The ‘American Express Delta Airlines SkyMiles Optima’ card grew 140% last year to become the nation’s largest cobranded airline bank credit card program, according to a research report released today by Brittain Associates of Atlanta. Brittain says its annual study showed the ‘AmEx Delta’ card growing from 1.1 million cardholders to 2.8 million during the past twelve months. The next largest program is the Citibank/American Airlines AAdvantage card with 2.7 million cards-in-force. The First Chicago/United Airlines program logs in at third place with about 1.4 million cardholders. Brittain’s study, involving about 8,000 consumers, also confirms that Continental, America West and British Airways lost marketshare during the past year. Of little surprise was the finding that the majority of cobranded airline bank credit cards are purely convenience users charging $15,000 and $20,000 annually.
Surpassing the venerable American Airlines AAdvantage card issued by Citibank, the Delta Airlines SkyMiles Optima card portfolio surged to the lead in 1997, thanks to growth of over 140% in the past 12 months. Complete market share data for the 14 air rewards programs that are tied to credit cards in the U.S. is included in a recently published study conducted by Brittain Associates, Atlanta.
The national study, involving more than 8,000 consumer interviews, identified current owners of general purpose credit cards that reward owners with air travel points or miles based on card usage. In total, the study indicated that there are about 12 million of these cards currently in circulation.
In the fall of 1996, the Delta SkyMiles portfolio had about 1.1 million cards in circulation. One year later, that estimated number had risen to nearly 2.8 million, barely edging out the American AAdvantage card, projected to have 2.7 million cards in current circulation. Both the Delta and American Airlines co-branded card portfolios are about twice the size of United Airline’s program, the third largest portfolio.
“American Express has to be very pleased with the way this Delta SkyMiles program is growing,” says Bruce Brittain, president of the financial services research firm. “Their marketing program has been high profile, consistent and effective.”
Other air rewards programs have not fared as well in the past year, however. Among those co-branded card programs losing market share were Continental, American West and British Airways. The Star Miles Travel Account program, a rewards program not tied to a specific airline, also lost ground.
“Actually, the Continental program is a good deal for consumers in a side-by-side comparison to other air reward credit cards,” says Brittain. “However, we were a little surprised by the decline in their portfolio numbers. Perhaps they scaled back their new account acquisition program in 1997.”
The study also reconfirmed that air rewards credit card owners are primarily those who pay their balance each month even though they use the cards often and charge $15,000 to $20,000 annually on their card. Those who pay balances monthly pay no interest charges to the card issuer.
“The reality is that many of these portfolios get good revenue streams from annual fees and the merchant discount fees,” says Brittain. “The interest revenue stream is there but it is not at the levels you see in other card portfolios. There are just too few revolvers.”
The study also indicates that ownership of these cards positively influence the choices of rental cars, hotels and restaurants if they are partnered with the airline to provide card owners with additional air rewards.