Originally Posted by
jfktocdg
250K in expenses a year thru amex is not how the average medallion member attained status via Spend. They are a very small minority and not "the problem" per se. Most did acquire it by a combo of low flying spend and low-moderate CC spend. That said, DL is not a bank. And signing up new CC members is unsustainable to the brand. We don't know the future of the most likely fraught relationship between Amex and DL. I do know that the exact number of "elites" who gamed the Amex system and the elite structure but it's MASSIVE. Their initial modeling was flawed and obv did not accurately predict the outcome, which was way way way too many elites. You can't model the effect that tic-tok and instagram and all social media have on a product. DL has spoken and their actions have made made clear a)what the problem areas are b)who the elites they want to have and c)who they don't mind losing. I will say that certain markets like MSP, they may make some sort of carve out for certain biz-centric captive hubs. That remains to be seen. AA and UA they will gladly take the overflow and we know the CC hawking that those poor FA have to do on AA, they need that revenue. DL is not UA or AA or any of the others and they don't want sully their brand or their service. And if it means pissing off CC spenders vs high spend biz travelers or high spend leisure travelers so be it. You still have to fill the back of the plane and that's fine but you don't need the back of the plane low paying customers to have the same benefits as the flyers paying the bills.
The flyers paying the bills???? By your logic, status should be awarded to AmEx employees and cardholders only.
From Delta's 10K published in February, Loyalty Program revenues were $2.6 billion in 2022. "[Loyalty Program revenue] relates to brand usage by third parties and other performance obligations embedded in miles sold, including redemption of miles for non-travel awards. These revenues are mainly driven by customer spend on American Express cards and new cardholder acquisitions. On continued strength in co-brand card spend and card acquisitions, revenues from our relationship with American Express increased in 2022 compared to 2021." Net income was $1.3 billion in 2022. Knowing that DL received total cash from the Loyalty Program agreements of $5.7 billion, and that they allocate the revenue across the categories that it is used in, the $2.6 billion represents the net income of the AmEx agreement. Since the profit from AmEx is greater than DL's total profit it seems that flyers don't pay the bills, but AmEx and their cardholders.