Delta rolls out new no-fee AmEx amid hot airline credit card market

Delta Air Lines is rolling out a new frequent-flier credit card with no annual fee, part of an effort to court new customers in the increasingly lucrative market for airline-branded credit cards.

The new “Blue Delta SkyMiles Credit Card” will become available starting Thursday, continuing Delta’s long-standing partnership with American Express. Unlike Delta’s other SkyMiles American Express cards – the Gold, Platinum and Delta Reserve cards – the Blue card will not charge an annual fee. It also will come with a mileage-earning bonus not featured on any of the other Delta cards: double miles on purchases at U.S. restaurants.

However, the no-annual-fee Blue card does not include perks common to Delta’s other American Express cards. Delta’s Blue cardholders, for example, will not be earn elite “qualifying miles” for hitting spending thresholds. Nor will they have bag fees waived for being a cardholder.

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Delta describes the new Blue card as one that’s “designed for consumers who are just beginning to explore the world of travel.”

“We built this card with the new and casual traveler in mind,” Sandeep Dube, Delta’s Vice President – Customer Engagement and Loyalty, says to Today in the Sky. “What they care about most is earning miles easily, miles that don’t expire and they don’t want to pay a fee for that. It’s purpose built for that.”

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The “new and casual” traveler segment that Delta says it’s targeting with the Blue card skews to a younger crowd. That's why Delta is offering double dining miles with its Blue card.

“Our research shows … their biggest discretionary spend is in dining out,” Dube adds.

Eva Reda,  American Express Executive Vice President, Consumer Partnerships and Product Development, echoed a similar idea in talking about the card.

“Designed for consumers who are just starting to travel and are looking for easy ways to earn miles in their everyday lives, the Blue Delta SkyMiles Card provides them with rich value in areas we know that they are passionate about and where we know they are spending-- in particular, dining," Reda said.

Delta’s Blue card will effectively replace the carrier’s little-promted SkyMiles Options card that also had no annual fee but earned just 1 mile for every $2 spent (or 1 mile per dollar on Delta purchases).

That Delta is rolling out a new SkyMiles American Express card underscores just how important loyalty credit cards have become to the airline industry. In addition to the traditional mileage-earning that fliers get from actually flying, carriers now sell miles by the hundreds of millions to banks and other companies that in turn give the miles to customers as rewards for credit-card spending or other purchases.

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Bloomberg News reported earlier this year that segment of the frequent-flier business -- airlines selling miles directly to banks and other retailers -- “has expanded so much that it accounts for more than half of all profits for some airlines.” Delta, for example, expects to take in about $4 billion by 2021 from its AmEx partnership, according to Bloomberg.

"The bottom line is that the business of selling miles is a very profitable one and has proven historically to be far less cyclical than the core airline," Joseph DeNardi, a Stifel analyst who tracks airlines, said in an August note to clients, according to The Associated Press.

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For Delta, its new Blue card is an attempt to expand its reach to a younger crowd of less-frequent travelers -- a group that's more resistant to paying an annual fee for a mileage credit card.

The Blue card will compliment Delta’s three other American Express cards that have perks designed more to high-frequency travelers who value things like elite status and lounge access.

“It’s a very clear distinction,” Dube says of Delta’s card porfolio. “If you travel a lot, we have cards for that. If you want accelerated status, we have cards for that. If you’re a new and casual traveler, now you have the Blue card.”

Scroll down for a synopsis of Delta’s four types of American Express cards:

IN PICTURES: 30 (more) cool aviation photos (story continues below)

Delta Reserve card

Annual Fee: $450

Notable perks beyond earning miles: Complimentary access to Delta’s Sky Club lounges; no fee for a first checked bag; 15,000 elite “Medallion qualifying miles" (MQMs) and 15,000 bonus "redeemable" miles for each $30,000 spent in a calendar year (up to a maximum of 30,000 bonus miles and MQMs); no foreign transaction fees.

Current sign-up bonus: 40,000 bonus miles and 10,000 MQMs after spending $3,000 in first three months with the card.

Platinum SkyMiles card

Annual Fee: $195

Notable perks beyond earning miles: Discounted Delta Sky Club membership; no fee for a first checked bag; 10,000 elite “Medallion qualifying miles" (MQMs) and 10,000 bonus "redeemable" miles for each $25,000 spent in a calendar year (up to a maximum of 20,000 bonus miles and MQMs); no foreign transaction fees.

Current sign-up bonus: 50,000 bonus miles and 5,000 MQMs after spending $2,000 in first three months with the card. Also: a $100 statement credit for making a Delta purchase within the first three months of having the card.

Gold SkyMiles card

Annual Fee: $95 (waived for the first year)

Notable perks beyond earning miles: No fee for a first checked bag; no foreign transaction fees.

Current sign-up bonus: 40,000 bonus miles after spending $1,000 in first three months with the card. Also: a $50 statement credit for making a Delta purchase within the first three months of having the card.

Blue SkyMiles card

Annual Fee: None

Notable perks: Double miles at U.S. restaurants.

Current sign-up bonus: 10,000 bonus miles after spending $500 in first three months with the card.

IN PICTURES: Even more cool aviation photos

This article originally appeared on USA TODAY: Delta rolls out new no-fee AmEx amid hot airline credit card market