Our Hot Take on the American Express/Delta SkyMiles Kerfuffle
When Delta released details about its revamped SkyMiles program, anchored by a co-branded Delta/American Express airline credit card, online conversations really took off (pun very much intended)… but not in the direction Delta hoped.
Let’s take a closer look at what happened with the Delta SkyMiles rewards changes and what credit card marketers can learn.
The Delta SkyMiles Debacle
In case you missed it, here’s a quick recap. According to Business Insider, Delta announced it would revamp its SkyMiles loyalty program. Allegedly based on customer feedback, the refresh (taking effect January 1, 2024) includes two key changes:
- SkyMiles will allow members to earn rewards only through cash spent, rather than miles flown.
- It significantly scales back access to premium benefits, such as upgrades, waived baggage fees and Delta Sky Club airport lounges.
Not surprisingly, frequent fliers took to social media to express their frustrations. As Business Insider reports, some customers said this was a slap in the face, while others voiced their annoyance that Delta did not reciprocate their years of loyalty.
Delta’s Response
According to Yahoo news, Delta CEO Ed Bastian recently acknowledged that Delta “probably went too far” and “too fast” in its changes to the program. Bastian explained that the changes arose from a need to balance the supply and demand for Delta’s top-shelf products and services: “We want everyone to be served at the highest level—it’s just way in excess of our current asset base, and it’s unsustainable where we’re at now,” he said.
Our Take
We’re eager to see how this upset to a premium airline co-brand card will play out over the next weeks, months and years. In the meantime, Media Logic’s co-brand card experts consider the revamp a cautionary tale. Here are insights into our team’s core concerns with Delta SkyMiles rewards changes:
- The new program degrades the value proposition and seems to prioritize the business “deal” between issuer (Amex) and airline (Delta) over the cardmember relationship. Understandably, this does not sit well with frequent flyers/loyalists who are likely the disproportionate share of the airline card’s customers. Savvy cardmembers understand the relationship between Amex and Delta Skymiles and will tolerate some changes to the “quid pro quo” of the card value proposition. However, Amex has likely gone too far in service to Delta and may face attrition as disgruntled cardmembers quit using their cards.
- The upheaval makes room for the competition. Since many Skymile loyalists likely reside near Delta hubs – and have many options with travel credit cards or co-brand cards from other airlines – the deal may result in cardmembers moving their travel spend elsewhere. And, as expected, other travel/airline options are taking advantage of the changes and targeting Delta Skymiles cardmembers.
- Less attractive rewards can result in less card spend. Historically, we’ve seen cobrands that have devalued programs – United Mileage Plus and American AAdvantage, for example – and saw less spend volume by their cardmembers as a result.
- These kinds of changes disrupt the fundamentals of successful co-brand portfolios. When brands degrade a card’s value proposition—especially cardmember’s ability to earn status, get upgrades and get into desirable Amex/Delta airport lounges—they ignore the fact that there’s no going backwards or successfully swapping out perks to compensate for why cardmembers the acquired the card in the first place. In addition, when the value of perks fail to offset high annual fees, card issuers are likely to experience attrition. Cardholders are unlikely to view a “first checked bag free” perk, for instance, as a good enough return on their annual fee.
- The SkyMiles updates put Amex and Delta at risk of brand degradation. Both brands are considered premium, carrying with it high consumer expectations. As reported by travel thought leader View from the Wing, flyers/cardmembers have been vocal about their dissatisfaction and plans to abandon the co brand: “Delta’s success derives from its brand. They’ve been a more premium carrier, and a more reliable one, although both of those pillars have taken significant hits over the past few years. Whether their card success is sustainable, as they continue to gut the SkyMiles program, is an open question.”
