Delta Air Lines has announced major SkyMiles changes designed to push consumers to use their credit cards and spend more on those cards, to avoid falling behind on the elite status treadmill.
For years they’ve been taking away from the program, sometimes a little at a time and sometimes a lot. And they’ve been requiring more and more from customers to get less and less. Like the proverbial boiling lobster, SkyMiles elite members went along for the most part every step of the way. And that was very good to Delta, generating around $7 billion from American Express at around a 40% margin and accounting for the vast majority of the airline’s profit.
Not satisfied with that, they’ve changed how elite status will be earned starting next year so that only qualifying dollars count – no more miles or flights flown – and qualifying dollars can be earned through spending on their credit cards. So far so good, that’s really just copying what American Airlines already did. But there are fewer activities other than card spend that will count towards status compared to American, and the threshold for top tier status is 75% higher than American’s too.
SkyMiles members have shown they’ll put up with a lot, but what Delta is asking for now is beyond the capacity of what most of them are able to give. And in response, the airline has simply said stop being poor.
Airline Credit Card Deals Are An Eleven Figure Golden Goose
With consolidation there are fewer big airlines for banks to partner with. That gave airlines more leverage as they negotiated co-brand credit card deals with banks.
Selling miles to banks has been important since Diners Club Rewards launched in 1985, and the first airline credit card – the Continental TravelBank MasterCard from Marine Midland Bank (now HSBC) – launched in 1986. This business grew in importance to the point that when United Airlines entered bankruptcy in December 2002, it was said they had to continue flying through Chapter 11 to support the underlying credit card business (Mileage Plus was then the only profitable division of the company).
The underlying value of these programs became clear when airlines were able to tap their loyalty program for up to a billion dollars in cash during the Great Recession.
Once Costco dropped American Express, Amex scrambled to keep their then-second largest co-brand deal, putting more money on the table than an airline had ever seen for a credit card. That set a new bar in negotiations, that led to American’s split deal with Citibank and Barlcays; to United’s pre-pandemic renewal with Chase; and to Delta one-upping with its pre-pandemic Amex deal extension through 2029.
These deals became so lucrative that United, Delta, and American were able to raise $6.5 billion to $10 billion apiece in financing backed by the income streams largely from their credit card deals during Covid.
However, there’s a problem. Banks have shown that it’s possible to build large rewards card portfolios without co-brand marketing partners, and in general the best ones are far more rewarding than airline credit cards.
- Banks are now paying so much to airlines for these marketing deals that there’s not enough cash left to reward the consumer.
- When banks don’t have to pay for branding and databases and myriad things on top of rewards, entirely apart from customer acquisition expenses, they’re able to compete aggressively with rich rewards.
Delta expects to generate nearly $7 billion in revenue from American Express this year. They want to see that grow to $10 billion (as a result of things other than inflation, although they’ll take inflation and claim success when they hit the number). That implies an eleven figure enterprise value for the mileage programs.
Airline Miles Can’t Justify Increased Consumer Card Spend
Customers would be foolish to spend more money on Delta co-brand cards when,
- Delta’s miles are worth less than miles in most other airline programs
- Airline miles are themselves worth less than bank-issued transferable currencies
- And you generally earn fewer of the less valuable airline miles with an airline card than you’d earn with a bank’s card. Less of your spend generally falls in accelerator (2x, 3x, 4x) categories with airline co-brands.
Spend on a Delta credit card simply is not valuable compared to spend on other cards. Spend on Delta cards is less valuable than a no fee 2% cash back card, and less valuable than a Chase, American Express, or Capital One premium transferable points rewards card. Banks can give more back to the consumer when they aren’t also paying a cut to their airline partner for things other than the miles.
It can make sense to get a Delta card when they’re incentivizing doing so enough (big bonus) and it can make sense to keep the card for benefits. But the only way to incent spend is with the elite program.
Elite Benefits Are The Only Way For Airlines To Move The Needle On Card Spend
Delta is leaning hard into its elite program to encourage spend on its co-brands.
- They want customers to upgrade to their premium co-brands to earn qualifying miles
- And earning status is going to require a lot of card spend for most members
Here are the new status tiers, earn in 2024 for 2025 benefits:
- Silver: $6,000 qualifying dollars
- Gold: $12,000 qualifying dollars
- Platinum: $18,000 qualifying dollars
- Diamond: $35,000 qualifying dollars
But every dollar put on a Delta credit card comes with a big opportunity cost, it means a dollar not spent on another card that would award more and more valuable points.
Delta Used To Be A Good Enough Airline And Brand For Devaluations To Work
In the past Delta has been able to devalue SkyMiles and not see cardmembers reduce their spending, in contrast to other airlines that have seen their cobrands take a hit from devaluations.
And the airline has been good enough (not cancelling mainline flights for months on end, good catering, and friendly staff) that even those who aren’t hub captive have stuck with them in spite of miles that are worth less than peers.
Delta executives say offering less valuable miles for rewards, with a reliable airline and good brand, is their strategy.
But Delta devalued their miles several times during the pandemic, and now even charges exorbitant prices for partner awards even when those are only offered at the same older saver style as before. And Delta is no longer as reliable as they were (they cancel flights now) and no longer offers as strong an inflight product (though their crews are still marginally friendlier).
Delta has eroded the advantages that have allowed them to retain loyal customers even with low value miles. And they’ve eroded the advantages that have allowed them to retain loyal customers even while they’ve made status worth less, for instance no longer allowing elite upgrade certificates to be used from coach to business class where premium economy is offered and now selling most domestic first class seats so upgrades on the most desirable routes are rare.
- The miles are worth less
- The status is worth less
- And Delta says they aren’t done making changes to the SkyMiles program and they plan to segment the first class cabin like they did to coach to maximize first class revenue, so expect upgrades to become even harder going forward.
There’s just too little left from Delta or SkyMiles to stretch card spending for status except at the slimmest of margins.
Card Spend Used To Make Sense For Delta Elites, But Now They’re Asking Too Much
Delta used to require $25,000 spent on their cards to waive ticket spend requirements for status. That was a reason a Delta flyer would spend on their American Express cards. They’ve eliminated this reason. And the new status requirements are out of reach for many, so they’ll stop spending instead of spending more if they’re even able to spend more.
The Delta Platinum would require $700,000 in annual spend to earn Diamond. Upgrade to the premium Reserve and it’ll take $350,000 in annual spend. Or, say, $20,000 in ticket spend and $150,000 in card spend.
They used to waive the spend requirement for Diamond with $250,000 card spend. Then it didn’t matter how much you’d spend on tickets. Now card spend on the Delta Gold card does not even count towards status at all. They want more spend and they want it on the high annual fee cards. And if you get the highest fee card without spending $75,000 a year on that card you’ll no longer even get unlimited visits to their lounges.
Even if you spend $75,000 or $350,000 on their $550 annual fee card you will get turned away at their lounges if you’re on a basic economy ticket. Delta is alone in booking their cheapest award redemptions into basic economy.
Could Delta Know Something We Don’t?
Airlines have a golden goose in loyalty programs, an annuity worth several billion dollars a year. Delta and American Express rolled the dice that they could generate 50% more from that portfolio over time, the dice haven’t landed yet, but they were willing to risk snake eyes.
Or maybe they didn’t realize they were taking this risk? A lot of analysis and interviews went into this project. There are a lot of spreadsheets and a lot of people signed off on it both at American Express and Delta. But maybe the spreadsheet function they used was finding numbers to backfill assumptions that this would all work out?
The best argument for the changes I’ve seen is,
- Sure, Delta is angering and effectively ‘firing’ a bunch of customers
- And these changes give less to consumers, while asking them for more
- And don’t even come with any sweeteners, promises that those who give Delta what they’re asking for will really benefit (remember, upgrades are going to get harder, not easier going forward)
- But Delta has done this same thing before and it worked!
- They have the data and we don’t!
The problem is there is some gutting of SkyMiles that would push consumers too far, even if almost unfathomably we haven’t hit it yet.
- If they made the program worth literally zero it would not be a motivator
- Some amount of value prior to reaching zero is enough to push customers away
- And no one knows where that line is
Delta is self-consciously encouraging a certain subset of their cardmember base to cancel or at least stop spending, betting that other cardmembers will increase their spend not just to offset but to grow total spend on the products over time. That could happen!
But a $7 billion annual annuity is a big bet to make, and it’s not an asymmetric one – in fact the reverse is true. They’re risking the current co-brand value for incremental gains. And everything says they’re the smartest people in the room.
It’s a gamble, and as with most gambles it is possible to win, but that doesn’t make the bet smart on a risk-adjusted basis.
I’m loathe to say this, but I think Delta will get away with this pretty easily. Two things I hadn’t seen mentioned, and that I think Delta decision makers believe:
1. Most of the public is very under informed. Yes, we the points & miles enthusiasits get granular, and yes, this does get into the main stream awareness. But, vast majority of people do not understand this very well, nor do they have the time to delve into it.
2. It’s not like the other airlines look so so much more appealing – again, to points & miles peeps we can draw out exact comparisons about how and in what ways United, American (and even others) are better, but for the vast majority of travelers – there’s already a fixed perception that “all airlines are crap anyway”, so those that are loyal to Delta due to whatever reason (hub captives or whatever) it’s easier to just stick with them.
I’ll point out one more thing – those huge lines at every Delta club? I think Delta sees this as evidence that most of the traveling public are suckers that will stick with them no matter what.
As a Diamond million miler I think this is a bridge too fat for Delta. They got cocky. Maybe it works and maybe it doesn’t. They have made changes before and they weren’t good for the customer but this time they went all in and I don’t think it will work in the long term. I have had a reserve card for maybe 5 years and at the end of next year I plan to cancel it. Once I don’t get Skyclub access it will be less than worthless for me. I am not able to use the companion pass as I have no companion so that is the only other benefit for me. There is not a way for me to move enough spen to the card to get to 75k. And if there was it isn’t worth it. I am eyeing a transition to the Chase Sapphire Reserve as it is head an shoulders above the reserve card in actual benefits. And I am already in the Chase system.
I tried booking hotels through Delta in March when they did the trial run. It was a sh*t show. A lifetime platinum at Marriott and I had no more benefits than any Joe off the street. I tend to use late checkout a lot and that would not be available to me. I also have to change dates or leave early often and the third party booking pretty miluch screws this up. The manager at one hotel I stay at a lot gave me a through tongue lashing over booking third party when I had to make a change. So you can bet I will never book travel through Delta in hopes that I might get a front seat once out of 20 flights for the 30 minute hop from ATL to Knoxville.
I like Delta and u have been loyal to them amidst other options but I think that time may be ending. I don’t know yet but what I do know is that it has been the talk on the 4 or 6 flights I have been on since the announcement and without exception the conclusion is people canceling their Delta cards and going free agent. Now, I know some people say they will and actually won’t but I have seen much more people claiming to have canceled multiple Delta card products after this announcement than after any of the previous ones. I’m sure someone will say that they know what they are doing but as I know has been mentioned Bud Light knew what they were doing and they have the best advertising in the industry.
I think the thing that the spreadsheets can’t tell them is that the customer is fickle and if you make them mad they will revolt out of spite. I’m sure I would deal with some delays and subpar flights just to show Delta that loyalty should be a 2 way street.
@ Dude26 — I think you make a gret point about the lines. People can’t even comprehend that their time and money would be better spent just sitting at the gate and NOT shoveling more high-sodium, high-fat food and more alcohol into their bodeis.
Delta has this right. All the customers who were already OK with charging to Delta cards for SkyPesos are not affected by this change. And that’s a lot of people – I always have to explain to friends that they can keep their Delta card, but put their spend on any number of other cards and get more value. They just don’t know that one SkyPesos per $ is not nearly as good as any other reward currency.
The customers who already know this and are carrying cards but not spending on them are not profitable for Delta, take up lounge space, and compete for upgrades – Delta just fired them and that’s good for their bottom line.
The customers remaining who DO put spend on their cards will now have less crowded lounged and priority on upgrade lists.
Yes, Delta’s changes are bad for the customers they just fired, but they are REALLY GOOD for the customers they want, who no longer share the same upgrade priority as the tag-alongs.
The open question is how many people will view the now-actual-elite Diamond status as worth the $3,000-$4,000 opportunity cost of charging to a different card.
So sad that Delta has raised the bar on their elite status. It happen at a worse time with inflation the way it is today. I have already booked a trip to Southeast Asia to get rid of my SkyMiles, I’m planning on getting rid of my AX Gold card at the end of the year. I still have a basic AX card which is good enough for me.
I have flown Delta since 1972 and do believe they are a great airline, but to spend absorberant amounts of money just to get free checked bags, complimentary upgrades, and MAYBE lounge access is definitely not worth it to me.
I’m back to being a regular Skymiles member and saving my money. The fares are ridiculously high to take a quick weekend trip to earn MQMs anymore, nope, not for me anymore. I’m done.
Done with DL, soon as I dispose of my SkyMiles savings.
Best way to get back at Delta is to burn your Skypesos on the highest value redemptions possible. Also, try to use them to fly on partners, not on Delta metal. Make them bleed where it hurts.
Excellent, well-reasoned analysis – 100% agreed.
I think people are hub-captive and Delta knows it. There are very few cities where you really have a choice in choosing another one of the Big 3.
Other than somewhere like LAX or ORD, MAYBE the NYC area, who really has a choice in direct business travel?
I think honestly the airline that will pick up Delta people is Southwest due to their random non-hub routes. It’s a step down in service, quality, and clientele, but the convenience is there.
For instance, if United pulled this shit on me, now having SMF as my home base, the best option is Southwest, which arguably would improve my quality of life right now.
Delta is counting on those hub captives not moving on because what alternatives do they have? If every hub has plethora of choices like NYC, LAX, SFO, you can bet delta would not be doing what they are doing now. By devaluing their mid to lower tiered frequent flyers (basically anyone not buying domestic f on regular basis), they won’t loose much except the ones who lives in those three metro areas I listed. They have the spreadsheet and know where their customers live and what alternatives they have. By running risk adjusted calculations, they know approximately percentage of road warriors they will lose. At the end of the day, how many frequent flyers will drive two to three hours to other alternative airports so they can avoid flying via Delta on a weekly basis? They might do it for few months because they are mad at Delta. But when reality sits in, they will go back to flying Delta with no status. This is what happens when there is no competition in whichever city/ suburb people choose to live.
I have already acted. I am Platinum Medallion (through 2024), a Delta Reserve card carrier, and flew Delta exclusively to gain and keep Medallion status.
The Delta Reserve was useful for the combo of discounted rewards flights, companion pass, MQD waiver, MQM bonuses, and Lounge access. It originally had a Skymiles bonus after a spend target, but they dropped that (last year?).
So, with the changes, the Reserve card makes no sense for me. All the reasons I got it (the MQD waiver, MQM bonuses, and lounge access) are gone or strictly limited. And under the new system, I calculated that I would have to dedicate my spend to the Reserve card in order to maybe hit Gold.
So, with my Reserve Card anniversary date hitting at the same time the new system news dropped, I downgraded the Reserve to Gold. It will provide me with a $100 yearly Delta credit, free first checked bag, 15% miles discount, and priority boarded in Main. That will suffice.
My direction has changed completely. All incentives for keeping the Reserve card and loyalty to Delta are gone. I picked up the Amex Platinum card and will now dedicate nearly all my CC spending to it, utilizing the points for flights on whatever airlines works best for me (based in the NYC area, I have options). Additionally, I will have more than enough lounge options under that card.
I honestly don’t understand Delta’s move. I was happy to remain with them. But no longer.
Delta’s got Gary Leff by the balls.
@Christopher Raehl writes “All the customers who were already OK with charging to Delta cards for SkyPesos are not affected by this change.”
The question isn’t whether there are people ok putting spend on their card, if whether they can get enough additional spend from those people first to offset losses of spend from other customers who defect and then to still be enough to grow total spend on the suite of products.
And customers who are ok with earning their currency are affected because they’re going to need to charge even more to these cards just to stay even. Many of them don’t have the spend. Delta just fired customers who were ok putting spend on their cards, too. Many of them were also ok putting spend on their Gold card, but not ok with spending a $550 annual fee on a card.
So it’s an open question whether Delta has this right, at best.
“The customers who already know this and are carrying cards but not spending on them are not profitable for Delta”
The bulk of customers buying tickets from Delta and spending $550 on a premium card probably were profitable, even without being heavy spenders on those cards, though some may not have been.
“The customers remaining who DO put spend on their cards will now have less crowded lounged and priority on upgrade lists.”
The first part is correct, the second only technically correct. There are people who will benefit! But upgrade percentages may not rise markedly because there are so few seats to upgrade into, especially in markets that likely overlap customers that can do truly outsized card spend.
@ Christopher Raehl — Yeah, while Diamond may become more exclusive, its value won’t significantly increase. Delta will continue to sell a higher and higher percentage of premium seats and the upgrade percentages will remain extremely low or become even lower (Delta would love to give zero upgrades). They aren’t giving you free SkyClub access (remember the pre-Diamond era, when Platinums received free Club access??), and at least so far, Choice benefits will remain the same (a coupon booklet of discounts). Why bother when the marginal cost of gaining status exceeds the benefits earned?
@Gary: It’s a frog. The lobster just turns AA colors.
#SoLongDelta & AmEx (Since 1996)
5 AmEx cards and DL Million Miler
Loyalty Goes Both Ways.
It was good while it lasted…#DL-TheNewBudLight
“Spend on a Delta credit card simply is not valuable compared to spend on other cards.”
The majority of consumers aren’t savvy enough to realize this or care. I’m guessing there are more than enough of these individuals (existing and in new sign ups) to give Delta the growth they want. There are more than enough consumers acting irrationally to meet Delta’s growth goals. Why worry about the informed customer, Delta wants the less informed customer.
How long can this go on? Long enough for Delta to measure and change the program once growth is reduced, or even shrinks.
@Dan but hasn’t United already pulled this shit on you back in 2020 when they changed over to PQP to earn status? They sure did to me.
Delta is now worse, but the concept is the same. The differences that I can see is:
better for United flyers:
– United’s status thresholds are lower than Delta’s
– United allows for unlimited lounge visits on their top card
better for Delta flyers:
– Delta makes it easier to earn status by spending on a credit card (because United’s cards have PQP earning caps, so you need multiples)
– Delta lounges are still accessible, to a point, with an alternative non-branded card (Amex Platinum)
But at its core, these decisions are about favoring frequent business travelers, and disfavoring most leisure travelers. I’m not sure how what Delta is doing is substantially different than what United already had, other than the lounge restrictions.
(To be fair to Delta, and I almost never fly Delta because of their terrible award tickets and poor international route network, loungesovercrowding was a problem they had to solve, though I think still having a visit cap on their top card if you don’t spend a ton was a piss-poor way to solve it.)
@Dan but hasn’t United already pulled this shit on you back in 2020 when they changed over to PQP to earn status? They sure did to me.
Delta is now worse, but the concept is the same. The differences that I can see is:
better for United flyers:
– United’s status thresholds are lower than Delta’s
– United allows for unlimited lounge visits on their top card
better for Delta flyers:
– Delta makes it easier to earn status by spending on a credit card (because United’s cards have PQP earning caps, so you need multiples)
– Delta lounges are still accessible, to a point, with an alternative non-branded card (Amex Platinum)
But at its core, these decisions are about favoring frequent business travelers (and, for Delta, big credit card spenders), and disfavoring most leisure travelers. I’m not sure how what Delta is doing is substantially different than what United already had, other than the lounge restrictions.
(To be fair to Delta, and I almost never fly Delta because of their terrible award tickets and poor international route network, lounge overcrowding was a problem they had to solve, though I think having a visit cap on their top card if you don’t spend a ton is insulting beyond belief.)
My 2 cents
* the vast majority of Delta customers will not change their flying habits (and even they all decided to switch airlines there isn’t enough capacity or logical routings via other airlines to capture or carry them)
* Delta reduces elite ranks and at the same time increases ancillary revenue via seat fees, upgrades, bag fees that use to be included as an elite benefit for flyers who were probably gonna fly Delta anyway (so were they really loyal flyers or just convenient flyers)
* the cost of entry to elite ststus in another airlines program is too high and so Delta customers will stick around
What shocked me was the fact that DL announced the changes without announcing any added benefits for Diamond . If DL had truly enhanced the Diamond program , it might have been more palatable for some . Instead ,they boldly just said give us a lot more for the same old Diamond . Nothing new to make Diamond sparkle brighter and nothing to really strive for .
Many great points made here by all…I too is/was all Delta…all the time…my Reserve will renew in Oct. and I’m keeping it for 2024 so I can run thru all my saved miles, still hit the SC and preserve status for one more year. (Honestly tho…talk about over reaction…outside of T4 JFK, B18 ATL, LAX are there really THAT many lines?) When renewal comes in Oct ’24 it’s a big no thank you!
I understand Hub captivity…but there are options…I am local to EWR and still found a way to fly Delta out of there while watching 15+ UA planes on the runway for every one Delta.
Now…I’ll be on the United planes…if nothing else their top card still grants me the lounge and UA has two great ones in EWR. As for status…Delta’s wasn’t that great anyway!
@ Jason — Good, let the morons stay on Delta, while I move my business to an airline that provides a reasonable value proposition.
Speak with our wallets and book away from Delta already.
Great article. I am a multi year diamond and reserve card holder. The straw that broke the camels back for me was the sneaky change to make global upgrade cerificates
Just a ticket to premium reserve rather than a real upgrade. I fly transcontiental a lot and this was the biggest reason to make sure I was diamond. Delta thinks they are smart but their best customers are attuned to their behavior. Like many companies influenced by Private equity trained management, they are making a move that may briefly juice short term returns but will put them in an antagonistic relationship with their best clients. #dropdelta
I keep thinking about the guy in my church who took his daughter to Vietnam a few years ago on award flights. I asked him how many Skymiles the flights were, and he said:
“I don’t know. I had enough.”
There are no winners in a game of losers.
Remember to tip your server.
When United made a similar change in 2019 I status-matched to Delta. Now Delta has one-upped United with higher requirements for each status level. But they compounded this by limiting the number of lounge visits to 10 per year on their credit card whose only purpose was to get lounge access. WTF?! That is too far for me.
Yesterday I had Amex downgrade my Delta card to Gold. Next year I’ll return to United where their Club card will give me unlimited visits, Premier Access (similar to Sky Priority) and where I hope to do a status match. If the match can’t occur I’ll purchase an Economy Plus subscription and have most of the benefits I had at Delta until I can achieve status at United.
I’m in New York so have choices. Lots of them. Bye-bye Delta.
I suspect Delta knows United is going to follow suit in a few days or weeks.
Delta is doing the right thing to continue spend on the product and not on the rebates (“loyalty”) program. People are on to them and understand they’re a scam (American Airlines wants 650,000 miles + $68.75 for a business class roundtrip next June in business!!!)
Incidentally, the frequent flyer programs profitability is a fiction of bad accounting. Aeroplan failed as an independent entity because there’s no profits in the program.
It will be interesting to see Delta’s greed play out. Will they get away with it or not? Stay tuned.
Delta’s actions have shaken the airline community to the core and Gary does a great job of putting it mostly all together. But his final assessment, even after acknowledging that Amex and Delta went over huge amounts of data, is flawed in coming to the conclusion that the risk is not worth it.
Delta didn’t invent the airline loyalty program but it clearly perfected it to the point of generating the most amount of revenue to the airline from one. No other industry has generated loyalty programs as generous or sought after as airlines and, at some point, it is worth asking the question if it is all too much.
Let’s not forget that Delta also led the industry in eliminating most travel agent commissions.
Delta is simply a leader in the industry that is consistently able to do what everyone else wishes they could do including with loyalty programs which incentivized alot of consumer habits which are not beneficial to airlines.
Delta wasn’t one of the chosen airlines during the formative years of the airline industry; it was an outsider even though it is the US’ oldest airline.
and yet, Delta has gained a leadership position in the industry both in the US and worldwide and has a route network – including market position in its own markets – as well as profitability that it can change the rules and that is all these loyalty programs are doing.
There will be some level of loyalty recognition because that is part of what distinguishes legacy from low cost airlines.
But Delta has managed to monetize its services – rather than give them asway as loyalty rewards – better than any other US airline.
yes, the competition will follow.
The period of mourning will take time, those that say they will walk away from Delta will still fly them esp. when the other airlines those people think they are fleeing to do the same thing.
The responses to these articles are getting more rational by the day including the first reply here.
Yes, Delta will be fine.
In fact, it will be stronger than ever and so will many of its competitors because of Delta’s leadership
@TimDunn: What do you think motivated Delta to make these changes? You take the view that they will be profitable, right? Thks.
@ Gary — Glad to see OMAAT’s post today re: AA sticking with their current program. One can spend about $17,500 on AA tickets (starting from LT Plat and charging AA purchases to Citi Exec card) and gain EXP with 6 real SWUs (unlike DL’s joke GUCs that upgrades to some premium economy garbage). And, there are plenty of inexpensive opportunities for LP to knock that down to $15,000 or less. It seems AA is going full-US Airways with crappy domestic planes (but better-than-Delta international ones) planes, some crappy lounges (but many better-than-Delta ones) and a very strong elite/mileage program to make up for the rest. I vastly prefer this approach to Delta’s crappy planes, arrogance and overrated Golden Corral SkyClubs.
We’ll still likely go with United for most of our travel in 2024, but that will be highly dependent on what, if any, changes United makes to MileagePlus elite qualification requirements. If United gets greedy like Delta, I guess we will go with AA instead.
Amex and Delta know what they created. Much of the huge number of signups was because Amex was harder hit in reduced spending during covid because so much of its card volume is travel related. Amex and Delta generated huge amounts of revenue for themselves.
Delta’s network has grown to the point they simply do not need to offer loyalty programs that are as rich and they had to dial back the number of elite flyers added during covid.
Loyalty programs are used to keep people loyal to a company and to acquire new customers. Delta simply is generating more new revenue than AA or UA so that it could dial back the level of rewards.
AA and UA will follow.
The real question will be what DL does in the next few years as the Amex contract comes up for renewal. Gary will closely track it but I suspect that AA, DL and UA all know they have opportunity to cut back on their loyalty awards including the number of people that get them and the amount of rewards they give even to those that are elite.
Delta is just leading the charge that others will follow
@ Tim — That is GREAT for Delta! While Delta has grown its network to be so big that they apparently no longer need any customers, I have grown my brain to be so big that I no longer need to give Delta any of my money! It is amazing how things change. Delta doesn’t exist in a vacuum. Future government administrations may be much more receptive to things like AA merging with B6 and/or AS. Then, what will happen to Delta current cush arrangement with politicians and Delta’s (according to YOU) collusion with AS?
@TravelWarr Please where have seen SC lines post-pandemic:
LGA
PHL
ATL: T, B, C, D8, E, F
JAX
FLL
DTW: A44
ORD
SEA
Places where I’ve flown DL and NOT seen a line ever:
MIA
MSP
DCA
Other’s experiences may vary.
@ Tim — Per your comment a few days ago that “AS and DL have a very stable relationship with DL taking the global and most of the eastern US local traffic and DL and AS splitting the local western US with AS having the edge,” do you stand by your praise of alleged collusion between DL and AS after seeing AS’s kick-a** status match offer today?
I think Delta needs to be humbled and understand that there are other players in the industry and while their product and reliability are superior to their competitors, it doesn’t mean loyalists will not jump ship.
They need to wake up and get a taste of reality.
It’s 2027 and the “Children of Men” world has come true.
United States airspace has been closed all year because trumpian militias control what’s left of the country and it’s not safe to fly. The remains of hundreds of Delta jets are scattered across the tarmac at what’s left of ATL, SLC and MSP, scarred by weapons fire. The only remaining person who qualified to enter a SkyClub after Delta’s latest SkyMiles “enhancement” left SEA in 2025 for what was to be Delta’s last flight, an evening service to LAX. She spent $1,750 and earned 3 SkyMiles for the flight, 0.0035% of what she would need to buy a cocktail in the SkyClub.
The only operating commercial airline is British Airways, with service across the UK and an occasional flight to the Continent, accompanied by the Royal Air Force.
And Tim Dunn is sitting at his keyboard, waiting for the power to come back on so he can troll boardingarea.com and use DOT statistics to remind us that Delta was perfect, United was basically a Ponzi scheme, the only reason American invented AAdvantage was because they stole the idea from a young Ed Bastian, and that no boardingarea.com author would ever have made any money if not for Tim Dunn’s prescient comments driving traffic to their site.
Gary, great article as usual.
I thought this was interesting and I’m curious what data you have on this. I’ve heard speculation but never seen any insight other than commenters saying they’re moving their business away.
“in contrast to other airlines that have seen their cobrands take a hit from devaluations.”
I am looking forward to actually getting the benefits that I strove for when I became Diamond, now that it will be harder to earn. Even if I only make it to Platinum, it will still be easier to get those upgrades. I can’t believe the number of Comfort Seats that are booked weeks in advance. I wonder how many Diamonds who will continue to be Diamond would have gone elsewhere if Delta hadn’t done something. As for the lines, I don’t go to the clubs for the food since I have a special diet, but I do go there to work, and standing in line for 10 minutes is not productive. Now, instead of nobody getting what they paid for (a guaranteed seat in the Club), everyone who pays for it should get it.
For those of you who are glad that Delta went this direction so you can get a free upgrade, I can’t wait to see how many of you subsidize the loss Delta experiences from people cancelling their Delta Amex cards or at least stop the use. Remember, the cobranded credit cards are cash cows for the airlines. Since the Delta Amex Reserve card no longer has any value, I am downgrading it to the free card, whatever it is called, and moving my business, spending, to the Chase Sapphire Reserve. Good luck to Delta . . .
@ BMG — I’m afraid you are likey going to be sorely disappointed about those upgrades. Delta SELLS those seats, and their goal is to give ZERO upgrades.
Interesting take from the perspective of the credit card companies: in effect, from those annual and transaction fees, airlines have been increasing their profit margins while decreasing the deliverables. Humans will stick with an arrangement long after more efficient ones become available and widespread. This stickiness is a combination of familiarity, emotional attachment, and trust.
Y’all mention the “smartest person in the room” with spreadsheets, projections, and all that, but we’re talking about behavior that is difficult to model. Have they led the way across the thermocline of trust? Are we looking at the first post-loyalty, post-credit card airline?
I don’t disagree with the point of this article at all but it’s baffling to me how the author dedicates two articles on this topic and I’ve yet to see one about anything favorable the carrier has accomplished. Not one.
Just so myopic and biased. How is this categorized as reporting when it’s actually some kind of mission or vested interest?
Thank goodness there are other publications that actually aren’t selective in their “reporting” for those of us who want to learn vs. reading an author’s constant whining.
@gene How are so many people now able to afford to pay? It never used to be that way.