How much do people charge to their Delta Air-Amex cards? (A lot)

Delta Air Lines CEO Ed Bastian recently shared a head-turning statistic about just how much the company’s customers spend—but he wasn’t talking about flights or airfare.

The amount of money consumers charge to Delta’s co-branded line of American Express credit cards, Bastian revealed on an earnings call in late June, approaches 1% of the U.S. GDP.

“These are, like, crazy big numbers when you think about it,” Bastian acknowledged.

It wasn’t merely hyperbole, either.

Later in the day, Delta executives further explained that the milestone Bastian cited is, in fact, what you get when you add up the total spending customers charge to all of Delta’s Amex cards (the airline declined Fast Company’s request for exact figures).

A few weeks after those comments, the Bureau of Economic Analysis (BEA) put the nation’s GDP at $26.84 trillion. 

For context, 1% of that is in excess of $268 billion.

Now, to be clear, Delta does not make hundreds of billions of dollars off its credit cards; in January, the company reported it received around $5.5 billion in 2022 through its Amex partnership.

Ed Bastian claims 1% of GDP

Still, that Bastian felt moved to highlight this—“Some of you are big spenders out there,” he remarked—speaks to the strategy Delta and many of its competitors employ in 2023. It’s a business model practically inviting the quip that airlines have become credit card issuers that also fly planes (a wisecrack cut from the same cloth as the one that characterizes Ivy League institutions as hedge funds that also operate a university).

“It’s not a new phenomenon—that’s not a new line,” says Gary Leff, founder of the site View from the Wing and a top expert in the field of travel, loyalty points, and miles. He noted the importance that credit card portfolios hold for airlines dates back decades.

But that arm of the business has taken on “increasing prominence” in recent years, he says—for Delta and its competitors.

“The world realized if they’re able to borrow [billions of dollars] against their loyalty program, that’s sort of huge,” Leff says, alluding to the pandemic, when multiple airlines put their loyalty programs up as collateral to help secure debt financing.

In doing so, an American Airlines filing revealed a third-party valuation for its AAdvantage loyalty program of between $19.5 billion and $31.5 billion. (Like Delta, United Airlines and other carriers, American offers a suite of co-branded cards.)

The pros and cons of SkyMiles as a business

Today, Delta reports it has 25 million active members in its SkyMiles program, and 30% of them carry Delta-affiliated credit cards. What’s more, an average one in eight new members ends up signing up for a card at some point, company executives confirmed earlier this year.

It seems a likely bet that conversion rate factored prominently into the airline merely requiring a SkyMiles membership from Delta customers hoping to use its newly-complimentary inflight Wi-Fi.

On top of that, Delta and others now give credit card holders an inside track toward elite status through their spending, adding a layer of significance to the cards beyond more traditional perks like free checked bags and accruing miles.

Why are airlines putting such an emphasis on credit card spending?

“It’s high margin,” explains Helane Becker, managing director and senior research analyst focused on airlines at TD Cowen.

After all, operating a loyalty program and credit card portfolio doesn’t require jet fuel or aircraft maintenance.

“The costs to administer are relatively small,” Becker says. “Unlike the cost of transporting people around the world.”

Airlines stand to profit further, Becker explains, when customers take those card-earned miles—purchased and awarded by the bank—and then redeem them on something other than a seat a paying customer might book. It could be a flight on a partner airline, a retail purchase, or on nothing at all—a “breakage” phenomenon that sees plenty of airline miles go the way of the billions of unspent gift card dollars.

Are airline miles losing value?

Of the near 1% of the U.S. GDP apparently charged to Delta’s cards, Bastian added, “we get value from each dollar that’s created there.” Company executives also mentioned the company’s customer base is becoming “becoming more and more premium”—translating to more spending and, ultimately, more money the airline receives from Amex.

Vasu Raja, American’s chief commercial officer, likewise told analysts last month that for every dollar of revenue AAdvantage customers bring in on flying, they bring in about 10 cents of other revenue—“primarily on a branded credit card,” Raja said.

For that reason, this credit card-centric trend doesn’t seem to be slowing, as anyone who’s sat through an inflight card pitch can attest.

Neither has membership growth: Delta’s executives (along with those at American and United) have each reported steep gains in recent quarterly earnings reports.

That’s despite many of those same airlines making changes to the redemption of miles in recent years, tying it more closely to cash prices’ fluctuations. In some cases, passengers end up handing over larger sums of miles to book a flight.

“It’s made miles useable much more often, but you may not get as much outsized value when you do,” Leff explains. “What’s interesting is that consumers have remained heavily engaged.”

Airline executives can only hope that this trend continues, as the perennially beleaguered industry continues to face financial and operational headwinds.