Delta CEO Says Gutting Of SkyMiles Only Rolled Back Temporarily

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.”

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.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. He knows there is money out there to grab, and so won’t give up going down that same road to shake more and more money out of consumers without giving meaningful additional value for it. Lowered the speed and backed up a little, but the destination is still what it is.

    DL’s corporate culture with regard to the loyalty program has been this way for so long that I wouldn’t expect anything but this from DL.

  2. Maxie Dean,

    Indeed.

    It seems like Delta and Amex are jointly and severally trying to grab as big a share of the card users’ purses/wallets as possible while cutting the value their affiliated cards’ users are to get in the aggregate. This way the companies combine to both save and make money at consumer expense.

    What I am concerned about is I how fast we see the other airlines and big bank card-issuers follow this course in much the same way. Oligopolies tend to collect at around the same intersections, much like gas stations.

  3. @ Gary — Well, at least they un-fired the 50-somethings who can now chase LT Diamond for 5-15 years and then use it for 5-10 years until they can’t travel as much any more due to advanced age. I doubt DL will ever get the $35k MQD they are aiming for out of most people in that group. They sure as hell won’t be getting that level of “wallet penetration” from our household, not without a significant boost in the value of the credit card spend rebate (like more valuable SkyMiles or 2x+ on all spend). And, just think, if the Durbin amendment ever passes (I suspect it will, before maybe being repealed after public outcry), all of the airline programs will be burned to the ground and us suckers will be left holding the proverbial bag.

  4. Anybody who trusts Delta after this is an idiot and gets exactly what they deserve…..be it now or in a couple of years.

  5. The only way they’ll get more spend out of folks like me is if the base earnings on the Platinum and/or Reserve card is 2x for everyday purchases. Otherwise, my Blue Business Plus transfers points to Delta with no annual fee, and so that’s a no-brainer. 2x on Reserve might get me to upgrade…

  6. I wish Delta would offer a one-year deferral of all status so I can enjoy my matched MVP 100K on Alaska next year without wasting a year of Delta status that I’m not going to be using very much. I’ve had Delta status for about 10 years. I’ll see where I am at the end of 2024, but at this point my business is Alaska’s to lose.

    I had enough rollover miles to earn three additional years of Platinum. Their plan to turn that into one year of Silver (under the original proposal in September) destroyed my trust in Delta. Ed’s emails that basically said “Yup, you caught us, sorry-not-sorry” didn’t help.

    Sorry Delta.

  7. I’m actually intrigued to see if this will work.
    Will the numbers of people stretching to put $35k on their credit card outweigh the numbers of people who cancel their cards because they can no longer even reach Silver status?
     
    I suspect not.

    The one thing in their favor is that many people haven’t heard about the changes, although many have. Also, people tend to be “sticky” with their finances, and hate changing cards.

    But these changes plus how difficult companion fares can sometimes be, we canceled all of our Delta branded cards and just went with Amex Platinum … transferring the points to Air France/KLM/Virgin for international biz tickets. (Ironically flying on Delta Metal)

  8. The ONE thing missing in all Fast Eddie’s pontificating? An apology. Screw you Delta.

    Signed,
    Delta Platinum or Diamond since 2008
    1.4 Million Miler

  9. Delta wants more money from flyers while offering them less. Why are people still flying with this airline?

  10. He can go F ¥ ( K himself as he does his past loyal subjects. He has been drinking his own bath water. Delta ain’t the only airline in the sky.

  11. He really needs to be shown the door. Bring someone who cares about customers and building an experience that’s worth these crazy $$$ they charge.

  12. After years of insisting my employer book only Delta Airlines, I am now retired with hundreds of thousands of Skymiles after achieving Platinum status for a couple years, now relegated to Silver, soon to be banished to Main Cabin. Delta Service has been better than alternatives like American and the horrible Silver. JetBlue has entered certain markets, meaning to fulfill demand at underserved airports. Delta may find it’s market eroded by aggressive low cost carriers like JetBlue who strategically enter markets that are underserved by the main carriers. I feel the need to spend my retirement finances very carefully. JetBlue looks appealing to me.

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