Delta has made a bunch of customer hostile moves this year as I outlined recently. I am sure Delta has run all the numbers as to the number of elites each of these moves will cost the company in defections to other airlines or other “modes” of transportation. If Delta is good at one thing it is numbers. They no longer care about public image – just the raw numbers and the effect it will have on the DAL stock price.
But you know who would suffer the MOST if Delta moves to a 1 cent per Skymile value as my fellow BA blogger MJ suggested could be on the way? AMEX. It was announced in Bloomberg today that AMEX is losing their deal with COSTCO and that likely will have a big impact on that co-branded AMEX card. The article said:
“The Costco partnership accounts for about 10 percent of the company’s total cards, Campbell said. That would be about 11 million of the 112.2 million cards in circulation at year-end, according to figures AmEx disclosed last month.” – Bloomberg.com
Now this is a rather harsh blow to AMEX. But AMEX has locked up a multi-year, 2 BILLION dollar deal with Delta and the co-branded Delta AMEX cards – but what if. Yes, that is the hulking elephant in the room. What if Delta DOES soon move to 1 cent per Skymile (or even so closely ties the value of redemption to that number that in reality it is almost 1 cent per Skymile with the “new” award calendar).
I can promise you, millions upon millions of Delta AMEX card holders will DUMP their Delta AMEX cards if Delta makes this type of move either publicly or by perception that a Skymile is now 1 cent in value. Why?
The real value to most folks is spending points for trips that would cost too much in cash. If they are getting a trip to Europe for 125,000 Skymiles or to Austraila for 160,000 round trip in business class there is REAL value rather than paying $3-6,000 or more for those tickets. If people have to pay 200,000 or 300,000+ points for that kind of ticket there is no longer any reason to push spending to the Delta AMEX family of cards. They will look at other, better choices like the Barclays Arrival+ card or Chase Sapphire Preferred as better choices that give more value.
For me, who will still be flying Delta for at least the next two years (I am Diamond for that long and might as well ride it out even with all the changes), I will keep holding my Delta AMEX Reserve card at least this year if not into next as I like the perks it gives me like more upgrades, more MQMs and the 1st class BOGOF cert. But that could change down the road if Delta DOES soon move to that 1 cent per Skymile valuation!- René
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