Yesterday Delta announced its award charts for 2015. When they revealed their plans for revenue-based points earning (rewarding the price of your ticket, not the length of time in their seat), but not the other half of the equation, it led to a lot of speculation (including by me) that the changes were going to be awful. Why else wouldn’t they reveal what awards were going to cost?
What they shared yesterday was the new five-tier award charts for economy and for business class (10 tiers in total!) for flights that originate or terminate in the US mainland 48 states, Alaska, and Canada. We don’t have the charts for the rest of the world yet.
The charts looked pretty good — more decreases than increases at the lowest saver level and at the highest last seat availability level. Releasing the charts went a long way to satisfy naysayers across the spectrum.
That led me to conclude that the real action is going to be in availability — are there as many seats available at the lowest level in the future, or will awards ‘really’ cost level 2 and 3 pricing, in effect a stealth price increase? We won’t know until 2015.
I concluded, though, that I didn’t really care. Delta saver awards are tough to get now, but their partner awards are easier, and I generally want to use my miles to fly international business class on their partners.
Since the price of saver awards didn’t go up, the price of using miles on partners didn’t go up. I earn my miles from non-flight activity, mostly the Suntrust Delta debit card. So these changes wouldn’t make me worse off.
Some readers thought another shoe could drop — a separate award chart, not yet released, for travel on partners (like United now has).
I asked Delta about partner awards and whether there would be a separate chart. I got a definitive no.
These are “the” charts. No separate charts for partners.
Several commenters though partner awards could be priced at level 2 or level 3, so a price increase for partner awards even if not a separate chart.
I asked Delta about explicitly this, whether “it will continue to be the case that partner airline awards will only be available at the saver (level 1) level,” and I was told that the introduction of new chart levels “won’t change partner redemption”.
Partner awards will continue to be level 1 awards.
At work I spend a lot of time driving to explicit clarity in documents, asking seemingly obvious questions “for avoidance of doubt.” If there’s a trap hidden in there somewhere, I want to find it. And it does appear there’s something.
Just as I expect there to be less Delta award availability, I expect there to be less partner availability as well.
Wait.. how can that be?
Partners offer redemption seats at the saver level. You can then book the seats, unless like United used to do the IT systems get programmed to pretend the seats aren’t there. Delta insists they do not do this.
However, Delta does say that award availability may change with their partners.
[E]ach airline partner determines participation and inventory levels for itself. So, for example, if [Air France] space is more or less, those inventory decisions come from [Air France], not [Delta]. Credit or blame where each is due.
Wow. Bomb dropping here.
When they say that each partner determines its level of inventory, not Delta, that Delta may well be willing to pay less for the seats than other partners do and then lays the blame on their partners for not offering the same availability at a lower price point.
Already if you check out Air France availability you will find more options booking with Alaska Airlines miles (or any other Skyteam airline besides Delta) than you will using Delta miles.
The explanation sounds a bit like ‘each partner determining their level of participation with Skymiles’ as an explanation for why there’s no elite mileage-earning on Korean.
I pressed on and was told,
[O]ne side of the equation sets the value and the other side determines if they are willing to pay what the other partner is asking.
Delta is negotiating redemption pricing bilaterally, and they’re going to get a certain amount of inventory at a certain price. And that price may be lower than what other partners are willing to pay. And Delta may get less availability to offer than other partners as a result.
With a five tier award chart, and level 1 as the lowest tier where all partner awards will be situated, I anticipate Delta looking to control its costs there — by paying partners less for award space, and possibly making less inventory available as a result.
We won’t know exactly how this all plays out until next year (or until all contracts get re-upped, which could be earlier or later than that). But I think the discrepancies we already see in Air France availability are a good indication.
If Delta will say that they won’t let their members book the same award space offered to all other airline partners, that’s one thing. But agents certainly aren’t trained in this.
The story I get now from Delta agents, when I see award space offered to other airline partners but that Delta won’t let me book, is that the other airline won’t offer Delta the space. And that’s not really true. Delta won’t pay for the space. Delta wants to blame the partner, just like they blame Korean for ‘setting their own level of participation’ in the Skymiles program.
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Thanks for getting this additional info. The number of people responding in comments to your and other’s blog posts with sheer vitriol at Delta has been entertaining. Most of them are basing that vitriol on assumptions that have no basis at all in reality. The bottom line is that Delta is being honest about the chart changes, but we won’t know if they’re being honest about adding more availability at the “lowest levels” until next year. And probably not even until a few months into the year as the IT systems are run through their paces and revenue management tweaks things to reflect discrepancies in real customer behavior vs. expected customer behavior under the new 5-tier system.
Oh, boy. There’s no real way of knowing how this will play out. Hopefully, it’s much ado about nothing, but it’s impossible to know.
Several years ago, the marketing head of oneworld promised that award inventory within the alliance would be universal: if one partner had the award seat available you could book it through another partner’s frequent flyer program. Well, soon enough, I was trying to book LAN award seats in the AA program. LAN showed award seats available; AA didn’t. Honestly, I think the problem was that the two airlines’ rez systems weren’t properly communicating, but nobody I could reach at AA had any interest in fixing this. To his credit, the oneworld marketing chief made some phone calls and — voila — I got the LAN seats from AA.
I honestly don’t think any alliance would do that today.
But we could very well get into a game where, as you describe, airlines won’t adequately compensate their partners for award seats, so they won’t make any available. Most of the readers of your blog already know that award inventory on foreign carriers tends to be WAY better than on US carriers. And with the service also better, we don’t give a darn that we redeem our USA airline miles to fly the foreign carriers.
But if this actually changes in the future — if the foreign carriers become as stingy as the USA carriers in making seats available to USA frequent flyer members — this game will radically change, and the Skypeso moniker will be even more appropriate.
I really appreciate your expert analysis and thinking of so many angles. My email from Delta today said, “More Award Seats available at the lowest redemption levels.”
I guess we can speculate about whether “more” means something meaningful or not, since they could double the number available at Level 1 and still not be in the ballpark with American and United, but they really can’t just shift most of the seats to Level 2 and 3 without being charged with false advertising, can they?
Reminds me about the story about the frog and the scorpion.
I scored some nice partner flights on AF and AZ for June last year. Non-stops from LAX-FCO and CDG-LAX. I have an in-between number of miles left (about 110K). Seems like my best strategy is to a) see if I can get something similar for a 2015 trip and transfer Amex points in to book it and b) if I can’t, let them lie.
I recently booked Biz for 2 to johannesburg. The only partner availability that Delta had access to reliably was Saudia. Most of the AF, KLM, KQ(!) space was inaccessible. Sounds like this will get worse.
@DaveS note that lowest is plural…!
On the plurality of “levels”… I have been assuming that likely means the same or slightly lower tier1 but a higher total of tier1+tier2 than is available in “saver” now. I think FrequentMiler’s theory is probably correct in principle, even if he can’t know the actual distribution. I hope it skews more toward tier2 and tier4 are taken entirely from the current pool of standard and peak, respectively, but I highly doubt it’ll be that generous a change.
I’m confused by this post. Delta says “[E]ach airline partner determines participation and inventory levels for itself.” Yes, that’s how it works across all airline partnerships right? For example, if you use AA miles to book Cathay Pacific, CX determines inventory levels of available awards. How is this any different? I realize I must be missing something…
In my mind, this isn’t news. I already realized that “participation” = “price”.
Excellent analysis. Thank you, Gary. And yes, “lowest levelS” makes me cautious.
As if the Delta experience could get any worse than it already is. I just spent 2 hours on the phone with Delta, which tried repeatedly to price my DCA-LAX-BNE-VLI ticket (on AS and VA) in first/biz at 225,000. (I’ve got them down to 170,000, and that still isn’t right.) Both the agent and the supervisor spent the entire time referring to VA as Virgin Atlantic, with the typical “you can’t go there” for Vanuatu. Obscure, yes, but served by VA. (I forgave them for repeatedly saying Bris-BAIN.) Compare that with a subsequent conversion I had with an AA rep who booked my IAD-AUH trip on Etihad (which took all of 10 minutes). As she processed my award, she asked me (1) how I viewed Etihad compared to Qatar, (2) if I had used Etihad’s car service, (3) whether I pronounced Qatar as Kuh-TAR or GUTT-er, saying she’d heard it both ways, and (4) after noting that I traveled a lot, asked me if I’d heard about the crazy award changes at Delta (!!). While I believe Delta and American training differs, I’m increasingly convinced that they hire from different gene pools. (Don’t mess it up, Dougy.) I guess I should consider it a victory that I’m clearing out SkyPesos before the new “rules” take effect. Meanwhile, I would love to see someone sue Delta for fraud. They advertise rewards that are almost impossible to book — even for travel geeks.
Very insightful, thanks Gary