Delta had $4.8B in profit in 2024 but only $1.9B came from "other revenue" which not even all of that revenue is from co branded cards. Also much of that also has a cost associated with it, since its cost money to fly those people around, even if they are being paid the revenue of the ticket from a credit card company instead of the passenger itself. Also its not like the passenger just would not fly without the deal. A large portion of those people would still pay to fly, but instead they are trading miles earned on credit cards for flights.

Actual marginal profit from the CCs is probably $1B so even without the cards Delta is still probably close to $3.8B for the year.

 

Our network is so ****ty I don’t want a card and we get the annual fee waved.

 

Not even close. Last quarter their "profits" were $382M, with $2B in credit card renumeration (almost all profit).

Without the credit card DAL would have LOST roughly $1.7B last quarter.

So yes. Delta loses money on its flying.

 

I can't believe that people still don't get this and try to reduce it in such a completely F'd up manor.

The airlines report the revenue from the CC partnerships, but they don't report all the miles they sell to generate that revenue. Those miles have real costs that are included in the operating costs of the airlines as people redeem all those miles for actual flights. Those costs don't have a separate line item on the costs side of the earning report like the CC revenue does on the revenue side. But the fact that the costs are not separated out for the redemption of miles doesn't mean they aren't substantial. The airlines and the CC companies don't want to disclose how many miles are "sold" for how much money, as that would not help either side in generating as much revenue as possible from these relationships

Do the airlines likely make good money on the CC partnership---yes
Do the credit card companies likely make good money on the CC partnerships---yes
If either side was not happy with the arrangement, they wouldn't keep renewing.

But, to state that the 2 Billion in revenue is "almost all profit," is beyond ridiculous.

 

The same people that say smaller airlines can't make money because they don't have scale, but then Delta, who has a TON of scale, still somehow isn't profitable and its only profitable because of credit card deals.

 

I agree there is a cost. However, I'll point this out. We are talking about using 2 different currencies when purchasing a ticket. Dollars and Miles. In Dollars, Company A cannot sell the ticket at the same price it would in miles, why? Competition. In miles, the consumer has no choice but to use it on whichever airline the credit card company has a deal with. With less choice, Company A can decide how much 1 Mile is worth in Dollars, while the customer is already locked in since they already built up a lot of miles for that Airline. Therefore, one could reasonably assume that selling tickets in Miles currency has a wider margin than selling in dollars, else why bother.

No one can claim that Company A would make the same profit whether it sells the ticket in Dollars or Miles. That's not true. There is a reason they do not have a line item for the cost to provide that seat and you alluded to this. Margins would be exposed.

 

Which is true. 2024 Delta brought in roughly 49 billion from fares, cargo, and airline activity. The other 20% comes from CC which equates to 70% net profit to their bottom line just from that 20%.
The co branded deals offsets the breakeven portion of their business to make them profitable. Smaller airlines don’t have that scale to entice customers to want to sign up for a credit card so they can’t afford for their CASM to exceed their Fare revenue per seat mile. Simply Jetblue doesn’t have the loyalty to offset loses.

 

You are conflating arguments and cherry picking here to make your point.

Because smaller Airlines don't have scale, their credit cards are not as attractive. The customer then picks the credit card affiliated with an Airline that has a bigger network, more places to go to burn those miles. The Airline then makes a bigger margin selling tickets in miles vs dollars. That margin subsidizes tickets sold in dollars making that Airline more flexible in competing in dollars to smaller Airlines, while remaining profitable.

The smaller network Airline does not have quite that......you know Friendly, I'm not going to continue with the explanation. I think based on your posts, you know where I'm going with this.

So yes, one can say "isn't profitable" and "profitable" in the same sentence as long as there is an explanation of what they mean, context. Yes, SCALE is important and makes a lot of differences. But you purposely throw words together in a way to make it sound stupid, knowing very well what is meant when someone says that.

Overall, it would be a different ball game if credit cards weren't in the mix. Most likely more consolidations years ago, but this is the current market so compete or go away is game.

 

Its revenue not profit. People cash those points in. I'll agree. Half their profits come from CC , but no , they aren't loosing money annually by flying.

 

Duplicate….