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Delta: "Demand for Skymiles as a currency is increasing."

Delta: "Demand for Skymiles as a currency is increasing."

Old Apr 10, 19, 8:14 am
  #1  
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Delta: "Demand for Skymiles as a currency is increasing."

Details from earnings calls

- Redemptions up 12% in 1Q19
- Customers using Skymiles for purchases outside of flights
- Upgrade with points growing faster than expected
- 4,000 customers upgrading with points every day, half with mobile
- AMEX spend up double digits in 1Q19

Seems like customers are using these pay for upgrade options in high numbers

Last edited by Adelphos; Apr 10, 19 at 8:25 am Reason: Added detail
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Old Apr 10, 19, 8:26 am
  #2  
 
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Originally Posted by Adelphos
- AMEX spend up double digits in 1Q19
That must be all those $250K spends to meet the minimum for Diamond ;-)
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Old Apr 10, 19, 9:26 am
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Lots of ways to read this - will be interested with how others view. Could be customers seeing/using an increased range of options and viewing currency more valuable, could be folks using currency faster fearing devaluation over time, could be this is within the normal range of variation seen (or within normal range driven by specific "offerings" given in the quarter - feels like these could be very company driven)....lots of ways to read...
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Old Apr 10, 19, 10:22 am
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Originally Posted by justpassinthru
Lots of ways to read this -... could be folks using currency faster fearing devaluation over time.....
This! for me personally... I am down to under 100000 now left for redemption and don't plan on having it accumulate unnecessarily.
Anyways with data there are n number of ways to interpret and spin... give me enough data and I can prove that black is actually white and vice versa
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Old Apr 10, 19, 10:24 am
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Ed called AMEX their most important commercial partner.
Current revenue from the AMEX partnership around $3.5B annually and will double by 2023.

Nothing like high margin passive income to support operations that fluctuate with weather, fuel prices, and costs of salaries and benefits.

Seems like they are managing their SkyMiles AMEX cards very well and people are seeing the value in using them.
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Old Apr 10, 19, 10:50 am
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How do they know the redemption spike isn't actually currency dumping? That would be the opposite of increased demand.
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Old Apr 10, 19, 11:58 am
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Where do you see the upgrade with points option? on the app/website? I never see it for my flights. JFK/SEA.
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Old Apr 10, 19, 12:21 pm
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Wording of OP title is unclear economically speaking

The only party involved that can actually affect SkyMiles "demand" is Amex and other transferrable credit card companies (if there are any). They are the major players that purchase and therefore "demand" skymiles. The only way to prove that Skymile demand has increased would be to demonstrate that Delta's sales of skymiles to Amex has increased. This is probably indirectly true when viewing OP's last bullet point with Amex spending up double digits (hence increasing overall sales of skymiles from delta to Amex).

Flyers using more skymiles has nothing to do with skymile demand.
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Old Apr 10, 19, 12:30 pm
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Originally Posted by BearX220
How do they know the redemption spike isn't actually currency dumping? That would be the opposite of increased demand.
They know how much is issued (they're the sole bank, remember?) as well as how much is being redeemed.
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Old Apr 10, 19, 12:33 pm
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Originally Posted by krakendown
Where do you see the upgrade with points option? on the app/website? I never see it for my flights. JFK/SEA.
Don't think it is available on all flights. I only see it on some flights.
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Old Apr 10, 19, 12:36 pm
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Originally Posted by vj_rama
Wording of OP title is unclear economically speaking
The title is basically quote. I think the whole topic is interesting, especially in the context of United eliminating their award chart and the perception that SkyMiles is a weak program, or that they aren't worth a lot. It seems like Delta's strategy is working in the short term as people continue to spend on their Amex cards and redeem points on things like upgrades
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Old Apr 10, 19, 12:43 pm
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Originally Posted by BearX220
How do they know the redemption spike isn't actually currency dumping? That would be the opposite of increased demand.
I'm willing to bet the number of people who really play the mileage game is incredibly small like .5% or less of Skymiles members. The vast majority earn miles and then when they see they have a fare bit they try to redeem for a trip. They aren't following redemption trends and blogs and the industry.

With new redemption options it's far more tempting to use some miles to upgrade their trip when they already have a flight they're about to take especially considering most people probably only fly once a year or even every other year.

Flyertalk people are on the extreme end of the bell curve for knowledge about flights and mileage, and are not at all a good barometer for the general public.
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Old Apr 10, 19, 12:48 pm
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Wow, Delta is probably the most profitable with their AMEX partnership and they don't have people constantly trying to sell them to passengers while you are on the plane. American and United should take a page from Delta.
On a side note, I put all my spend on the AMEX because I value quantity over "quality". It may not be the best redemption value, but I don't have to pay anything. I know I'll never run out because I keep spending money and paying it off.
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Old Apr 10, 19, 12:50 pm
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Originally Posted by kop84
I'm willing to bet the number of people who really play the mileage game is incredibly small like .5% or less of Skymiles members. The vast majority earn miles and then when they see they have a fare bit they try to redeem for a trip. They aren't following redemption trends and blogs and the industry.

With new redemption options it's far more tempting to use some miles to upgrade their trip when they already have a flight they're about to take especially considering most people probably only fly once a year or even every other year.

Flyertalk people are on the extreme end of the bell curve for knowledge about flights and mileage, and are not at all a good barometer for the general public.

Id say even your .5% estimate is high.
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Old Apr 10, 19, 1:34 pm
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Originally Posted by drminn
That must be all those $250K spends to meet the minimum for Diamond ;-)
Is that supposed to be up over last year, or last quarter? If it's over last quarter, sure, because we all stop using our Delta cards late in the year after we get our bonuses.
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