Delta will no longer award miles or status credit on its cheapest fares for tickets purchased December 9 onward for travel starting in 2022.
Matthew Klint of Live and Let’s Fly declares this to be reasonable “and should not be taken as an affront.” Here, I think, he conflates whether it’s ‘fair’ for the airline to make whatever offer that it wishes transparently (even if it’s a bad offer) and whether consumers should accept a worse deal when they have a choice.
Misunderstanding Basic Economy Fares
Matthew mistakenly argues that basic economy is primarily about “compet[ing] with ultra-low-cost carriers like Frontier and Spirit” – the idea is those airlines offer less, so Delta should give less when it charges their prices, and that creates a reason for customers to spend more on Delta.
Even if ultra low cost carriers initially spurred Delta to think along these lines, that’s not how basic economy fares are actually used. They’re primarily about market segmentation.
Airlines don’t want to sell tickets for less money than a customer will pay. It used to be that airlines separated business travelers who would pay whatever fares were asked from price-sensitive leisure travelers with advance purchase requirements and Saturday night stay requirements. But those tools no longer work (and that’s largely the fault of low cost carriers who don’t impose similar rules on their fares). So Delta uses basic economy as a way to offer low fares and compete for leisure business, that business travelers don’t buy.
Delta is using its loyalty program as a way to differentiate these customers. And the move not to award miles on the cheapest fares is the flipside of another practice they already engage in, charging more miles to avoid basic economy restrictions on award tickets. Clearly applying basic economy rules to the cheapest SkyMiles awards – redeemed by members who already have SkyMiles – isn’t about competing with Spirit and Frontier.
To be sure there’s an element of convincing customers to buy up an additional $30 – $60, but the fare difference can be in the hundreds of dollars and that’s pure segmentation.
But even if Delta was using them ‘against ultra low cost carriers’ those carriers do offer miles and both Spirit and Frontier have revamped their programs to become more valuable including easier-to-earn elite status that in some cases offers more than lower-tiered status at Delta.
Matthew claims that Delta without miles is still the better choice over Spirit or Frontier, which is beside the point. It’s not as good a deal as the lowest fares on American Airlines, which matters even more. But the claim of being better than the low cost carriers is also highly debatable since Spirit’s Big Front Seat is probably the best deal in all of travel. They’ve even been adding internet to planes.
It’s Not Unfair, Delta Just Doesn’t Value Low Fare Business
It’s not ‘unfair’ of Delta, they can reward whatever they wish. There’s no bait and switch here. In that sense it’s “reasonable.”
- It seems short-sighted not to use the loyalty marketing engine to incent price-sensitive leisure travelers – this is business they want which is why they’re offering fares at low prices to begin with
- It’s Delta offering less value to customers than competitor airlines
In other words, customers need to realize the bundle of value that Delta is offering on the cheapest fares is falling, and factor that when comparing their alternatives. And customers looking for the lowest price should factor how the airline values their business.
It’s ‘fair’ for Delta to value any business (or not) as they choose. But that doesn’t mean customers should shrug at the move.