3 Responses

  1. Jason
    Jason at |

    I think it has the potential to be a huge value proposition for the airlines. I’m in a former Delta hub (CVG) and fly roughly 25k miles a year on paid tickets and about another 50k on award tickets. However, I’m Platinum with Delta because I put $120k a year on my co-brand cards. Skymiles are useless for anything aspirational, but while the CVG Delta schedule keeps my award ticket reservations I’m regularly paying a bit more on the revenue tickets to fly Delta to enjoy my perks (the lessening of which is another discussion).

    The point is that hardcore CC spenders that don’t fly a lot don’t cost the airline a tremendous amount to offer the benefits to because they aren’t flying often. The only people against the scheme are the butt-in-seat flyers that think they are the only valuable revenue stream to an airline. Frankly, I would contend that the $120k/year I put on my co-brand Amex cards makes me more valuable than someone buying $30k in tickets. Let’s say Delta is getting 1% off my spend so I’m worth $1200 a year to them. Let’s go on to assume a 4% operating margin at the airline which I would contend may be too high given how tight those margins are, so that guy is worth $1200 a year too. Here’s why CC is more valuable though… they don’t have to do anything but put their name on the card to make $1200 off of the CC guy.

    Frankly, I’m surprised Delta doesn’t provide a path to Diamond status if you put enough on the card.

  2. Nick
    Nick at |

    I think the issue is it dilutes benefits for everyone and those who actually fly a lot might look elsewhere. Is spending $120K on your credit card really as valuable as spending $30k on the airline, I doubt it. But I get that selling miles is a bit like printing money and difficult for the airlines to say no to. CC spend is pretty easy to game though, I say as I’m on my way to Target. It’s all a merry go round and you just have to play the game to the point it makes sense to you.

  3. Andrew C
    Andrew C at |

    Was there elaboration on what they think of as “abuse”? Do they mean “people who put lots of spending but do minimal flying”? I’ve never understood why anyone involved would mind that! Just struggling to see what abuse constitutes in this context.