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Delta-AmEx Renewed Partnership Likely to Drive Revenues

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Delta-AmEx renewed deal

On April 2, Delta Air Lines (DAL) announced that it had renewed its 23-year long credit-card partnership with American Express (AXP) for another 11 years. The renewed partnership deal, which will run through 2029, is likely to bring in massive incremental revenues for the airline in the next few years.

With this renewed agreement, AmEx cardholders will be allowed to transfer their membership reward points to Delta’s SkyMiles loyalty program. Apart from this, AmEx Platinum cardholders will get complimentary access to Delta Sky Clubs.

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In recent years, American Express has become one of the key partners for Delta which has increasingly diversified the airline company’s revenue streams. Delta revealed that its credit-card partnership agreement brought $3.4 billion in additional revenues in 2018. With the renewal of the same deal, the company anticipates that annual revenues from this source to double by 2023 and reach $7 billion.

Talking about the importance of this partnership agreement, Delta CEO Ed Bastian said “Enhancing customer loyalty is at the heart of our business. Our partnership with American Express provides a competitive advantage as we deliver substantial value to our customers and owners.”

Long-standing relationship

Delta and American Express have been in partnership since 1996. The two companies have a strong portfolio of co-branded products that allow AmEx cardholders earn miles and avail certain Delta-related benefits such as Main Cabin 1 priority boarding, free checked bags, and access to Delta Sky Clubs.

To target millennials, the two companies rolled out a no-fee card in 2017. The launch was a great success as Delta revealed that the initiative helped it add over one million new card members in 2018. Moreover, the spending across its card portfolio grew in the double-digit range last year.

Other major US airlines (IYT) have also diversified their revenue streams by partnering with the credit-card issuer. United Airlines (UAL) has several co-branded credit cards such as United Explorer Card and United MileagePlus Club Card. Another air carrier, American Airlines (AAL) co-branded cards include AAdvantage MileUp Card and AAdvantage Aviator Business Mastercard.

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