Cobranded credit cards may help airlines recover from coronavirus
Having a credit card, in some ways, is like having invisible extra money. You don't need cash in your pocket right now to pay for something if you have the right piece of plastic (or metal) in your wallet.
As it turns out, in times of financial uncertainty like the one we are in now, airlines have been able to leverage their credit card partnerships for their own kind of financial boost.
This happened at least once before, in first decade of the 2000s, which was not a great time for airlines' bottom lines. Between the post-9/11 travel downturn and the 2008 financial crisis, U.S. carriers were generally facing a cash crunch.
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Take Delta Air Lines, which was mired in Chapter 11 bankruptcy protection from September 2005 through April 2007. But while it reorganized during that process, Delta was able to get a cash infusion from American Express, which issues Delta's cobranded credit cards.
"American Express pre-purchased a large block of SkyMiles from Delta, and that brought in some much-needed cash," said Henry Harteveldt, president of Atmosphere Research, an industry analysis firm. Amex made another such SkyMiles purchase in the wake of the 2008 financial crisis, he noted. That deal was worth $1 billion, according to CNN.
Related: 2020's best airline award credit cards.
American and United received similar lifelines from their lending partners during the earlier financial crisis.
How much of a boost were those partnerships worth?
Citibank, which issues AAdvantage Mastercards, purchased $1 billion worth of miles in 2009, according to The Dallas Morning News. Chase, which issues MileagePlus Visas, purchased $600 million worth United miles as part of a 2008 contract extension, according to IdeaWorksCompany, an aviation analysis firm.
Harteveldt said he expects another round of this kind of aid as the airlines try to find their footing after COVID-19.
"No one anticipated this pandemic occurring, but it increases the importance of the relationship between the airline and its credit card partners," Harteveldt said.
"Consider these banks an airline's equivalent of personal protective financial equipment," he added. "For some airlines at least, these partnerships can provide critically important access to auxiliary cash."
Harteveldt anticipates lending partners — Amex for Delta, Chase for United and Southwest, and Citibank and Barclays for American — could spend hundreds of millions of dollars buying frequent flyer miles from the airlines as part of a financial aid package in the near future.
Related: The types of relief credit card companies are offering during the coronavirus crisis
The exact terms of those deals, Harteveldt said, will vary based on a number of factors, including an airline's financial health and what kinds of terms its lending partners want to place on the funds.
The lenders, too, will be careful not to pre-purchase too many miles from an airline that could to emerge much smaller after the outbreak subsides, he said.
"The last thing a credit card partner wants to do is be saddled with far too many loyalty program points for an airline that is not operating enough flights and is therefore not offering enough inventory for award travel, because it dilutes the value of that credit card," Harteveldt said.
He added that some airlines may prefer to take government aid under the CARES Act while it's available, and keep the option of financial assistance from a lending partner in reserve if the crisis drags on longer than anticipated and Congress chooses not to pass a second airline aid package.
Related: 5 things to know about the $50 billion U.S. airline aid package
When a cobranded credit card issuer does decide to give aid to an airline partner, though, traveler-friendly deals are likely to result.
"Potentially this could mean richer signup bonuses, more bonus points or incentives to spend," Harteveldt said. "It could become a golden age for the cardholders because the banks are going to want to make sure these points are used."
Read more: Airlines have to provide passengers with refunds for canceled flights
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| 3X | Earn 3X Miles on Delta purchases. |
| 1X | Earn 1X Miles on all other eligible purchases. |
Pros
- Delta SkyClub access when flying Delta
- Annual companion ticket for travel on Delta (upon renewal)
- Ability to earn MQDs through spending
- Various statement credits for eligible purchases
Cons
- Steep annual fee of $650
- Other Delta cobranded cards offer superior earning categories
- Earn 100,000 Bonus Miles after you spend $6,000 or more in purchases with your new Card within the first 6 months of Card Membership and an additional 25,000 bonus miles after you make an additional $3,000 in purchases on the Card within your first 6 months, starting from the date that your account is opened. Offer Ends 04/01/2026.
- Delta SkyMiles® Reserve American Express Card Members receive 15 Visits per Medallion® Year to the Delta Sky Club® when flying Delta and can unlock an unlimited number of Visits after spending $75,000 in purchases on your Card in a calendar year. Plus, you’ll receive four One-Time Guest Passes each Medallion Year so you can share the experience with family and friends when traveling Delta together.
- Enjoy complimentary access to The Centurion® Lounge in the U.S. and select international locations (as set forth on the Centurion Lounge Website), Sidecar by The Centurion® Lounge in the U.S. (see the Centurion Lounge Website for more information on Sidecar by The Centurion® Lounge availability), and Escape Lounges when flying on a Delta flight booked with the Delta SkyMiles® Reserve American Express Card. § To access Sidecar by The Centurion® Lounge, Card Members must arrive within 90 minutes of their departing flight (including layovers). To access The Centurion® Lounge, Card Members must arrive within 3 hours of their departing flight. Effective July 8, 2026, during a layover, Card Members must arrive within 5 hours of the connecting flight.
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- Enjoy a Companion Certificate on a Delta First, Delta Comfort, or Delta Main round-trip flight to select destinations each year after renewal of your Card. The Companion Certificate requires payment of government-imposed taxes and fees of between $22 and $250 (for itineraries with up to four flight segments). Baggage charges and other restrictions apply. Delta Basic experiences are not eligible for this benefit.
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- Delta SkyMiles® Reserve American Express Card Members get 15% off when using miles to book Award Travel on Delta flights through delta.com and the Fly Delta app. Discount not applicable to partner-operated flights or to taxes and fees.
- With your Delta SkyMiles® Reserve American Express Card, receive upgrade priority over others with the same Medallion tier, product and fare experience purchased, and Million Miler milestone when you fly with Delta.
- Earn 3X Miles on Delta purchases and earn 1X Miles on all other eligible purchases.
- No Foreign Transaction Fees. Enjoy international travel without additional fees on purchases made abroad.
- $650 Annual Fee.
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- Terms Apply.
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