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Delta wants to get $6.5 billion from their relationship with American Express, while American says customers are embracing the new AAdvantage – just two of the statements made at the 2023 J.P. Morgan Industrials Conference.
Loyalty was top of mind for two airlines at the 2023 J.P. Morgan Industrials Conference, as they embrace it as a profit center looking towards the future.
Leaders from American Airlines and Delta Air Lines answered questions from analysts about how they hope the loyalty program will drive business forward.
American Sees Spending as Future of Loyalty Program
New American president Robert Isom spoke on loyalty when asked by an analysts about the American AAdvantage loyalty business. He was quick to note American’s changes in the past two years – including earning elite qualifying points from credit card spending and adding more reward tiers – as positive, flyer-friendly changes.
“The closer to that relationship that you can have, the more that you can engage that customer, the more benefits that you can offer, and it’s also getting the customer what they what they value and they may be willing to pay more for,” Isom said, as quoted in a Seeking Alpha transcript. “The shift last year that we made in terms of earning points within our program that you can basically spend your way there through purchasing out American or through our co-brand and the other ways that we offer to earn mileage… customers are recognizing that, and I think are embracing it, we have never seen enrollments higher.”
According to Isom, spending on the co-branded credit cards are “as high as we’ve seen today.” His magic equation involves “offering a great product, a reliable product, having a personalized relationship, that translates into the ability to actually earn a premium.”
Delta Sees SkyMiles as Profit Center From Loyal Customers
For Delta Air Lines, Delta SkyMiles is just as much a customer information tool as it is a profit center. While Delta president Ed Bastian noted the average age of the 25 million SkyMiles members is 38, their goal is to skew that number much younger.
“We’re getting the desired effect in terms of younger people that want to be connected,” Bastian said, as quoted by the Seeking Alpha transcript. “And we know that we’re building loyalty that’s going to last generations by doing this, which is another reason why it’s free. We want those customers to stay with us because when customers come to Delta, they tend not to leave us.”
More importantly, a loyal customer is a profitable customer across channels for Delta. While Bastian said the move to make wi-fi access free on flights cost $1 billion over three years, it pales in comparison to the amount they stand to make from their relationship with American Express.
“We’ve talked a lot about our targets for 2023 to get to a $6.5 billion contribution with American Express,” said Bastian. “And we’re on track to deliver that and hopefully even a bit more as we progress over the course of the year.”
Although United Airlines also presented at the conference, they spoke more about their operations instead of their loyalty goals.
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