United Airlines told investors on Tuesday that while new card applications are down, and that’s expected to last 6 to 12 months, spending volume is reduced only in line with current economic conditions. In other words, they don’t find that people are taking their current spending and shifting away from earning miles to cash back or other rewards.
That’s consistent with what Delta also told investors on Tuesday. The airline’s CFO, Paul Jacobson, suggested that the “brand proposition for miles versus cash is unchanged.”
He acknowledges SkyMiles members taking “a little hiatus when people aren’t going to travel,” but that the program still continues to motivate spend because it gives people “something to look forward to [the] prospect of saving up for something.”
Giving us a window into how Delta’s charge volume compares with that of other American Express products, which he’s privy to based on data their co-brand partner shares with them, he suggests that there hasn’t been a shift to other products – that spending reductions are in line with those of other cards. He says Delta hasn’t “seen proportional shift or bigger shift of demand for sales on Delta-related cards” versus American Express’ other cards, and that “everything is in line with pre-Covid.” As a result they project Delta card spending will grow as the economy recovers.
While spending in travel and entertainment is down markedly other spend has held up better. Nonetheless Delta and United reporting that spend volumes on their cards are consistent with those of non-travel rewards products seems contrary to data from Chase that their heavily travel-focused portfolio has seen spending drop 40%, an above average figure for an issuer.