn’t say disconnected, but it’s not fully dependent upon the airlines in and of itself.”