Delta Air Lines CEO Ed Bastian told BloombergTV that the moderated the announced changes somewhat after a consumer backlash only because they were “too aggressive in trying to get to that equilibrium quickly.”
And they are still going to make the full changes, just not yet, “we’ve got to go at this at a much more measured pace.”
.@Delta $DAL CEO Ed Bastian: "You never get the balance rate in aggregate when you get so many different people with an opinion. The two things that we saw when we made the change. First of all, the reason we made the changes is because, Alex, you fly as you know this, there is a… https://t.co/5wkt6g93D4
— Ross Feinstein (@RossFeinstein) October 23, 2023
What’s more, the changes that Delta had originally announced for SkyMiles weren’t even all that they’re planning. At the Morgan Stanley 11th Annual Laguna Conference, after first announcing their changes, they shared with investors that “over the next several years we’ll announce additional changes to qualification and to how a mile is awarded.”
Ed Bastian is going around telling media that they had no choice but to make changes because there’s just not enough premium product to go around, that really is not true and it isn’t the reason for the changes.
We needed to rebalance because we had far more premium customers than ever. We’re investing in premium assets, but we just can’t continue to keep up with the demand set that we have.
The facts are that Delta has greater ability to control supply of their own premium product than Bastian acknowledges (they aren’t victims of their own success here), and the explanations they share with investors are different than what they tell customers.
- They control the amount of premium product. If they have greater demand for first class seats, they can add first class seats. The fact that they’re now selling more than three quarters of the seats suggests they may just be too economy heavy on the aircraft. Meanwhile lounges are full because, unlike at American and United, (1) they let anyone in flying the airline who has an Amex Platinum card, and (2) they don’t yet have separate, dedicated business class lounges.
- The real reason changes are being made is Amex revenue. What they revealed to investors last month is that the changes were “designed to do get a higher share of wallet from the people we know can spend. Our hypothesis is that people will find their way to get to the levels they want to.”
Furtermore pushing up the requirements for elite status, and giving customers a path with a lot of credit card spend, will be “hopefully stimulative.” Delta anticipates just under $7 billion in revenue from American Express this year. They have a goal of getting to $10 billion. The changes were made “in conjunction with our partners at Amex” and they’re “very comfortable [originally-announced changes] should be accretive.”
It’s no coincidence that Delta initially starting telling customers who complained about the big jump in status-earning requirements, that didn’t bring any new benefits, that they should simply stop being poor.
SkyMiles members should listen to the airline’s CEO when he says that the only mistake they made was how quickly they ripped the band aid off, that they still intend to go in the previously announced direction, and all they’ve done is slowed things down for next year.