Delta ditches Lyft for an Uber-perks partnership as loyalty programs land big profits
Taking an XL… Delta Air Lines is saying so long and thanks for all the SkyMiles to longtime ride-hail partner Lyft. The airline said it’ll part ways with the company in April after eight years, opting for a partnership with much larger rival Uber. Delta’s SkyMiles loyalty program members will be able to link their Uber accounts to earn miles for $$ spent on rides and food delivery (Delta has a similar deal with Starbucks and Hertz). FYI: Uber has 161M monthly active riders compared to Lyft’s 24M. The switcheroo isn’t the only move that Delta (which reports earnings tomorrow) has made to boost its 120M-member loyalty program:
In-flight popcorn: Delta said SkyMiles members will get access to YouTube Premium on board at no extra charge. And they can watch MrBeast in crisp 4K resolution, as Delta’s upgrading its seatback screens next year, joining United.
Loyalty pays… Airlines don’t offer discounts and ad-free seatback YouTube out of the goodness of their hearts — the programs bring in big bucks. Airlines’ profit margins on credit-card partnerships are about 50% (far higher than margins on tickets), and American and Delta have more than doubled their revenue from selling airline miles to credit-card companies since 2017. Delta brought in a whopping $1.8B last quarter from its co-branded American Express card (AmEx pays Delta for miles to give away as a card perk).
Some deals are too good to be true… Airlines’ lucrative rewards programs could be in for a bumpy ride. In September, the US gov’t began investigating programs at Delta, United, American, and Southwest Airlines. Transpo Secretary Pete Buttigieg criticized the companies’ ability to change reward values as they see fit (airlines use dynamic pricing to vary point values day to day). Critics say that’s made it harder for flyers to win the rewards game.