New this week is that Delta Air Lines is eliminating qualifying miles and segments next year and will award status based on qualifying dollars only – but qualifying dollars can be earned through credit card spend, as well as booking hotels, cars and vacation packages through Delta.
It’s going to take $35,000 qualifying dollars to hit Diamond. You only earn 1 qualifying dollar per $10 spent on their Reserve credit card or 1 per $20 on their Platinum co-brand card. And they’re limiting lounge access via credit card, too.
At the Morgan Stanley 11th Annual Laguna Conference, Delta was asked about changes to the airline’s loyalty program. His answers were telling.
- They wanted to make elite qualification simpler. He didn’t understand qualifying miles and segments.
- Where they “are going as a company in terms of brand” is to “expand ways to earn miles.” It was a mistake not to reward customers for activity like buying rental cars, hotels, and vacations through their portal.
- They want these changes to mean different members are able to earn different status, “making sure we had the right people in the right categories,” there were “too many in certain categories” (top status levels) and that made them “unable to fulfill the commitments you make in terms of the upscale brand.” This also played in customers waiting in line to get into Delta’s Sky Clubs, he said.
Bastian said that “the last big thing we did was transition from mileage to dollars spent.” He called that “transformative” and said that this “is another step in that direction.” But it is not the last.
According to the Delta, “over the next several years we’ll announce additional changes to qualification and to how a mile is awarded.” In other words, even if you can get comfortable with Delta’s latest changes don’t get comfortable. The goal posts will be moving again. He added, “I think there are additional steps in the next years to make sure our best customers are receiving truly premium experiences.”
So what is Delta actually after here? More of your money.
- The changes are “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.”
- He thinks pushing up the requirements for elite status, and giving them a path with a lot of credit card spend, will be “hopefully stimulative.”
- They are expecting just under $7 billion in revenue from American Express this year. This was all done “in conjunction with our partners at Amex.” We are “very comfortable this should be accretive.”
Once customers do earn the highest status under this new program, don’t expect the benefits of the past. Delta noted during the event they had a “74% paid premium load factor” domestically last month. A decade ago it was less than 50%, and twenty years ago it was just over 10%. Which begs the question, why go for tougher SkyMiles requirements when there aren’t seats to upgrade into? After all, the 74% includes routes where there’s no premium demand at all, where customers want to go things are far tougher than that number suggests.
Interestingly, they noted “real strength in Boston and New York” where “of course we have the leading position in both of those markets.” Unspoken was a nod to the Biden administration for killing off the American Airlines-JetBlue partnership which would have given them competition.
With strength in some of the most premium markets, and already selling their premium products well, Bastian previewed that they plan “to segment premium products” in much the same “way they have segmented coach” – noting things like basic economy, and of course they’ve done Comfort+ as well. He adds, “that’s a hint towards what’s coming.”
Delta may be drawing the wrong lesson from their ability to sell premium seats. They’re thrilled by how many they’re selling and how few are left over for frequent flyers when they should be asking themselves maybe they do not have enough premium seats? Because when someone spends $350,000 on a $550 annual fee credit card in hopes of the occasional upgrade, you want it to be possible enough that they keep spending $350,000 on that $550 annual fee credit card, not to mention giving you all their ticket purchases.
It is a legacy of Doug Parker’s idiocy in swapping DL DCA slots for USAir LGA slots
AA is paying the price
I”m glad you picked up on the comments. I’m pretty sure the comments were made by Glen Hauenstein, rather than Bastian.
And they said exactly what I said was the case – DL’s strength in NYC and BOS is accelerating which is why they are bringing in more and more high value passengers – and doing it at a faster rate than other carriers.
And they also said that they intend to improve the premium products which means they indeed want to sell more for higher amounts of money but also deliver a higher quality product.
DL is supposedly set to rollout larger Delta One cabins on its A350s – 7 new ones are supposedly due for delivery next year and they will start retrofitting some of their existing A350s including some of the ex-Latam aircraft. The A330-900s are supposedly also getting more premium seats.
Also, the MAX10s will feature some of the highest percentages of premium seats of any domestic aircraft yet. Obviously their mission allows them to segment their use but DL will add more premium seats on fleets where it makes sense to do so.
The hurdle to get into premium cabins might be getting higher and fewer might get there via elite benefits but there will also be fewer people trying for something they cannot attain even as DL adds more seats and enhances the services they offer – at least that is what they are saying and it makes lots of sense
Lina Khan, take a bow. This is the monster that you have created. Expect more sharp elbows into customers faces at Delta.
I hear the reserve card now comes with a bottle of lube in the welcome box.
The beatings will continue until morale improves.
I travel business class 7 to 8 times per year for leisure, so diamond status didn’t mean much except for the occasional use of the GUC (which is become far less worthwhile in recent years). These changes mean I likely won’t get diamond medallion any longer which doesn’t bother me.
What is comical? “ Segmented premium product”
I think this is where Delta loses passengers like myself. Free agency is the only thing that makes sense.
I feel like if you have enough disposable income to spend $350,000 per year on your credit card (so above and beyond mortgages, car loans, and other forms of credit where you can’t spend on a credit card), then you have more than enough at your disposal to book first class…if you want it. And if you don’t want it, then you have made the decision that it’s not worth it (for whatever reason) but most likely because you don’t see the point in paying a premium for a short flight or don’t value the product that is offered: some extra space, wine in a can, and what is essentially a TV dinner.
In my opinion, the value of being a top tier elite should be in the end to end experience regardless of class, and that should be the reason why someone invests in obtaining that level of status (not just a free upgrade or two). Making the barrier to entry so much higher should allow the airline to offer a true elite experience. For example, there should be a check-in experience above and beyond the priority experience provided to the masses. Boarding should be easy(er) (what’s the point of group 1 boarding if that’s everyone in a 20 seat first class cabin plus another 20 Diamonds who didn’t get upgraded?). I should receive a complimentary SkyClub membership, and if not and you’re going to make me pay for it, then give me some upgraded booze at the very least. I should always get my first meal choice regardless of where I’m sitting and regardless of whether or not I pre-ordered. I should be re-accommodated during IROPS without having to sprint to the SkyClub to beat the crowds and they should be willing to downgrade or bump someone to get me re-accommodated. My bag should always be first off on the baggage carousel.
So if Delta is able to deliver on a truly “elite” experience for its Diamond members by thinning out the crowds, then color me excited and motivated to strive for that status. But if everything remains the same and I don’t get to access the SkyClub after 6 or 10 annual visits, then I’ll continue to consider myself a free agent who looks for the most convenient and cost effective itineraries.
I get that Delta has a lot of stickiness with hub captives…who will find themselves justifying 75K+ card spend. I don’t get it for those of us in competitive cities.
I’ve been Diamond for a few years (will be against next year). I put roughly 30-40K on flights yearly total. I put airfare on a vanilla Platinum and hold a Delta card (but no spend on it). So I’m not one of the many Platinums with rollover who only buys 5K in tickets.
For me, losing the SkyClub access on layovers ruins the Delta value proposition. I’m not going to put 75K on a Delta card (or the vanilla Platinum…it gets my airfare and that’s it); the ROI sucks.
Why won’t I just go free agent and simply buy first class or a lie flat on whichever carrier is most convenient/cheapest? Especially without SkyClub access in one of the outlying locations without other lounge options?
What am I missing? Surely I’m in the demographic Delta wants I presume (30-40K on flights, roughly 150K credit card spend a year). The SkyClub changes make no sense to me.
What Sam said.
@ Gary — Oooh, does “more premium” mean I get an actual meal instead of 20 little bags of gummy bears and potato chips for a meal on my 2,000 mile transcontinental flight? These are the same scumbags gaslighting ME airlines 5 years ago and then getting obscene bailouts from taxpayers two years later. Now, they have let their bailout money go to their heads. Seriously, do they think small business owners are going to run their payroll through their AMEX cards now, or what??? There are not that many people in the world that can put $350,000 on credit cards each year. If I had access to that level of spend, I sure as hell wouldn’t use it to earn Delta SkyMiles. What a pathetic joke.
People putting $350k of their own money on their own Amex card are doing NetJets. The new world order is built solely for OPM full-fare premium travelers, which is fine, but you can’t fly Delta (or any airline) to profit on the backs of the top 2% of its HVF base while giving the back of your hand to everyone else.
It will be interesting to see how all this shakes out and everyone has a year to decide what works best for them. I think Delta made mistakes with their impact evaluations. I’ll use my situation as an example.
Regular Delta Flyer for almost 30 years. Retired 6 years ago, rolled over Diamond for two years and lost it as COVID was beginning.
Current Situation:
3MM Status. Likely never make 4M, that gets me lifetime Gold. Most were in seat miles until Delta started the funny money miles a few years ago.
1 Million + SM in the bank.
Logging 125MQMs + annually and the 25K AMEX $25K spending waiver is how I get the MQD.
Domestic and International (Europe) is cash or points. The value of using points is decreasing.
SkyClub membership is through the Delta Reserve Card.
I live in a feeder location with no SkyClub.
My take on things so far. I’ll roll over 70K or so miles into 2024 after meeting the qualifications for Platinum for this year. If I kept the Reserve card, this would be whopping $3500 New Dollars to put toward Platinum. Massive devaluation considering the miles would essentially roll over Platinum status. That plus another $25K spending and 2025 status would have been Platinum under the old program.
Now, my annual Delta spending will not have me reaching any status point. The reserve card will get me 10 SkyClub visits and since they can’t be used for my wife as well, they are pretty much useless. I don’t drink so $50 for a club visit isn’t something I can justify. Same for a $1495 annual membership. That is about what Lifetime membership cost in 1998. The only Club access I get outbound is transiting ATL or on arrival somewhere if I need to kill some time before leaving the airport.
Running all this through my slow brain calculator gets me this result:
Drop the AMEX Delta Reserve Card. No real value anymore. I don’t spend $75K on it nor would I.
I’m not moving my hotel or rental car charges to the Reserve AMEX. Loss of rates and benefits booking through Delta isn’t worth chasing an unattainable Delta Status. Besides, I really don’t trust Expedia or other third-party booking engines.
Evaluate the Chase Saphire or other travel cards, keep the hotel card and the Emirates card. Emirates points are hard to use and have a low value, but I use EK regularly and at this point, Delta really doesn’t value my business, past or present. I generally fly Coach for anything under 8 hours, especially to Europe. Delta’s cost to upgrade to their Premium Economy or Delta One is crazy and neither product is all that great. My long-haul international business will likely be Emirates, Qatar, Singapore, Etihad or another airline, but price will be a big factor. I have the flexibility to look for bargains and book accordingly. My long haul international is in Business Class and the EK A380 product is aging, but still pretty good.
Bottom line, Delta is going to see less business from me, AMEX is going to see my Reserve Card cancelled and American or United may see some business, but it will be based on ticket cost. I have United Silver, but they aren’t serving my airport. So, another non benefit.
I think my situation is probably very similar for many mid-tier Delta flyers. I’ll watch developments over the next 18 months, but don’t hold out a lot of hope for changes.
$7 billion from Amex in revenue? What is going to happen to this revenue when there is a mass exodus from Amex by customers who got the card for the benefits. And one of the biggest benefits is the lounge access.
“Pray that I do not alter the terms further.”
Buzz Aldrin is disappointed that his trip to the moon and back (500K miles) will only be converted into 25,000 Delta MQDs using the new 20:1 ratio.
Keep Climbing…
Count me dazed and confused.
1. Qualifying for status can be simple, or it can be fair; it can’t be both.
2. NYC & BOS demand is what DL is being directed to serve.
3. DL is a subset of AMEX and V cc’s and its passenger capacity exists to bring in government taxpayer dollar subsidies. This new cc-DL strategy is TBD, for little old me, anyway.
4. On this month’s flight between JFK and the Caribbean, my first row first class seat entitled me to a packet of a couple cookies and a couple of “cocktails” stirred not shaken. And my fellow under-dressed passenger to my immediate right had his trainers up on the wall. Not quite a Golden Age of Travel experience. I can’t get too excited about booking DL again.
Disclosure: I mostly avoid Delta since Hauenstein’s “ham sandwich” admission. So I don’t really care much … yet. But it seems to me that Amex ought to be seething about these changes. Limited SkyClub entrances for my $550? Devalued spend-to-points? I’m seeing that some of you are not renewing (I wouldn’t!), but I’m not hearing much from Amex itself. Surely this is really bad for them?
Aw, my bad! I kept reading and found that Gary’s already there:
https://viewfromthewing.com/delta-air-lines-risks-killing-american-express-deal-golden-goose-with-skymiles-changes/
Aw, my bad. I read further and saw Gary’s already there:
https://viewfromthewing.com/delta-air-lines-risks-killing-american-express-deal-golden-goose-with-skymiles-changes/
I think Gary’s last sentence says it all for me. I do find this so confusing and am wondering if a not insignificant number of AMEX Reserve card holders will not renew, seeing that the value just isn’t there. The DL emails and website rollout of these changes are gibberish to me.
Perhaps Delta executives that ‘don’t understand’ qualifying miles and segments should have been using the SkyMiles program instead of executive travel perks and employee travel program that they assuredly thoroughly know.
The major difference between the DL Reserve card and the United Infinite card WAS that the United card came with airport Priority benefits (that you would need to earn status with Delta to get) but the Reserve card gave you the Companion ticket. However, both gave you unlimited lounge access.
Now the difference is far more stark. The United Infinite card still has the unlimited lounge access and the Reserve card has…ten! Ten. Total. On a connecting flight there and back you will now conceivably use (4) visits or 40% of your benefit on one trip. No thanks!
I will keep my Reserve till next fall…use all my stored DL miles for trips…and keep the lounge access until it changes in Feb. 2025. But – assuming United doesn’t change the lounge access on the Infinite card – I will drop the Reserve and pick up the Infinite card.
I won’t have status anymore…but I’ll still have the lounge and the Priority check-in and the handling of my checked bag.
As easy a decision as when the garage band picks Slash as their guitarist on that commercial…
I
The thing about Delta was that it didn’t completely suck to fly with them (was diamond since that program started). But like many others here, I realized during that pandemic that I hated traveling, so I have cut way back. Probably won’t do enough to get gold and already have lifetime silver. I live in Seattle so if I am going to take coach, I can take Alaska instead — they also don’t completely suck — and they have much more convenient flights to most destinations.
Looking forward to free agency — but it does feel a bit like I am breaking up with an old friend.
Time to cancel the Reserve card and put the $550 towards a new guitar. (I will probably cancel my Marriott card as well.)
PRO TIP: You can enroll in pre-check directly with TSA for $70 (depending who you enroll through) for five years. One perk that doesn’t have to be lost along with status.
Easy decision for me. Some may think Delta offers some magical better experience but I’ve run into just as many frumpy, snooty FAs there as on AA, long phone times and disinterested personnel.
Won’t miss the cheap snacks and mini bottle of water, nor the poor quality meals.
I’ll choose my airline based on time slot and price. Delta no longer worth the price difference.
I’ll take the money I spent for the card and all the money I charged to it and use it somewhere else. Won’t miss the “opportunity” to spend 700k miles just to get a crappy FC ride to nowhere with inferior service.
I’m sure my decision won’t put a blip in their earnings but if enough follow my lead, might make a few heads look up.
So what is Delta actually after here? More of your *employer’s* money.
Delta is not stupid, Delta knows OPM flyers pull shenenigans in order to spend more on tickets than is needed. Every Jim in sales will now try to “spend” more with various tactics like delaying purchase, upfaring, etc
Delta’s loyalty program goes from terrible to worst.
I am not sure what the solution to the over crowding SkyClub is, but I will say it’s become a zoo in there. I just got back from Europe, and used Delta’s SkyClub in Los Angeles. There were kids in there screaming. A woman let her 3 year old child scream while he was running around the club like it was some kind of play ground. It was hard to find a place to sit. There was a man sitting with his feet on the table where people eat. There were even dogs in the lounge. This is supposed to be a place for business people to work and travelers to relax. It’s become anything but…..
Someone explain the fascination with lounges. Outside of some international carriers,they seem to offer a ho hum experience.
I have not bothered with a mileage program since NWA WorldPerks went away. Sure, I have the mileage credited to one of several programs but I don’t expect to use them due to onerous requirements.
Boston? AA carries nearly as many passengers as DL in Boston (that is before the NEA) and with more main line routes. AA need to figure out their NYC strategy (IMO a destination hub with key global business markets works better then a transfer hub). JFK and LGA are great to get to or away from, but horrible hubs due to weather and slot restrictions.
I’ve recovered from my DL/NWA hub days and now that AA is resuming control of the airlines from Allegany, DL flyers will find out that, DL is not climbing but crashing.
To be perfectly clear, there is no significant value in the SkyMiles program, regardless of this alphabet-soup nonsense regarding so-called “status.” The program is dead-dead-dead, and it pushed the AA and UA programs in exactly the same direction.
It’s basically a hostage situation, at this point. Delta has taken travelers in Atlanta, Salt Lake City, Minneapolis, etc., hostage, and nobody will do anything about it.
@jns
The original frequent flyer program was free. The status game is all a mindset. The ante keeps getting higher. The stress or costs are not worth jumping thru their hoops. Did they ask how you need to jump or let you know they will farm your data?
I am one of those ~$5k a year Platinum flyers living off rollover (though last year was an exceptional $15k year). New York based, so I have options but found Delta to be overall better on the ground, in the air and on the phone. Put $30k most years on the reserve card for the waiver. I valued the 4 regionals, the Amex BOGO in F, automatic upgrades to comfort, lounge access and little to no wait time to speak with an agent. In exchange, I stopped comparison shopping. For basically any flight under 8 hours, delta.com is my first and only stop. Free upgrades into comfort (I’m tall) and luggage (I check skis and occasionally bags) offset higher the fares on Delta. ~2x a year I book long haul J using credit card points. It’s a simple strategy that met my needs without needing to play too many games.
I’m not surprised that Delta fired me as customer – I was never that profitable. But firing everyone spending less than $18k did surprise me. Silver is of course a complete joke, and Gold really isn’t any better. There is no universe in which I put ANY money on my Amex cards going forward. There’s no point in putting even a token $10k on the Amex to hit silver, and I’m sure as hell not putting $70k to hit Gold or the truly absurd $130k to hit platinum. And zero chance I book a single car or hotel on the portal – I’m not stupid. Obviously the math is a bit more favorable to those who spend more on Delta, but I still don’t see the numbers making sense for most given that nobody wants a pile of Skymiles. They’re a relatively cheap rebate with no aspirational use.
So I too am looking forward to free agency. I haven’t made a decision on the reserve card after next year. I do make use of the BOGO each year, and with no status priority boarding and free bags becomes relevant again. I will probably pay for F and Y+ more often (and overall will probably spend more on flights to travel comfortably). But I will go from having not stepped foot domestically on another airline in over 5 years, to buying on price and schedule without a second thought.
It’s an interesting move – surely to be copied by the rest of the market. But I do wonder if people are stupid enough to start running huge numbers through their Delta Amex cards, as Delta and Amex are betting? I have no doubt some people will, and there will be a few uses cases where it still makes sense. But for the rest of us? It is going to mean Amex gets none of my spend starting Jan 1, and Delta gets far less of my walletshare starting in 2024. I don’t get it.
@Patti: The actual fact is far more people do not have lounge access compared to those who do. Sometimes it’s hard to realize that when you’re waiting on a line in ATL, LAX, or JFK. But, at the same time look around…the terminal is a complete zoo. The Sky Club in those locations is a more sane…zoo.
But, have you ever been in the Sky Club in BNA, EWR, CVG, DFW, etc.? Those clubs are exactly what you’d expect…an escape from the masses.
However that being said, limiting someone who flies regularly and carries the Reserve Card to 10 visits a year might just go down as the stupidest move since “New” Coke!
sunviking
you clearly are basing your statements more on bias than data, esp. when you use pre-covid data.
DOT data shows that Delta and its regional airlines operated 4041 flights in the month of May while AA and partners operated 2097; that is nowhere near close to similar. B6 operated 4136 so DL and B6 are virtually of the same size and yet DL uses widebodies on a number of flights and gets far more revenue per seat so DL has long since become the largest airline at BOS by revenue – and that will not change.
And since LAX always gets thrown in about size, DL operated 4028 to AA’s 3325. and each of their regional operations are about the same size so the difference is almost entirely mainline flights.
at LGA it is 7281 flights in May for DL to 3527 for AA; at JFK it is 5247 for DL to 2235 for AA.
besides each of their hubs, DL is larger at BWI, DEN, EWR, FLL, IAD, IAH, LAS, MCO, SAN and SFO among the largest airports in the US. the list of AA/DL non-hub cities is quite a bit shorter and includes just AUS, BNA, and TPA among.
AA has simply fallen hard and fast in the largest and most competitive markets in the country and also in many of the competitive medium sized non-hub cities or United and Southwest hub cities.
Southwest has 3000 more flights/month from MDW and ORD than AA mainline has from ORD.
it is precisely because of DL’s larger size in NYC, LAX and BOS as well as all of the medium sized cities that DL is in a far stronger position to capture premium and corporate travel than AA.
Good to see the airline focused on giving a good product to passengers who pay premium fares instead of having a crAAppy product that’s given out for free to salespeople on $49 fares.
I can see the Gulf between DL business class and AA’s widening even more, which is a great thing since the US lacks proper premium class offerings from scheduled.carriers (hence so many people opting for private, who’s growing like crazy). Maybe DL will finally include lounge access in its business class fares now, like the entire rest of the world does, now that it stopped subsidizing Amex’s customers?
jake,
a Delta One ticket does get you SkyClub access and Delta is building D1 dedicated lounges
and, yes, Delta is committed to delivering a better experience and increasing the number of people that pay for it.
Add in the network advantages which I noted above and it isn’t a surprise that the biggest increase in premium passengers for Delta is coming from American and in markets where AA is receding
Tim if you purchase a first class ticket, can you use the lounge?
Tim Sorry sent by mistake. I didn’t finish. I meant to ask if you purchase a first class say from San Diego to Boston?
If we include New Jersey into the NY market as well, then it looks like DL transported around 7 million domestic passengers vs 9 million on UA. And that’s with United’s advantage of using a single airport vs two.
Delta (DAL) stock has tumbled down over 4 percent over the past couple of days. Talk about destroying value for customers and shareholders alike.
Bill,
UA has long carried more total passengers but a higher percentage of the total are connecting. DL carries more local NYC passengers. UA right now carries more total revenue. DL operates more flights.
Marco,
crude oil is up considerably over the past week which is the biggest reason that airline and transportation stocks are down. Other legacy/global carriers were down more than DAL so the notion that DAL’s Skymiles changes led to a fall in its stock is just plain not supported by real world facts.
Breaking up with Delta and becoming a free agent flyer. No way $350K spent on a domestic air carrier is justifiable.
The thing is, I would be spending more money with them.
If they started flying to places again that the flew before the pandemic – or at least through SkyTeam.
If they got their product back up to where it was before, like Premium Select. I mean, I flew it in 2018 and 2019, and it had actual real dishes and we were served from the galley. Now it’s cardboard served from a trolley, the seats are ragged out, and they want about 2 grand more. Um, nope.
And yes, I felt Delta One some as well. Their Domestic D1 is old and worn, and no, I am not paying what they want. I will use an RUC on it, but I won;t give them real money, when I go Jet Blue Mint for about 50% less.
They have degraded their products, their premium products are a mixed bag, and they are unhappy people are using what they actually do pay for?
DL Plat here.
@Jake,
How in the world is the SkyClub subsidizing Amex? I think you need a lesson in revenue sharing my friend. And those cards are NOT cheap cards. People are paying. Right through the pandemic for years when the SkyClubs were shut or serving food that you can buy out of a vending machine.
They know what they are doing. They will lose many loyal customers. Now the ball is in their court, they have to work hard to re-earn our business! They can’t take that for granted anymore!
+1 on @Doug’s comments above and great analysis. I am an inaugural Diamond, now Plat. I don’t/won’t spend enough on the AMEX Reserve to matter. Good point too on paying $50 for my wife to have a glass of Prosecco between connections. Delta really sums it up with their “74% paid load factor” for First Class. Why bother with the spend or the card, just buy a paid F ticket and then hole up in a restaurant/bar in the airport – there are plenty of nice options these days.
At least on my routes, Delta’s price for first class is more often than not significantly higher than the other carriers like United. I do better just paying the price for first class with the carrier with the best price/routing, whomever that is. The status game is a losing battle for all but those who fly for a living. (Salespeople, bloggers) If people sat down and calculated what they could be earning on a cash back card, they’d give up on Delta spend.
Peter says “I should always get my first meal choice regardless of where I’m sitting and regardless of whether or not I pre-ordered.
Sounds like you and Nathan should be flying on private jets, not public airlines.