A week and a half ago Delta announced its revenue-based changes to how miles are earned through flying. And then this past week they shared some of the details on how mileage redemption will change next year.
Since then there’s been much electronic ink spilled (much of it by me) trying to make sense of it all, combing through the details, explaining what it all means.
But it’s really not that complicated. We were told far in advance what to expect.
Delta has been working on these changes, in one form or another, for more than three years. Early planning was leaked two years ago.
In fact, three and a half years ago Jeff Robertson, the head of the Delta SkyMiles program, stated clearly that they thought they were too generous with the program and that had to change.
The frequent flyer model of over-awarding is not sustainable and must be changed. It’s either going to be redemption or accrual or both.
And it’s both. It was clear at the beginning of this. So no one should be surprised that’s what we get.
Of course, they’ve made it really complicated and that helps to obscure that fact.
They show a few reductions in their award chart, but have gone from 3 award levels to 5. (United and American have just 2)
When members are already overwhelmed by programs — not the median reader of this blog perhaps, although many blog readers too — Delta is making their system far more complicated, rather than less complicated.
In addition to the expanded award levels, when you fly Delta will now be separately track your:
- Medallion Qualifying Dollars (spending towards elite status)
- Medallion Qualifying Miles (flying towards elite status)
- ‘Miles’ earned from your ticket price (that now have nothing to do with the miles you fly)
And you don’t even earn miles for the ticket price on all flights, partner flights on partner tickets will earn some percentage of distance flown based on fare class. And you don’t even earn qualifying dollars or miles on all of their alliance partners.
As they’ve re-thought the program, the one thing they haven’t done is made it simpler for members. And that complexity serves to mask the changes in value — but statements of their intentions are plain enough.
I’m not saying there’s no longer value in the Skymiles program. There is. I have hundreds of thousands of Delta miles and I will be earning more (through non-flight activity). But I’m under no illusions that these changes are making even a substantial plurality of members better off.
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Exactly why is the current “frequent flyer model” not sustainable? What is the problem Delta is trying to address? Is it the liability unredeemed miles represent or is it the cost to Delta of redeemed miles (“free” flights)? Or both? Or something else?
I’m crediting my first Delta flight in 10 years (remember Song?) to my Alaska account. Looks like my 7000 orphan miles will remain as is.
This is not Delta responding to a problem; it is Delta seizing the opportunity. The opportunity is the USA airlines’ consolidation that has effectively created an oligopoly. Until and unless more competition returns to the industry, the airlines’ frequent flyer programs and other services will continue to spiral down as prices by and large escalate. Delta is just ahead of the game in realizing that it no longer need maintain a competitive FF program.
@JetAway – a very good question indeed, since the major programs are profitable billion dollar businesses on a standalone basis.
All true, Gary. However, as you know, the complexity of these FF programs is what allows people like you and me to game them.
Gary:
Delta’s new 2105 is touting the ability to book a domestic award one-way as United and American allow. However this may not be a good benefit. Delta is the only domestic carrier that allows a stopover in one of the hub (or major cites) when redeeming a domestic award. I fear this benefit will be lost. Comments?
Delta is at least consistent with s**king the worst of any major FF program
Nobody outdoes them
What’s the difference between a plurality and a majority, Gary? Do you know? Because you use “plurality” and it makes no sense. Reminder: Words mean things. Please write better, and be sure your words mean things. SAT words mean things, too even when you misuse them.
You’re welcome, from a small plurality of disappointed readers.
@Steve T – at this point we do not know anything about changes to routing rules
@KeepingItReal – actually using plurality rather than majority here was intentional because there are very much multiple classes of members, not only aren’t they making the majority of members better off but I was suggesting they wouldn’t be making the largest group of flyers that’s less than a majority better off.
If earning is reduced through regular flying I hope that means CC earners will have access to more award inventory.
A clarification please? It’s been said that FF programs are profitable for the airlines involved. I’m guessing its that AX or Citi, et al are the ones who make it profitable in the sense that huge sum$$ to their respective carrier partners and the issuers make the vig, so to speak, on the merchant fees, interest, et cetera. Am I close?
@$&! auto correct on this ipad! I wrote but it was changed. Should have read that ‘huge sum$$ are paid to their respective carrier partners”.
Your post seems absent a point.
@Gene – my comment? If yes, then what I’m wanting to confirm or expand upon would be your comment to @JetAway on “billion dollar stand alone business”. I’m guessing it has something to do with what Citi paid to AA (very close to $1b) to be the sole issuer for the AAdvantage-Citibank credit card after the AA/US merger.
@Classictraveler — my apologies, but my comment was directed at Gary not you!
Steve: Alaska allows stopovers on domestic one-ways awards, but due to the network the stopover opportunities are limited. (I mean, if you’re going from FAI to anywere outside of Alaska, I suppose you could get an ANC or SEA stopover… or from BOI to most other places could get you a SEA or PDX stopver…)
I too have started to credit my DL flights to AS. I’ve also bought my 1st AA ticket in over 30+ years. I’ll follow it up with a AA challenge. Right now I’m in the process of burning DL ff miles.
The FF mile problem is from Amex not flyers and now they want the flyer to take the hit. Not me!
@Gene: ok, no problem. But if anyone can clarify/expand on the profitability and sources that make the airlines FF programs hugely profitable, that would be great.
You want to know why they did this? It is right in your last paragraph: “I have hundreds of thousands of Delta miles and I will be earning more (through non-flight activity)”
The programs were to promote *flying*; you know actually getting on a plane, but have devolved to a game of churning Credit Cards for points. So thy are reducing the value of all the points they give away, and make the game less valuable for those that dont fly.
Those of us who actually fly and directly spend money from Delta will benefit – as it should be. Starting in 2015, I will be getting the maximum of 75K points on each of my flights (long haul intercontinental Business Elite). And I will typically have 6-8 of those per year.
@KeepingItReal. Pretty funny the grammer police does not even know how to properly place as comma. The comma belongs after the too!
Gary –
Can you explain the rationale for Delta ending Medallion upgrades on JFK-LAX and JFK-SFO? I know the whole thing about them equipping these flights with lie-flat seats and all that… but why would they prefer to fly the plane with empty seats up front than providing their highest-fare-paying, Diamond members with a well-earned perk? It’s not as if they are losing revenue by putting me in that seat and freezing out a Business Class-fare-buying customer since they never gave the seat away until the last minute anyway. Interestingly enough, now with no shot at upgrading, I will cease buying a more expensive fare (the ones that got me to #1 on the upgrade list) in favor of the $350 cheapie fare… so they will actually be losing $$ on me.
@Bill – presumably they think some customers will hold off on buying the seats if they can upgrade into them. Plus they may view empty seats that can’t be upgraded into as perceptually a more valuable product.
Thanks Gary…. that doesn’t seem like logical thinking to me. If I represent their so-called “coveted business passenger” I am not about to change from spending an average of $800-$1,000 for a transcontinental roundtrip, to $2,500+.