Increasing Benefit of Airline Credit Cards
As frequent fliers know all too well, cheap fares, be they cheap airplane tickets or cheap vacation packages can end up being more expensive than expected after paying to check bags when flying. As of June 1st, Delta will waive the first checked bag fee for anyone that has or is traveling with someone who is a Delta/American Express card holder. Since last fall Continental has been offering a similar fee waiver through its credit card partner, Chase Bank.
If you travel a couple of times a year and check a bag each time and/or travel with your family who check bags, the annual savings could be considerable. A family of four, each of whom checks one bag, could save $200 in baggage fees on a single round trip.
Now that two major US airlines are waiving first bag fees for holders of their branded credit cards, other large airlines may feel forced to match this offer. Given that United is merging with Continental that only increases the likelihood of United adopting a similar program. It is hard to believe that American, US Airways, and other airlines that already offer their own branded credit cards will allow Delta and Continental to retain such a strong marketing advantage.
Passengers do not have to purchase their airline tickets with Deltas credit card in order to avoid first bag luggage fees, only be, or travel with, a Delta card holder.
Most airlines are currently waiving luggage fees for members of their elite frequent flier programs.
Checked bag fees generated $2.7 billion in revenue for U.S. airlines in 09. Delta and Continental must believe that they can make more money from passengers use of their branded credit cards than from charging them to check their first bag when flying.
Airlines are usually paid by a financial institution about 1 percent of every purchase a customer makes using their branded credit card. An airline would therefore make about $300 annually if a card holder made $30,000 in charges yearly
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