Delta Is No Longer A Good Enough Airline To Keep Gutting SkyMiles

Before the pandemic Delta Air Lines was a meaningfully better airline than its peers.

  • It would go months on end without cancelling a mainline flight
  • Cabin crew were friendlier
  • And there was more investment in the product

Delta went so far as to hot towels and welcome cocktails, along with amenity kits and thank you’s from the staff, in international economy.

The Atlanta-based carrier has had the strong brand in the U.S. aviation industry. They had the best performance. And they had a strong position at key hubs.

  • If you lived in Atlanta or the Upper Midwest, the only viable option for many customers was Delta
  • And they’d made sufficient investments in places like New York that they created loyal customers.

Unlike other airlines, they did not need to make the same investments in points programs to keep customers loyal to the airline. And that loyalty kept them engaged with the airline’s co-brand American Express card. They created a lucrative partnership with American Express which, thanks to the historic moment of Costco terminating their own Amex co-brand, put Delta in the drivers seat there. American Express had to overpay to secure the Delta partnership, setting off a chain reaction in the industry with ever more expensive co-brand deals.

Delta says that nearly 1% of GDP is charged on their cards, that they’re going to generate nearly $7 billion in revenue from American Express this year, and that they have an eye towards growing that partnership to $10 billion.

And they’ve been able to do with with an intentional strategy of making the SkyMiles program less rewarding than airline peers, according to the program’s Vice President Prashant Sharma. He says they want the value they offer to be “sustainable” and “not necessarily trying to play the game with customers” of delivering outsized value. Instead of a valuable currency, it’s the overall Delta “experience” that keeps customers engaged.

This strategy has worked for Delta. They’ve made consistent cuts to the value of their miles over the last decade, but when doing so their co-brand’s charge volume hasn’t suffered in the same way that co-brands at other airlines have taken a hit when making similar changes.

There is obviously some point at which Delta cuts too much,

  • If the value of SkyMiles were zero it would not motivate customers
  • So some amount before reaching zero is pushing too far

Here’s the thing. With Delta’s latest changes, demanding more from customers without giving them more, they believe they’ll push customers to spend more on their cards in order to maintain their experience and not lose out. Clearly they will lose some customers but the bet they’ve made is that requirements like,

  • $75,000 spend on a $550 annual fee card just to keep unlimited lounge access, which is a standard perk (without spend) of similar products at other airlines
  • $150,000 spend on that $550 fee card to keep Diamond status for someone who was doing so with the minimum-required $20,000 in ticket spend already

But on net they think they’ll gain. Except Delta isn’t as good an airline as they used to be and certainly not as good compared to competitors.

  • They are still the most reliable overall, but only by a few percentage points each month. United and American are catching up, and Delta now cancels flights in a way that they never used to.

  • They offer free inflight wifi and seat back video like JetBlue. United is adding seat back video, and has said they plan to make wifi free.

  • Their flight attendants are friendlier than American’s and United’s, though not necessarily friendlier than Alaska’s or Southwest’s.

  • Their inflight food and beverage program still hasn’t recovered from the pandemic. Their business class seats have doors on some planes, though American is adding this and United is expected to also.

God Save The Points says that Delta can make changes to its programs, and customers will shift their behavior to give the airline more out of a fear of missing out, because they’re the best airline. But this is anchored in the past.

One Mile at a Time points out that their business class product is inconsistent at best, featuring numerous “Boeing 767s with really uncomfortable business class seats, plus ex-LATAM Airbus A350s, that don’t even feature direct aisle access.”

Dedicated business class lounges are coming, and while Delta’s Sky Club’s still remain a cut above United Clubs and American Airlines Admirals Clubs (when you can get in, and the crowds inside detract from the experience) they still don’t have the equivalent of United’s Polaris lounges or even American’s Flagship lounges.

American and United are in many ways rising. Delta isn’t as good as it once was, though that could change. Ultimately brand follows the underlying reality, even if imperfectly and with a lag.

Delta is not a good enough airline to keep doubling down on the path of low value miles, expecting more from the consumer, and seeing the consumer continue to respond.

If you live in a Delta hub, maybe you’ll keep flying them but get off the status hamster wheel. If you live in a more competitive market, you might give American a look (if you want to earn status from things other than flying) or United (if you earn status primarily from flights).

It’s too bad that the Department of Justice entrenched Delta’s strong position in New York by preventing American and JetBlue from partnering to be a competitor there, and in Boston where Delta also considers themselves to hold the leading position.

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, 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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  1. Downgraded my Delta Reserve card (60k+ per year spend) to Gold and will only use it when I need to.

    Picked up Amex Platinum and will build points to transfer wherever I find the best option. I’m in the NYC area and have plenty of options.

    Going from Platinum Medallion to Free Agent flyer. Sorry, Delta. You lost me.

  2. No, Delta is not or ever was a “premium carrier” The only premium carrier I know of was Midwest Express.

  3. @Doug McMasters: Downgraded my Delta Reserve card (60k+ per year spend) to Gold and will only use it when I need to.

    Picked up Amex Platinum and will build points to transfer wherever I find the best option. I’m in the NYC area and have plenty of options.

    Going from Platinum Medallion to Free Agent flyer. Sorry, Delta. You lost me.

    I plan on doing the same, downgrading my Delta Reserve. How did you decide on the Delta Gold Amex card? Why not the Delta no fee card, or just the Amex Platinum card? I do plan on getting the Amex Platinum card as I enjoy the lounge access and it provide far more clubs than the Delta Reserve card, thus justifying the cost of the card.

  4. I decided to go with Gold for the lower annual fee, free bags, and the 15% discount on award tickets.

    I had the Reserve card for the waiver, mqm boosts, miles bonus (already gone), and the lounge access. All four of these are going, gone or significantly altered. And since I can only reach Gold Medallion at best with the new system, I’ve decided to quit the Medallion program altogether and go more free agent with points transferred from the AmexPlat to any of the tickets on any of the airlines available to me. I’ll also use the AmexPlat for the lounges available.

  5. Not happy about the changes to SkyMiles…but American? Rising? Seriously? I live in an AA hub and you couldn’t pay me enough to fly them. I fly Delta even though it means changing planes or trekking g up to JFK because the in flight experience on American is so much worse. Maybe United will manage one day to make me a convert but knowing American as well as I do, where the airline treats you like garbage, even in first class, and if you ask for anything, people act like you’re interrupting their day, I couldn’t ever in good conscience give them any more of my hard earned money, even though they’re technically the most convenient for me.

  6. OMG, Midwest Express! I miss them so much. Best 3 hour flight I’ve ever had. I wouldn’t eat them, but the smell of baking chocolate chip cookies could block out the smell of anything else on the plane.

  7. I’ve ben a Delta member for over 20 years. I’ll probably downgrade my Delta AMEX card, and start flying other airlines. No longer feel dedicated to Delta.

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