Delta Air Lines, a major player in the airline industry, has recently implemented significant changes to its branded credit card fees, marking the first adjustments since January 2020. This move comes just months after the airline faced backlash over alterations to its rewards program and exclusive Sky Club access. In this comprehensive overview, we explore the recent changes, their implications, and the broader landscape of airline-branded credit cards.
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Delta’s Controversial History
Last year, Delta faced controversy for making its rewards program more exclusive and increasing the cost of lounge access. The changes, initially introduced in September, aimed to base elite status on the amount spent with the airline or via branded credit cards rather than miles flown. The airline also planned to limit entries to its Sky Club lounges for premium cardholders starting February 1, 2025.
Swift Fee Increases Despite Backlash
Despite the outcry and subsequent adjustments to its SkyMiles program, Delta has chosen to increase the annual fees for its branded credit cards. American Express, the issuer of Delta’s credit cards, announced the changes overnight, surprising many industry observers.
Kyle Potter, editor of Thrifty Traveler, expressed surprise at the swift action, considering the recent negative response to Delta’s SkyMiles changes. He noted that the fee increases are part of Delta’s strategy to generate more revenue and encourage frequent use of its credit cards.
Changes to Annual Fees
The annual fees for several Delta Air Lines-branded credit cards have witnessed significant hikes:
- The annual fee for Delta’s lowest-tier gold card increased from $99 (after an initial free introductory year) to $150.
- The Delta SkyMiles Platinum American Express, which used to cost $250 annually, now commands a fee of $350.
- The Reserve card’s annual fee also jumped by $100 to $650.
These increases indicate a substantial shift in Delta’s approach to credit card fees, especially for cards that unlock elite status and exclusive perks.
Risking Cardholder Loss
Delta and American Express appear willing to risk losing some cardholders due to the increased fees. Industry experts, like Jay Sorensen, President of IdeaWorks, suggest that these changes are signs of a successful portfolio from a demand perspective. Branded credit cards contribute about 10% of airline revenue in the U.S., and the demand seems to outweigh the potential loss of customers.
The Broader Landscape of Airline-Branded Credit Cards
While Delta’s moves may seem daring, the reality is that revenue from branded credit cards has become a crucial aspect of airline income. These programs often make the difference between a profit and a loss for airlines. However, experts caution that a frequent flyer program should primarily focus on selling more airline seats, rather than centering around credit cards.
Enhanced Perks Alongside Fee Increases
To mitigate potential cardholder dissatisfaction, Delta and American Express have introduced enhanced perks alongside the fee increases. These perks aim to provide additional value to cardholders:
- Enhanced Companion Certificates: Companion Certificates for Platinum and Reserve cards now include round-trip flights to Hawaii, Alaska, Mexico, the Caribbean, or Central America, with capped ticket costs for the companion.
- Annual Statement Credits: New statement credits are introduced for categories like Resy, ride-hailing services, and Delta Stays, providing cardholders with additional benefits.
- Medallion Status: Platinum and Reserve cardholders will receive $2,500 Medallion Qualification Dollars at the beginning of each year, putting them halfway to Silver Medallion status. Additional earnings for every dollar spent further enhance Medallion Status.
Welcoming New Cardholders with Bonuses
Delta SkyMiles® American Express Cards are now welcoming new cardholders with enhanced welcome offers until March 27, 2024:
- The Delta SkyMiles® Gold American Express Card offers 70,000 bonus miles.
- The Delta SkyMiles® Platinum American Express Card provides 90,000 bonus miles.
- The Delta SkyMiles® Reserve American Express Card comes with a generous offer of 100,000 bonus miles.
New Price Tags on Delta SkyMiles® American Express Cards
While existing cardholders won’t see the steeper annual fees until their next renewal date starting May 1, new customers will immediately incur the new annual fees. The changes in annual fees for various cards are as follows:
- Delta SkyMiles® American Express Reserve and Reserve Business: $550 to $650
- Delta SkyMiles® American Express Platinum and Platinum Business: $250 to $350
- Delta SkyMiles® American Express Gold and Gold Business: $99 to $150 (fee is waived the first year)
Added Select Rewards for Business Cards
Business cards have also seen additions to opportunities for earning miles:
- Delta SkyMiles® Gold Business American Express Card: 2 miles on shipping, along with spending on select U.S. advertisers, capped at $50,000 in eligible purchases in the first year.
- Delta SkyMiles® Platinum Business American Express Card: 1.5 miles on both transit and U.S. shipping, in addition to single eligible purchases of $5,000 or more, capped at $100,000 in eligible purchases in the first year.
- Delta SkyMiles® Reserve Business American Express Card: 1.5 miles on transit, U.S. shipping, and at U.S. office supply stores.
Conclusion
Delta’s decision to increase branded credit card fees amidst recent controversies reflects the airline’s confidence in the demand for its cards. While the changes may prompt some cardholders to reconsider their loyalty, the enhanced perks and bonuses for new customers suggest a strategic move to attract and retain a valuable customer base. As the landscape of airline-branded credit cards continues to evolve, consumers must carefully evaluate the benefits and costs associated with these cards to make informed decisions about their loyalty and travel preferences.