Delta Air Lines has angered its best customers in a way I haven’t seen from an airline in many years. They’re taking away lounge benefits from customers who spend $550 a year on their premium credit card, and they’re demanding substantially more ticket and credit card spend for status – looking only at qualifying spend (and no longer miles flown or flights taken) in determining elite level, and increasing the amount of spend required significantly.
We’re seeing a backlash and cardmembers saying they’re walking away from the airline, though those who are hub captive will likely continue to fly – Atlanta and Salt Lake City passengers won’t defect to another carrier. People are cancelling cards. But even if the changes were a huge mistake, Delta won’t admit it, and they aren’t likely to reverse course – just make tweaks at the margin.
Airlines Reveal Surprisingly Little About Frequent Flyer Program Financials
Airlines disclose surprisingly little about the details of the frequent flyer program portion of their business, considering how material these programs are to an airline’s bottom line. Prior to the pandemic it was common at American Airlines for the carrier to lose money in a given quarter flying planes, and all of their profit to be the result of selling miles to banks. Delta last year earned $2.9 billion, roughly $2.2 billion of which was from SkyMiles.
Delta says that they’re on track to generate almost $7 billion this year from American Express, and that nearly 1% of GDP is spent on its co-brand credit cards. These are very rough figures. While there are outside estimates of the margin that Delta earns on SkyMiles (~ 40%) they don’t break down a lot of detail around the business.
That means they won’t need to admit they’ve made a mistake.
People Are Cancelling SkyMiles Cards And Shifting Spend
Left and right Delta SkyMiles members are reporting on social media that they’re cancelling their co-brand credit cards, and that if they’re even keeping their cards they’ll do so for the benefits but no longer spend on the product.
We don’t know what the order of magnitude effect is here, but we know that:
- Delta’s bet is that its changes will increase card spend.
- That means cardmembers who don’t cancel or shift spend away will need to grow their spend enough to (1) make up for the losses, and (2) grow spend.
- The benefits to status that are supposed to drive spend come only with their most expensive cards, not their mass consumer cards. That means either a huge number of cardmembers need to upgrade, or it’s a smaller portion of their cardmember base that needs to drive the increase and offset losses from the bigger pool of cards.
- It’s only elite customers with premium co-brands that these changes are designed to push more spend from, that’s a subset of a subset.
Delta is demanding more from customers without giving them any more in return, and rewarding them with a currency that it worth less than what customers can earn elsewhere. And their bet is that a small subset of cardmembers will increase their spend so much as to offset those who cancel and the bulk of cardmembers for whom the changes aren’t designed to incent spend.
We Won’t See The Full Negative Effects Of These Changes For Over A Year
While the way Delta elite status is earned goes into effect for 2024, many people have already earned and will use status next year even if they don’t re-earn it next year for 2025.
And changes to the lounge benefit for the expensive co-brand won’t go into effect until 2025. So while some people are proactively making changes now, others may not do so for a year or more.
Meanwhile there’s a growth path for SkyMiles already, signing up new customers just to gain access to free on board wifi, and Delta has said they convert around one in eight program members to their co-brand card. Naturally increases in the portfolio will offset losses, and help disguise damage done to their portfolio from these changes as well.
It won’t be clear in the numbers right away, or even for awhile, what exactly these changes are doing to the airline’s business. And people forget how much recent growth in card spend is simply due to inflation.
Delta Will Declare Victory And Run Promos
There’s no reason Delta will need to admit error, and they’re unlikely to do so even if if it becomes clear to them that they’ve made an error. Delta is going to say that the changes are having their desired effect. Even if card spend were to drop which is unlikely they’ll attribute that to outside forces.
We’ll know, though, that they know they’ve made a mistake once we see promotions or program changes that increase the pool of elite members – it means they’ve cleared out too many – or that encourage card spend.
@Gary, I think the word you’re looking for to describe Delta is hubris.
I think that all of the US airlines are doing something similar to what DL is doing. All of these changes will change the way the customers will look at buying airplane tickets. The decisions going forward will be based on price and the number of hours and or stops it takes to reach your final destination. The miles you could earn are not important. In addition if it takes more miles to qualify for status that in most cases will be much more difficult; the decision to maintain status will also be reduced in making your flight reservations.
Exactly. They’ll run “triple mqm on card spend this month” promos to try to bail themselves out of this, which may help to a degree but ultimately ad hoc promos won’t generate actual loyalty the way a predictable frequent flyer program can because travelers can’t chart a long-term loyalty strategy around haphazard shortcuts around the published rules which are offered at the whim of the airline.
I downgraded my Delta card a few years ago and stopped using it. I only keep it for the available spend that impacts credit score, and Amex has nothing else I am interested in moving to now.
@ Gary — We will be taking the following steps — 1) closing 2 to 4 of our 4 Delta Reserve cards the day that he Companion passes post to our accounts, 2) Using every single SC visit allowable, 3) using all of the RUCs earned from this year’s DM status on award tickets before Jan 31, 2025, 4) using SM whenever possible to pay for any DL tickets, 5) crediting any paid DL/ST flights to AF beginning the second after we qualify for DM this year, and 6) never requalifying for DL status beyond our LT Gold again. Delta can dial back any of the changes they want, and it won’t change any of the above decisions. Delta can go pound sand.
I am holding the card till next Oct’s renewal period. Then, I’m off to United and the Infinite card. I have the card essentially for the lounge access, the MQM spend waiver, and lastly the companion ticket. They took 2/3’s of that away so…bye bye.
Truth is…Delta elite status isn’t worth much so I could live without that aspect. But, the lounge is most important to me as a frequent flyer. I have only ever seen lines at JFK T4, ATL B18, and – once – at ORD. They could have set a limit of visits on the more popular SC’s or reduced the Amex Plat w/o reducing the Reserve card’s access.
But…in NO way do I spend $550 for 10 visits. In 2023 I hit 10 visits by the end of Feb.
Wishful thinking. You haven’t provided any real datapoints. Saying that you will cancel a CC doesn’t mean you actually did it. Delta is counting points addicted customers and I think we both know the mentality of people in this space. The driver here will be AMEX.
It’s far from unprecedented for a network airline to try centering its FFP value offer on the top 2% of its customers and give the other 98% the back of its corporate hand. But it typically doesn’t work out.
In UA’s early Smisek days they did something similar (though admittedly less drastic), diluting elite tiers and benefits and introducing PQDs, and UA’s top HVFs were very excited to see lesser mortals shoved out the airlock. “United’s firing you! United doesn’t want you as a customer!” they crowed on Flyertalk.
Two things wrong with that: the tippy-top elites imagine that cutting off the lower classes will translate into more benefits for them, but this never happens. And it’s never possible to fly an airline to profit on the backs of just 2% of its base. The next recession will prove this once again.
United, which a decade ago seemed fully on board with the screw-the-proletariat model, is now renovating and upgrading its economy cabins.
@ Gary — Oh, and I left out the most important part — during 2024, qualifying for top status on ANOTHER airline, probably UA but maybe AA. The gates are much more convenient for these two airlines at our home airport and the AA and UA lounge and gate agents know us by name. When flying Delta, we are just another one of the masses and get treated with the same indifference as everyone else. Delta has friendlier service? I think not.
@ ABC — One’s point addiction is much better served by Chase/Capital One/Citi/non co-brand AMEX. They have stronger crack, and it’s cheaper.
I will absolutely be cancelling my Delta branded Amex card as soon as I am back home from an overseas trip! I have just under 3 million miles on Delta, and am Platinum this year! No more! I will use my accumulated miles and be done with them. It is liberating in a way….loyalty goes both ways and that has now evaporated. One more FYI…..I am looking to go Business Class to Australia next year…..Delta wants 745,000 miles RT…..Singapore Airlines, a carrier three times better than Delta wants 380,000 miles, and occasionally only 290,000 miles if you time it right. Really?! Good luck Delta…..you will need it!
Smart flyers who prioritize maximizing their income and making their travel spend more flexible won’t be looking back, no matter what Delta (or American, or United) does.
The captives, vainglorious, and addicts (and those who profit from them) are the ones begging for Delta to reverse course.
Great news for JetBlue
@Robert Haimsohn: Well said. I think some flyers, not only DL flyers, are already chanding as you mentioned. It is not worth to stay loyal these days.
Bloggers will also declare victory. It seems you already have. We will never know the full story because all the data is proprietary.
Gary, American airlines is doing the exact same thing. They used to have their executive card which cost $450 a year. They’ve now raised that price to $5.95 per year. Plus any person that you put on your card example a spouse. They have to pay an additional $175 a year to have the card
The problem with Delta’s approach is that it’s wrong to incentivize revenue directly, even if that is the end goal. You have to incentivize behavior and decisions. Many top spenders don’t even have a choice in their travel spend (corporate travel depts), so you think you are incentivizing them to spend more, but you really aren’t incentivizing them, they’d do that anyway.
Meanwhile, not everyone has the ability to spend a massive amount, but you still want to influence their decisions to shift more of their business to Delta. That used to be in the form or rewarding people for choosing Delta for each individual flight, regardless of price. Now you’ve told the majority of people who do control their own travel spend decisions to pound sand.
Bottom line, you need to influence the drivers of revenue to build loyalty that grows revenue…solely rewarding revenue doesn’t influence decisions, and will paradoxically have a negative effect on revenue.
The answer to all of this is simple. Whether it’s Delta or any of the airline, Just get rid of your co branded airline credit card and go with a cash back card..
Delta whines about overcrowding in the clubs. One simple solution: Limit free alcohol to 1-2 drinks. I don’t drink, so I’m already paying for something I don’t use.
Delta is scheduling connections in ATL in the 40 minute range. No club use on those.
I use a club for “quiet” time bc and a coke. Most Priority Pass Clubs provide that, locations may be inconvenient.
Like others, I’m past platinum qual for 2024, won’t hit Diamond so with the loss of the SC, Reserve card goes away next yr. My downgrade to basic to keep collecting miles I will fly in DL.
Since MQMs rolled over and earned next year won’t do me any good, the Reserve card spend is minimal from here in. I over spent slightly into the low 30s this year.
10 K of tickets yesterday didn’t go to DL. Hotel spend would never move to DL card. 100-150 nights a year still.
So I lose Platinum going forward, keep what few benefits are available to Lifetime Hold and divert the cc spend elsewhere.
I suspect most of the mid tier folk’s thought process is similar.
I am using DL’s actions as motivation to reassess everything I do around credit card usage and air travel. I’m focused on:
1. Consolidating credit cards with redundant benefits down to one card – my DL Reserve will likely be a victim of this consolidation.
2. Open new cards that offer benefits I might not have right now
3. Fly airlines that strike the right balance between convenience, service, route network and ease of path to top-tier elite status.
I fly enough to quality for top-tier elite on two airlines so I am deciding which two it will be. To this point I was thinking that it would continue to be DL and UA. Data is showing it should be UA and AA. To hit DM on DL I would have to consolidate travel to just DL and that is not in my best interests.
I’m long over Delta who greatly influenced the level of corruption in FF programs
we experience at most legacy carriers today.Sadly an industry of monkey see monkey do
450k in miles for a business class flight one way to most destinations? What? Huh?
Its a complete SH*t show now and Delta and their greed got us to where we
are today for the most part.
Yes I could have booked a variety of programs from 100k to 900k one way home from Europe next month with Delta Sky Pesos or Frying Blue.In coach or business
Booked Jet blue for 1500.00 instead in business class back from Europe in Mint
Took my cash rebate of 3% on my CC and said no way to any of these programs credit cards gouging us year after year to earn their near worthless currency and lack of availability .
Hello BA and Virgin Atlantic (deltas partner) 900 dollars plus nuisance fees on a one way mileage ticket.
Now buy on price and buy what I want when I want and can afford whatever I want in any class
Don’t need their crappy status despite having achieved some lifetime tiers when being in these programs was a privilege years ago
These giant FF Ponzi schemes now occasionally make sense but by far I have 0 interest in most of the programs in or out of our country with some rare exceptions with the sweet spots.
Delta led the way and destroyed the golden goose and hopefully for them there are many more gullible folks out there willing to play into their web of scamming.I’m long gone thankfully
For the record I’m not against Delta or any airline making it harder to access clubs as they have become more popular to the common traveler and it is necessary to thin the herds of which there are to many but*s seeking to few seats.And when everyone is elite no one is elite.Or for that matter when everyone has access there is no room at the Inn or a massive line from you know where out the front door!
Maybe the result of this Delta action will be noticeable on AMEX financial reports if Delta is correct about the amount of spend going on their branded cards.
Unfortunately I’ve already paid my Amex Skymiles annual card fee this month, and my simple plan is to stop using my Amex Skymiles card immediately. I’ll use up my accumulated Skymiles before my next annual fee hits in Sept 2024 and then likely cancel the card. I liked flying Delta for the past 25 years, but I live near IAD and DCA. I didn’t mind the occasional connecting flights since I don’t fly often. DL is not strong here, but with the frequent devaluations of Skymiles, maybe I can do better with United and AA loyalty programs. United makes more sense for IAD usage anyway. Maybe American for DCA?
Please don’t close your Delta AMEX and then open up another airline’s card. Please do close all your airline branded cards. Please do open and spend on B Premium (2.625 – 3.5% cash back), C Reserve, A Platinum, Ci Premiere, and/or V X, and be better rewarded, fly what’s best for you and not chase stingy reward availability, and be free from these airlines’ nonsense.
In my opinion, the impact of these changes won’t be visible until March – April 2024 when both Delta and Amex would have data for the first quarter that affects 2025 status. Until then, it is just noise on social media, and that doesn’t really reflect actual spend behaviour. If the Q1 data looks positive and is reinforced by Q2 numbers, expect other airlines to announce similar changes in Q3. The biggest losers will be those who live at fortress hubs.
Another Delta misstep worth mentioning is their current rerouting…
I live in a beautiful town that requires layovers for most of my travel. In the past 6 months I have seen my Delta layover times skyrocket. Where before I had an average layover of about 1.5 hours and my return flights had me home around 6pm (all totally manageable). Delta is currently changing all of my remaining tickets for the year and most of my flights now feature a more than 5 hour layover (!!!!) and arrival times hovering around midnight.
Between the rerouting and the benefit downgrades, I’m out.
I’m hub captive (ATL), but retired.
I’ve have cancelled my Reserve cards and will not fly Delta again if I can help it.
I have no problem adding an extra stop to get where I’m going and quite enjoy flying ATL-IST-EU etc.
Being beholden to Delta, or any company for that matter, is dumb.
So as a recent MillionMiler that has favored Delta for my business travel over the past 30 years, I now find myself a free agent. My status has been earned the hard way by miles flown not spend, and these new rules won’t compel me to be creative and fit a Delta itinerary into the travel policy. I’m now Silver for life, and won’t reach Gold based on MQD spend limited by corp travel rules. In fact, as a Boston based traveler making 10 TATL’s a year it makes my life way easier. I simply need Gary’s help to find the best One World program as my travel will become almost exclusively BA (better schedules and service than Delta)
I’m sure this is what Delta intended to have happen …….
I’ll venture that American’s stance on keeping the status quo for a year isn’t so much to attract Delta refugees but rather to see the outcome of this revenue play but on Delta’s dime.
I have a United Club Card. It only makes sense because of the club. I only charge flights on it. The value for miles is now so low that a money-back card produces far more value. Think about it. Just checked random flight from. ORD to LAX. 38K miles. $239 dollars. Unless I’m getting two or three miles per dollar, it is better to get 1% cash back and just buy the ticket.
I have had Amex Delta Gold and then Platinum for years. I have been flying to Europe 3-5x per year for work. I’ve used the lounges and occasionally gotten tickets for points. Most of my domestic travel now on American (schedule), I have their MC to get free checked bag. The Delta FF changes make the Delta Amex cards esp Platinum, near worthless in my case. I’ll use up the DL points and choose airlines based on price and schedule. This could be the beginning of the end of frequent flier madness for all but high frequency business travelers, maybe not such a bad thing.
“And it’s never possible to fly an airline to profit on the backs of just 2% of its base.
The next recession will prove this once again.”
Truuer words were never spoken. The airlines bend over backwards for customers during times of economic decline.
@Bill Dunne – Delta has raised the cost of their club with guests (equivalent to American) to over $1400. Delta’s $550 annual fee comes with 10 visits total, American’s card comes with guests and paid authorized users get unlimited access with guests too.
Delta is the Bud Light of airlines.
This is the very short term. People always threaten when there are program changes. I definitely will be canceling cards as the annual fee comes up. It will take a while if there is any impact to Delta. I am not sure about that since many poeple just let the cards renew every yr and it autopays. I can say years ago I was much more lax with not canceling cards even when the benetis for me overlapped other benefits, or the benefits were not as valuable.
@Vijay You make valid points. I know Delta wants to trim the herd of elites. For many yrs I could find sweet psots in redeeming miles for award tix on Delta or Virgin. Its been a long cold spell for me. AMEX reps are going to hear it and I assume they will make some retention offers.
@Paul I am sure American and United will be looking to make similar lounge access changes. American Express I think will also make it more restrictive to use their lounges. They were welcoming when they started but things are starting to chill even as the PLat card has risen to 695.00 per yr.
@Gene,
Obviously. Be a free agent. Don’t spend more than the signup bonus on AMEX DL cards.
Will cancel mine at next renewal. Daughter canceling hers in Dec.
We only fly DL in FC to an international hub so we get the 2nd bag. Don’t use their lounges anyway.
We flew in to Jakarta from Singapore yesterday. 70 minute flight. We had flat beds and REAL meals on china and real glasses. For a 70 minute flight.
Similar flight on DL, mini bottle of water and didn’t even get snacks
Same on flight from Atl to JFK except we got thimble size cold drink and cheesy snacks offering. Bleh
It’s so nice not seeing Delta Dawn Tim Dumm. Hopefully he’s gone the way of the people canceling their Delta CC.
You really think people can just walk away? Us there open seat to be found anywhere after this? The only open seat is in skyclub. Demand is going to make AA ans UA cost more than Delta and we are back to square one. Are you here to fly or are you here to eat in a lounge ?
One post blasting Delta then another post from bloggers like VFTW posting Delta AmEx puff pieces. SMH. Talking out of both sides of the mouth with zero shame.
Where is Tim Dunn? Has he decided to take a break from the blogs after last week?
@Goal – what on earth are you talking about
Seems like Covid lengthy shut down affected everything.
Lot of great posts here…
Anyway…@SadDeltaPatron & @Williams G. Lewis…I will pretty much be doing exactly what each of you have done. I’ll be dropping the card next year…
…but there’s some things I did already…in addition to everyday spending, I used to have every possible monthly bill on the Reserve Card’s AutoPay to hit the MQM spend waiver(s). Those have all been removed and that purple card will remain firmly tucked inside the wallet. Next year, I’ll blow thru my remaining Sky Miles while still an elite and able to use the SC without the 10-visit limit. Then…I’m done.
Fool me once…
My wife and I cancelled all 4 of our delta cards. We will shift spend to AS and AA.
I drank the Kool-Aid. Yup…. no more. I’d fly using my Delta platinum AMEX card and would actually knowingly over-paid for my flights just to get more miles and possible upgrades. I’ve been Platinum for years and now know I need to unplug. Much like the major cable companies are doing to us, I’m not even getting a kiss… if you know what I mean. DELTA is nothing but a greed machine. I’m done with Delta. Let’s all take a stand do to Delta what they are doing to us.
Corporations are like the snake that hitched a ride across a river on a turtle then bit it after crossing. When asked why, it said it can’t help it, it’s a snake and that’s it’s nature. Airlines are corporations and they can’t help it, it’s their nature. They’d rather you die than lose $1 in profit. Please don’t make the mistake of associating human qualities, like loyalty, with an airline.
As much as I dislike the situation, Delta will win for itself via these changes. We can “thank” the government for all the waivers and favors granted Delta and the other industry cartel kingpins as consumers are faced with paying a price one way or another for all the industry consolidation allowed by the government (inclusive of all three branches of the federal government) and “libertarian” and other corporate kiss-ups.