Airlines and their bank partners are continuing to sweeten
offers as they compete for new co-branded credit card customers.
“It’s a very competitive space,” said Gary Leff of the
website View From the Wing. “On the whole, I think we’ve seen elevated upfront
offers, more than we have and bigger than we have in a long time.”
Just last week, for example, Delta introduced an enhanced
suite of SkyMiles American Express cards, including two with which users can
earn 100,000 bonus points. Both the SkyMiles Platinum card, which has a $250
annual fee, and the SkyMiles Reserve card, which has a $550 annual fee, offer
80,000 points after spending a relatively modest $3,000 in the first three
months plus 20,000 additional points upon the cardholder’s first anniversary.
Those offers join the United Explorer Business Card and
United Club Explorer Business Card Visa offers, which also feature 100,000
bonus miles. In the case of the former, the annual fee is just $99, though the
spend to get the award must be $10,000 in three months. A late summer Explorer
Business Card offer was the first 100,000-point offer by a U.S. airline in five
years, according to Leff.
Other airlines are also making generous offers. New holders
of American’s AAdvantage Aviator Mastercard, issued by Barclays, get 60,000
points after making their first purchase and paying the $99 annual fee within
three months. They also get a $99 companion certificate.
Southwest, meanwhile, is offering 75,000 bonus points on
three versions of the Chase Rapid Rewards Visa card after new users spend
$5,000 in the first six months. The cheapest of those cards costs just $69 per
year, while the most expensive version still costs only $149 and includes a $75
annual travel credit and up to four upgraded boardings per year, among other
Many other cards at various airlines also have stepped-up
perks, including offering lounge passes, free Global Entry, no foreign
transaction fees and double or triple miles on certain categories of purchases,
even for low-fee or sometimes zero-fee cards. Those accompany more standard
offerings, such as first checked bag flies free, better boarding positions and
one frequent-flyer point for every dollar charged on the cards.
Airlines and banks are offering these generous perks for a
simple reason: The cards are exceptionally lucrative. For example, last April,
when Delta and American Express extended their SkyMiles credit card partnership
through 2029, Delta said it expected the exclusive agreement would boost
partnership revenue to $7 billion by 2023, up from $3.4 billion in 2018.
More broadly, American, United, Delta, Southwest, Hawaiian
and Alaska reported a combined $18.6 billion in frequent-flyer revenue in 2018, according to the annual CarTrawler
Ancillary Revenue Yearbook produced by the consulting firm IdeaWorksCompany.
IdeaWorks president Jay Sorensen estimated that 90% of that
revenue, or $16.7 billion, came from co-branded credit cards.
IdeaWorks hasn’t completed its analysis for 2019, but
Sorensen recently estimated that combined credit card revenue for those six
airlines reached $18 billion. The carriers earn income from the co-branded
cards by selling reward miles or points to the issuing bank. Those are the
points that banks offer to customers as sign-up bonuses and for card purchases.
The slew of generous airline credit card offers appears to
be serving their intended purpose. On an earnings call in January, American
president Robert Isom said that the carrier ended 2019 with a record number of
co-branded card members, record card spending and record flight redemptions.
Similarly, Delta president Glen Hauenstein reported that the
carrier set a record last year by signing up 1.1 million new co-branded card
With airlines offering so many generous sign-up offers,
choosing cards can be challenging for consumers. While the best card will vary
by individual, depending upon his or her travel habits, Leff said he
contemplates three categories when considering cards: the upfront bonus; perks
such as free checked bags, lounge access and loyalty status qualifying points;
and how many points the card offers per dollar spent.
For spending accruals and more flexible point redemption, he
suggested travel cards that are not co-branded with airlines.
For example, the American Express Gold Card is currently
giving new members four points for every dollar spent on dining or at
supermarkets and three points per dollar of flight purchases. Amex points can
be redeemed with 19 airlines and three hotel companies.