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Hindustan Times
07-08-2025
- Business
- Hindustan Times
How loyalty programmes are keeping America's airlines aloft
You might expect America's most valuable airline to earn its keep flying passengers. But you would be mistaken. In the second quarter of the year Delta Air Lines notched up an operating profit of $2.1bn, comfortably ahead of its domestic rivals. Buried in the financial statements, however, was a more revealing figure. Had Delta relied solely on revenue from passengers, it would have operated at a loss. Delta is hardly unique in this regard. Last year American, Southwest and United—America's other big airlines—also lost money from flying passengers, even as the four jointly made around $14bn in operating profits (see chart). To be sure, airlines earn revenue from other sources such as cargo. But what keeps them aloft is a vast loyalty business that binds together consumers, airlines and credit-card issuers. In recent years frequent-flyer programmes in America have grown ever larger and more lucrative. How much bigger can they get? Chart The model is simple: airlines sell miles to card issuers; cardholders earn miles by spending; and those miles are eventually redeemed for travel. Each party benefits. Banks and other financial firms gain loyal customers, travellers enjoy flights and perks, and airlines secure a steady stream of profits. In the quarter from April to June American Express, a credit-card giant, wrote a cheque to Delta for roughly $2.1bn—equivalent to the airline's total operating profit. Citigroup, a bank, paid American about $1.4bn and JPMorgan Chase, another lender, handed some $800m to United. Such transfers, in turn, allow airlines to lower their fares. When American launched the first mass-market frequent-flyer programme in 1981, the aim was to reward repeat business travellers with free flights and upgrades. The subsequent involvement of card issuers turned these schemes not just into significant sources of revenue, but also useful tools of corporate finance. Aviation is a volatile trade, subject to fluctuations in fuel prices, business cycles and the demand for premium travel. At the same time, airlines must make long-term capital investments in aircraft and infrastructure. Selling miles to issuers helps manage the mismatch; carriers receive cash upfront and deliver the service later. Because they control the rules of redemption, they can steer passengers towards off-peak flights and unsold seats. These days the frequent-flyer schemes of America's big airlines command valuations in the tens of billions of dollars, sometimes exceeding the equity value of the company itself. During the pandemic, when airlines faced a collapse in travel and a liquidity crunch, they did not pledge aircraft to raise funds; they borrowed against the future cashflows of these programmes. The growth of these schemes has been fuelled over the past decade by a proliferation of credit cards dangling ever more lavish travel perks. Delta and American Express now offer no fewer than seven co-branded cards. Entry-level versions earn SkyMiles—Delta's loyalty currency—for every dollar spent; premium tiers come with lounge access, free checked bags and complimentary upgrades. Delta says that roughly 1% of America's GDP is spent through its co-branded cards. Even cards that are not co-branded, such as Chase's Sapphire Reserve and American Express's Platinum cards, are closely tied to air travel. They grant access to exclusive lounges, now fixtures in major American airports, and allow cardholders to convert points into airline miles with a range of carriers. These cards have been remunerative for financial firms, too. Annual fees are one source of revenue. Chase recently announced that its Sapphire Reserve will cost $795 a year, up by 45% from the year before, and American Express is expected to hike the charge for its Platinum card, currently $695 a year, in the autumn. But the real money comes from the interchange fees collected on transactions. When a consumer uses a Delta card to spend $100 at a retailer, for example, roughly $2 flows to the issuer. A little under $1.50 is returned to the customer in rewards or rebates. Interchange fees amounted to $160bn in America last year, and help explain why the loyalty business has not reached the same altitude elsewhere; in Britain, for instance, they are capped at a rate of 0.3% for credit-card transactions. How much bigger will America's loyalty nexus get? Over the past eight years both Delta and American have more than doubled the revenue they earn from selling miles to card issuers. United has seen growth of around 70%. Many airlines now award loyalty status based on how much customers spend, rather than how often they fly. Today a customer can reach American's top loyalty tier without ever having stepped on one of its planes. New partnerships are expanding the loyalty networks. Delta has teamed up with Uber to award miles for rides; United lists a growing roster of retail partners offering bonus points for spending with them. Yet the system is also showing signs of strain. Lounges are overcrowded. Card fees keep climbing. And changes to how loyalty is rewarded have ruffled some flyers' feathers. Then there are the regulatory threats. In June a consortium of carriers successfully lobbied against an amendment to the GENIUS Act, America's new law on stablecoins, that would have capped interchange fees. But the proposal may re-emerge soon enough. Airline bosses will need to keep a close eye on the engine that now keeps their companies flying.
Yahoo
19-07-2025
- Business
- Yahoo
10 Reasons to Buy and Hold This Market-Leading Stock Forever
Key Points The airline industry has undergone significant changes, and Delta Air Lines is at the forefront of achieving enduring profitability. Network carriers have substantial advantages over low-cost airlines in the current environment. The market underappreciates this airline's robust cash flow generation and return on investment. 10 stocks we like better than Delta Air Lines › Airline stocks haven't traditionally been a great investment, and they've attracted criticism from no less than Warren Buffett in the past. However, if you are willing to keep an open mind and share my view that something fundamental has changed in the industry, then Delta Air Lines (NYSE: DAL) is a great stock to buy. Here are 10 reasons why. 1. Growth in premium revenue The traditional view of the airline industry is one of highly cyclical booms and busts, where booms lead to overcapacity, which in turn leads to intense price competition in main cabin ticket prices when the inevitable demand slowdown occurs. One way Delta seeks to mitigate the cyclicity of its industry is by growing its premium cabin revenue, as high-income travelers account for 75% of air travel spending. In fact, whereas premium seats made up about 10% of seats in 2010, that figure has now increased to 30%, and Delta expects premium cabin revenue to surpass main cabin revenue by 2027. 2. SkyMiles loyalty program Delta engenders customer loyalty through its highly successful SkyMiles program, which saw a 50% increase in membership from 2017 to 2024. Members tend to spend more at Delta, and the loyalty program generates long-term customer value for the airline. In this way, Delta also diversifies away from the traditional airline model, which is focused on one-off transactional ticket sales relationships. 3. Co-brand credit cards with American Express American Express purchases miles from Delta, which it then uses to incentivize credit card holders to earn rewards through spending on the card. It's a highly successful product, and American Express' remuneration to Delta through it has grown from $2 billion in 2010 to $7 billion in 2024, with Delta's management aiming to reach $10 billion over time. Again, it's another example of Delta diversifying its revenue streams. 4. A new discipline As implied earlier, airlines haven't always been disciplined in reducing capacity when the industry slows down, and this has led to profit margin bloodbaths in the past. That said, for the second year in a row, Delta has adjusted capacity in response to overcapacity (in the summer of 2024) and a demand slowdown (in the spring of 2025, due to tariffs), which is good news for its cost and earnings management. 5. The industry is also more disciplined In addition, the industry at large is more disciplined, too, with peers like United Airlines reducing capacity in light of the tariff-induced slowdown in 2025. Discussing the matter on a recent earnings call, Delta's CEO Ed Bastian said, "On the supply side, we're encouraged by the industry's actions to align capacity with demand as we move beyond the peak summer period. Importantly, seats at the lower end of the market are scheduled to contract." 6. Impressive return on investment I've discussed this matter at length elsewhere; suffice to note that Delta is leading the industry's charge to generate a return on invested capital (ROIC) (13% in 2024) in excess of its weighted average cost of capital (WACC) (8% in 2024) with a long-term target ROIC of 15%. This is a key metric that the airline industry has struggled to achieve overall in the past. 7. Market position Delta is achieving good ROIC because of its favorable market position, thanks to the factors noted (premium, SkyMiles, etc.), but also its core domestic airport hubs in Atlanta, Minneapolis/St. Paul, and Salt Lake City, a strong international presence at London-Heathrow, Paris-Charles de Gaulle, and Amsterdam. 8. Structurally advantaged As a network carrier, Delta has a structural advantage over the low-cost carriers in the current environment of rising airport costs. Rising labor costs, supply chain, and airport fees (to fund expansion and maintenance) might increase the average ticket price by, say $10, which has an inordinate impact on a low-cost ticket price of, say $70, but not so much on a Delta ticket costing $250. 9. Robust cash flow generation Yes, Delta has debt thanks to the COVID-19 pandemic lockdown periods, but as of the end of June, its adjusted debt is down to $16.3 billion from $21.4 billion at the end of 2023. Moreover, given Delta's excellent free cash flow (FCF) generation (management reiterated guidance for full-year 2025 FCF of $3 billion to $4 billion recently), the company's debt reduction will continue as it strengthens its balance sheet. 10. Valuation Ultimately, while valuations may fluctuate, Delta remains a stock to hold for the long term at its current valuation. Trading on just over 10 times estimated 2025 earnings and 12.2 times the low end of the 2025 FCF guidance range quoted, the market is undervaluing the long-term growth prospects at Delta, and the stock is highly attractive at these levels. Should you invest $1,000 in Delta Air Lines right now? Before you buy stock in Delta Air Lines, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Delta Air Lines wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $687,149!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,060,406!* Now, it's worth noting Stock Advisor's total average return is 1,069% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 15, 2025 American Express is an advertising partner of Motley Fool Money. Lee Samaha has no position in any of the stocks mentioned. The Motley Fool recommends Delta Air Lines. The Motley Fool has a disclosure policy. 10 Reasons to Buy and Hold This Market-Leading Stock Forever was originally published by The Motley Fool Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
The Hill
30-06-2025
- The Hill
Delta locks some customer accounts over security concern: What to know
HARRISBURG, Pa. (WHTM) — If you have a flight with Delta Air Lines coming up, you may want to make sure you can access your frequent flier account before you head to the airport. The airline locked access to some customer frequent flier accounts because of cybersecurity concerns it learned of earlier in the week and didn't immediately notify those customers, based on similar information provided by two different reservations agents at different times Saturday to an affected customer, a reporter for Nexstar's WHTM. The potential security breach happened last week, based on the information provided. The reporter discovered the problem Saturday while trying to log into the airline's system to check in for a flight scheduled for Sunday. The login failed, as did an attempt to reset the password. This previously unreported issue occurred while Delta also worked to recover from a severe storm at its Atlanta hub, which caused the airline to cancel nearly 1,000 flights Friday and Saturday. The reporter called the airline's reservations center, where an agent immediately recognized the problem and said a known issue, regarding concerns about a potential security breach, had impacted a large number of customers earlier in the week, and those customers' accounts had been locked. The agent said the customer, like others impacted, had to upload a photo of a valid government ID (such as a driver's license) to verify his identity. The agent helped the reporter navigate to a form on the airline's website through which the photo could be uploaded. She said because of the large number of customers impacted, the requests were taking time to address; the reporter could call back later for further manual assistance over the phone if the issue wasn't addressed in time. 'Delta SkyMiles accounts are secure,' a company spokesperson said in a statement, responding to questions about the issue. SkyMiles is the airline's frequent flier program. 'As we do occasionally, out of an abundance of caution, we reset credentials for accounts and ask that customers verify them with us to maintain security of the accounts. We apologize for any inconvenience this might cause.' A different agent later in the day, assisting the reporter further, also recognized the issue immediately and said about 68,000 customers had been impacted. The spokesperson declined to comment further. The 68,000 customers would represent fewer than 1% of Delta's approximately 130 million SkyMiles members, and it was unclear whether any accounts had actually been breached, as opposed to whether, for example, hackers had unsuccessfully attempted to breach the airline's systems. But two security experts said the airline's handling of the issue — locking customer accounts but not immediately notifying the impacted customers that they should attempt to reset their account credentials to regain access — was unusual. 'This is the first time I've ever heard of a company doing something like this without notifying customers,' Jonathan Weissman, a principal lecturer at the Rochester (New York) Institute of Technology's cybersecurity department, said Saturday night. 'It makes no sense that they would lock the accounts and not tell the customers that the accounts have been locked.' Weissman said companies often require customers to reset their passwords, even after successfully blocking hackers from accessing an account, but they typically notify customers immediately when that happens so the customers can address the issue calmly and at their convenience rather than when they have an immediate need to access the company's website or app. 'Locking the accounts is a good, safe measure,' Weissman said of Delta's initial step. 'But not communicating that fact to the affected customers can cause mass confusion and problems with people boarding flights eventually. The information should be forthcoming from [Delta], not in response to questions from customers.' Weissman said it's possible the airline doesn't know the extent of the issue, but if it knew enough to lock the accounts, it should have notified customers of that action and their need to set new passwords at the same time. Another cybersecurity expert, also speaking Saturday night, agreed. 'They need to come clean and do their best job of notifying everybody affected,' said Scott Schober, CEO of a New Jersey-based cybersecurity company called BVS and author of several books about cybersecurity. 'At a minimum, they could alert you so you can take action, and then provide more information as they learn it.' Less than half an hour after the first agent helped the reporter navigate the process of uploading the photo of his driver's license, he received this message: But the password reset didn't work. The reporter called and spoke with another agent who was also familiar with the issue and was able to help successfully reset the password, resulting in a successful account login. Delta is generally well-regarded among U.S. airlines, sometimes ranking higher than all others in customer surveys and analyses of metrics such as airline punctuality.
Fast Company
30-06-2025
- Fast Company
The sneaky way to to deal with public Wi-Fi restrictions
On a recent flight home to Cincinnati, I found myself in a Wi-Fi pickle. Delta was offering free in-flight Wi-Fi for all SkyMiles members, but only after logging in through a web page. That created an obstacle for connecting my recently-acquired retro gaming handhelds, which don't have web browsers onboard. With no access to Delta's login site, I couldn't get them online to track my gaming progress. Quite the first-world problem, but after a bit of searching, I found a solution: Using my Android phone's personal hotspot feature, I could relay Delta's Wi-Fi to any nearby device without having to go through a login page. Even with my phone in airplane mode, I was able to set up the hotspot and get my gaming handhelds online. It turns out that Windows PCs, MacBooks, and many Android phones can share a local Wi-Fi connection this way. I wish I'd known about this earlier, because it can be useful in all kinds of scenarios:. You're paying for hotel, in-flight, or cruise ship Wi-Fi, but each device connection costs extra. You're using a guest Wi-Fi network that limits the total number of devices you can connect. You've brought a Fire TV Stick or other streaming device to use in a hotel room, but the guest Wi-Fi network has a login page that your device can't navigate. In all of these situations, relaying the Wi-Fi connection from a phone or computer provides a workaround. To the network, it just looks like you're connecting one device, but in reality you're distributing it to your other devices as well. This story first appeared in Advisorator, Jared's weekly tech advice newsletter. S i gn up for free to get more tips every Tuesday. A personal hotspot refresher When you set up a personal hotspot on your phone, it effectively becomes a tiny wireless router, with its own network name and password. You can join this network from your other devices, and they'll use your phone's internet connection to get online. Typically, you'd use a personal hotspot to extend your phone's cellular connection to laptops, tablets, or other nearby devices when Wi-Fi is unavailable. If your wireless plan supports hotspot use, it's a great alternative to device-specific data plans (like those pricey iPad plans the major carriers love to push on unsuspecting customers). But with the in-flight Wi-Fi pickle I mentioned above, connecting to cellular wasn't an option. My phone was in airplane mode with cellular disabled, and there's no cell reception at 10,000 feet in the air anyway. Instead, I used the same personal hotspot feature to share Delta's Wi-Fi connection with my gaming device. That allowed me to get online even though that device couldn't log into Delta's network on its own. Side note: If you've never used your phone's personal hotspot feature before, I suggest giving a try: On iPhones: Head to Settings > Cellular > Personal Hotspot. From here you can turn on the hotspot and look up or change the network's password. (The Wi-Fi network name will be the same as your phone's name, set under Settings > General About > Name.) On Android: Instructions vary by phone, but look for Settings > Network & Internet (or Connections) > Hotspot & Tethering. You can set both the network name and password from this menu. With personal hotspot turned on, your phone should appear in the Wi-Fi menu on other devices, so you can connect with whatever password you set up. Just remember that hotspot mode puts a strain on your phone's battery, so turn it back off when you're not using it. Setting up the relay To relay a Wi-Fi connection, you'll need a compatible Android phone, Windows laptop, or MacBook. (Sadly, the hotspot feature on iPhones only works with cellular data; it can't share local Wi-Fi connections.) To see if your Android phone is compatible, try turning on your personal hotspot and Wi-Fi at the same time. If your phone's top status bar shows both the hotspot and Wi-Fi symbols, any devices you connect to the personal hotspot should route through Wi-Fi instead of your cellular network. (You can also test this by turning on Airplane Mode before enabling the hotspot.) On Samsung phones, you should also head to Settings > Connections > Mobile Hotspot and Tethering, tap on the words 'Mobile Hotspot,' then tap the 'Password' field. Hit the 'Advanced' button at the bottom, then make sure 'Wi-Fi sharing' is turned on. If you can't use your phone to relay a Wi-Fi connection, try sharing from your laptop instead: Windows 11: Head to Settings > Network & internet > Mobile hotspot. Set a password under the 'Properties' heading before turning the hotspot on. MacOS: Head to Apple Menu > System Settings > General > Sharing, then click the 'i' next to 'Internet Sharing.' Turn on the 'Wi-Fi' toggle, set your network name and password, then turn Internet Sharing on. Just like the personal hotspot feature on phones, your laptop will create a small Wi-Fi network for connecting your devices, and they'll share whatever internet connection the laptop is using. Keep this in mind next time you run into an overly restrictive guest Wi-Fi network, whether it's on dry land or not. This story first appeared in Advisorator, Jared's weekly tech advice newsletter. S i gn up for free to get more tips every Tuesday. The extended deadline for Fast Company's Next Big Things in Tech Awards is this Friday, June 27, at 11:59 p.m. PT. Apply today.
New York Post
20-06-2025
- Business
- New York Post
Best US airlines for 2025 revealed — and one topped the list for the seventh straight year
They're flying high. Travel blog The Points Guy (TPG) has named the best airlines in the US for 2025 — with Delta Airlines taking the crown for the seventh year in a row. The top-tier carrier was also named the most reliable on-time airline in America. Advertisement The rankings were devised to 'help consumers navigate the constantly changing aviation landscape' that's rife with 'changing airline policies, systemic delays and increased scrutiny on air travel,' per the site's founder Brian Kelly. 5 Delta Airlines nabbed the top spot for the seventh year in a row. kamilpetran – While they didn't place first across all other categories — notably falling short in affordability and the mileage customers got out of the SkyMiles rewards program — Delta soared above the competition due to their collective performance across four separate metrics. Advertisement 'What put Delta over the top in 2025 was its strength across all the categories we analyzed, from the consistently strong, on-time airline operation it runs to the experience customers have at the airport and in their seats,' TPG wrote in their report. In December, Delta Air Lines collaborated with Shake Shack to bring the fast-food giant's popular cheeseburgers to first-class cabins on domestic flights traveling more than 900 miles. United Airlines came in second place, rising from third last year. The carrier eclipsed Delta when it came to loyalty rankings and also improved in two main categories compared to last year: overall reliability and passenger experience. Advertisement United could potentially fly even higher next year due to the recently announced 'Blue Sky' agreement with JetBlue, which will increase the airline's footprint and improve perks for loyalty members, CBS reported. To compile the list, the Points Guy team analyzed each airline across four categories: reliability (based on delays, cancellations, lost luggage and more), passenger experience (inflight amenities, customer satisfaction, lounges, etc.), the caliber of the airline's loyalty program, and the cost and reach of each carrier. They then rated them on a scale of zero to 10. 5 United placed second overall. robin – Advertisement TPG based its list on 2024 data from the U.S. Department of Transportation, including passenger complaints filed with the DOT, along with mishandled baggage reports for each carrier and operational data. TPG also examined international route networks using aviation analytics firm Cirium — although they emphasized domestic networks — as well as each carrier's financials and publicly available fleet information. 'Our Best Airlines Report thoroughly analyzes and compares each airline's performance to help consumers make the right choice for them, because not all airlines are created equal,' TPG's Kelly added. 'Ultimately, we want consumers to know they have a choice so they can fly the airlines that best align with their needs.' 5 Airlines — including Alaska, above, which ranked fourth — were rated across several categories from reliability to the power of their loyalty programs. KKF – Southwest Airlines jumped up two spots to notch the No. 3 position, which TPG attributed, in part, to the carrier boasting the lowest cancellation rate in the industry for 2024. They noted that the carrier maintained its cost and reach last year — thanks, in part, to the lack of add-on fees. However, the budget carrier could face some headwinds next year following some major changes, including the rollout of checked bag fees and the phase-out of their popular 'first come, first served' policy in favor of the more standard assigned seating. Rounding out the top five were Alaska Airlines and Hawaiian Airlines. Advertisement 5 'Our Best Airlines Report thoroughly analyzes and compares each airline's performance to help consumers make the right choice for them, because not all airlines are created equal,' The Points Guy founder Brian Kelly said. 'Ultimately, we want consumers to know they have a choice so they can fly the airlines that best align with their needs.' Lukas Gojda – 5 Southwest Airlines made the top three. Carlos Yudica – TPG's 10 Best Airlines for 2025 Delta Air Lines United Airlines Southwest Airlines Alaska Airlines Hawaiian Airlines JetBlue American Airlines Allegiant Air Spirit Airlines Frontier Airlines Other takeaways included that American Airlines saw the biggest year-over-year decline in rankings, plunging three spots to seventh overall. Advertisement That fall from grace comes as AA plays catch-up to United and Delta in terms of profitability, as well as upmarket amenities such as business-class seats, cabin features and lounges. Budget airlines Allegiant, Spirit and Frontier occupied the last three spots in the rankings, which TPG attributed to their myriad add-on fees, lacking loyalty programs and amenities that paled in comparison to the competition. Unfortunately, U.S. airlines fared poorly on the international stage, too. Advertisement In Skytrax's recent ranking of the best airlines in the world for 2025, Delta placed the highest on list — but in an abysmal 22nd place, followed by United in a miserable 51st. Meanwhile, Air Canada topped the list of North America's top airlines for 2025, Delta came in second, and Canadian carrier Porter Airlines rounded out the top three.
