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Are rewards programs keeping airlines afloat? They just might be.
The program was initially launched as the “Delta Airlines Frequent Flyer Program” in 1981 and was renamed SkyMiles in 1995. The recent ad spot marks Delta’s first major investment in marketing the loyalty program. Why the recent focus on marketing a 42-year-old program?
Unsurprisingly, the COVID-19 pandemic.
How Airlines Are Creating Their Own Banks
Though travel demand and spending decreased due to the pandemic in 2020, Delta was able to generate cash by raising $6.5 billion through the SkyMiles program and payouts from its co-branded credit card partnership with American Express.
Delta isn’t alone in using this approach — United used a similar strategy to generate cash from its loyalty program during the pandemic, and recent reports have found that some popular rewards programs are worth more than the airlines.
In late 2020, Delta created its subsidiary SkyMiles IP Ltd. which essentially serves as the company’s own “bank” that it can purchase miles from to use as financial leverage.
With this move, the success of the SkyMiles program is now integral to the success of Delta, so investing in the program’s growth is a no-brainer for the company. The more miles it can award loyal customers, the more potential capital the airline can leverage if travel demand dips again.
“Grow Your World With Every Mile” may have been the first piece of content we’ve seen promoting Delta SkyMiles, but it certainly won’t be the last.
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