Gig103

On arrival, as I walked past the SEA Centurion, and instead went into the SEA Skyclub to get a coffee and little frittata breakfast while waiting for baggage delivery, I wondered if it was costing Amex money when we go to the Skyclub (and vice versa once Reserve cardholders start visiting Centurion)? I've heard that airlines pay each other for business class passengers entering lounges so maybe something similar goes on.

355F1

Yes. Usually it’s around $30/person, I believe.

krazykanuck

I highly doubt Amex is paying rack rate per entrance for a Platinum cardholder.

If I were to guess, I'd say that Amex probably pays Delta a flat fee per cardmember year for SkyClub access for Platinum, Centurion, and DL Reserve cards. I'm sure that their DL/Amex agreement is very complex. I mean these are multi-year deals covering co-branded cards, Skymiles purchases both for the co-branded cards and MR transfers, lounge access, etc. I just don't believe it would be as simplistic as paying per swipe at the retail rate. I also don't think it would be sustainable for Amex since you probably have a relatively small portion of frequent DL flyers that incur a disproportionate number of SC visits. In 355F1's theory, Amex would have paid over 50% of my gross annual fee to Delta just in my SC usage since January, if you assume $30 per visit.

Often1

The CC affiliate agreement is a world of difference from reimbursing through ST.

VFR

At some point I believe I read (possibly in Amex or DL's earnings report) that Amex pays Delta for each checked bag when someone with a Delta credit card checks one, not a flat rate.

It also seems to be that Amex and the other banks directly pay Priority Pass ~$27-30 per person when someone uses a Priority Pass lounge or (formerly) restaurant, then Priority Pass forks over ~$22-25 to the lounge/restaurant and pockets the rest. So if they are willing to pay Priority Pass on a per-visit basis, they probably are willing to pay Delta in a similar way.

Incidentally, it seems that the reason the Sky Clubs generally are better than the Admirals Clubs or United Clubs may be due to this reimbursement model. I suspect that the AA/UA club credit cards do pay a flat, bulk rate for their club memberships, so Delta is financially incentivized to have nice clubs and generate a lot of visits, while AA/UA are incentivized to be attractive enough that they can pocket membership fees but not too attractive that people will visit a lot, since that lowers their per-visit revenue numbers.

notquiteaff

No worries, in some five years of Plat membership I have never entered a Delta lounge, so I am helping Amex make up for your “abuse”. You’re welcome :-)

KevPNW

I find it hard to believe that Amex would pay Delta for someone utilizing the features of a Delta co-brand card. If that’s accurate, it’s a terrible deal.

VFR

Amex couldn't lose Delta once they lost Costco, so it seems they made some concessions when negotiating their last Delta co-brand deal. And on the bags specifically, there's no way Amex pays rack rate; my guess would be between $5 and $10 per checked bag.

My suspicion is that most people with the Delta Gold credit card ($99 annual fee now), don't take the 10 to 20 one-way flights with checked bags per year to make it unprofitable for Amex based on the annual fee. And then they also make profit from interchange fees and interest. I would also bet that there are enough people with an unbranded Platinum card who don't fly very much that it makes up for the folks going to the Sky Club every week.

It might be the topic for another thread, but to me, Amex seems to be the best at designing credit cards for which the benefits are paid for by the annual fee, assuming that they do not pay rack rate for things like the unbranded Platinum Uber credit or the unbranded Gold GrubHub credit. The benefits encourage people to use their cards, which keeps them in wallets instead of sock drawers, which generates interchange fees (and since they own their own payment network, they are probably making more money there than other banks).

ijgordon

Isn't "rack rate" for SkyClub access like $60? The $29 fee is for guests of Plat Cardholders/Members and for lower-level Delta Amex cards that don't include access.
~$30 still seems a little high though; wouldn't surprise me if it's in the $20-30 range.

Centurion

Amex bailed out Delta during the great recession and they have a very close relationship. They tied their computer systems together prior to any other bank and airline partnership. It takes a lot of trust to share data in todays world.

Steve M

Back when CO was still around, they definitely got a per-visit fee from Amex for each Amex Platinum cardholder or guest that entered a Presidents Club. Source: directly from the CO executive's mouth, at a FT DO. He wouldn't say what the exact cost was, but I think he implied it was around $20 per visit. It wouldn't surprise me if the other partnerships work the same way, but since the Amex/DL relationship in particular is close, it may have a different arrangement.

We asked him about the issue of the Amex Plat access causing reduced revenue, because of all the people that didn't buy a club membership but otherwise would. A person would have to visit 10+ times a year in order for the per-visit revenue to replace a club membership. He pointed out that although that's true, it's balanced by the number of occasional Amex Platinum visitors that would never buy a full club membership, plus there are some road warriors that travel several times a month (or even week) and generate far more in visit revenue from Amex than if they were club members (this implies there was no upper limit in per-visit revenue per cardholder, at least under that arrangement). So there are many factors for both sides to consider in these arrangements. From Amex's standpoint, there would be some cardholders that cost them far more in club visits than the annual fee generates, but think of all of the people that justify an Amex card just so they can use a club 2-3 times a year, many of which end up having 0.

dayone

My memory is that AA received some soft-dollar marketing funds when the Admirals Club was an Amex benefit.

I would be very surprised if Amex is paying DL a click fee.