Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Delta Air Lines Giving a New Year's Gift to American Express

A lot of companies change various policies when a new year begins. A great example is the change to the Delta Air Lines  (NYSE: DAL  ) SkyMiles program and how it impacts one of their best partners, American Express (NYSE: AXP  ) .

Delta has a new spending requirement in order for a frequent flyer to maintain his or her status, but there's a way around it.

Up until now, in order to achieve an elite status with Delta, a flyer simply had to earn a certain amount of Medallion Qualification Miles, or MQMs, in a calendar year, or fly a certain number of segments. The mileage requirement ranges from 25,000 for Silver Medallion status to 125,000 for Diamond Medallion status. 

While the mileage (and segment) requirements have not changed, there is an additional qualification that now must be met.

The new "MQD" requirement
In order to increase the exclusivity of its elite status programs, Delta has invented a new requirement called Medallion Qualification Dollars, or MQDs, which essentially require a certain amount of spending by frequent flyers in order to maintain their status.

The catch is that only a portion of your ticket price counts. So, for example, to maintain Silver status, $2,500 MQDs are required in addition to the mileage requirements.

However, some of the cheapest Delta fares are mostly made up of taxes and fees, which don't count. A recently booked ticket for $290 on Delta only fetched $160 as MQDs. You can see how it is certainly possible to fly well over 25,000 miles while ending up far below the MQD requirement.

It's also worth noting that the new requirement only pertains to U.S. customers, and not internationally based travelers.

If you're currently a Medallion member and are starting to get worried about meeting the new requirements, there is one way around it. Delta has created an exemption for holders of its American Express-branded cards, whereby if you charge a total of $25,000 to your card, you are exempt from the new MQD requirements. 

Source: American Express.

How it could affect American Express
If you value your Delta status, and like many U.S. consumers, have several active credit accounts, this could be the encouragement you need to begin using your American Express card more than you currently do. American Express currently offers three levels of Delta credit cards: gold, platinum, and reserve. Each card has different benefits, with more of the flyers with elite status choosing either platinum or reserve because of the inclusion of MQMs. 

Additionally, Delta American Express Platinum cardholders who spend more than $25,000 also earn 10,000 bonus MQMs, giving those with higher status an added incentive to reach the spending threshold. 

American Express currently derives more than half of its revenue from its U.S. card services segment, so any incentive to increase in spending would benefit the company. 

Foolish bottom line
Now, I realize not every cardholder will care enough to drastically increase their spending, but some will. Many frequent flyers enjoy their free checked bags, first-class upgrades, and various other perks far too much to lose them.

Even if you're not a frequent flyer, but merely an interested investor, this adds to American Express' image as a high-end, differentiated credit provider.

One great stock pick for 2014 and beyond
There's a huge difference between a good stock, and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report: "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2786436, ~/Articles/ArticleHandler.aspx, 8/29/2015 12:58:08 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Matthew Frankel

Matt brought his love of teaching and investing to the Fool in order to help people invest better, after several years as a math teacher. Matt specializes in writing about the best opportunities in bank stocks, real estate, and personal finance, but loves any investment at the right price. Follow me on Twitter to keep up with all of the best financial coverage!

Today's Market

updated 15 hours ago Sponsored by:
DOW 16,643.01 -11.76 -0.07%
S&P 500 1,988.87 1.21 0.06%
NASD 4,828.33 15.62 0.32%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/28/2015 4:00 PM
DAL $43.94 Up +0.08 +0.18%
Delta Air Lines, I… CAPS Rating: ***
AXP $76.65 Down -0.23 -0.30%
American Express CAPS Rating: ****