Delta: An Airline or a Fintech Business?

This week's change to Delta's SkyMiles program indicates higher profits will come from more spending on credit cards, not more miles flown.

As a loyal Delta customer for over a decade, I’ve closely followed changes to their SkyMiles loyalty program. This week, Delta announced a big shift. Starting next year, SkyMiles status will be based solely on two factors: spend on Delta flights and spend on the Delta SkyMiles American Express card. Miles flown won’t count.

Many longtime fliers are understandably surprised & upset by this change, but Delta’s reasoning for this move is pretty smart. The reality? Delta likely makes more money from people using its co-branded credit cards than it does from flying them around. This change is just the latest sign of a trend we’ve been seeing: big companies transforming into fintech giants.

Recently, Delta’s CEO Ed Bastian shared that spending on Delta cards is approaching 1% of total US GDP. In 2022, Delta’s credit card business generated $5.5 billion from its ~$50B of revenue. While this represents just 11% of their revenue, insiders speculate this segment might account for a massive 25-50% of their gross profits. More than ever, Delta’s focus isn’t just on flying people; it’s about harnessing customer loyalty to boost their bottom line.

As companies mature & adapt, the allure of massive fintech profits becomes undeniable. We’ve seen this playbook work beautifully with other consumer businesses like Target RedCard and the DoorDash Rewards Mastercard. The emerging truth? When a company cultivates a loyal relationship with a large customer base, it can often make more money through fintech offers like spending, saving, and lending, than it can by operating its main business.

In the future, loyalty will not just be about making repeat purchases, it will be about forging financial bonds. Delta’s pivot is a testament to this evolving symbiosis between customer loyalty, financial integration, and profit maximization.