Delta’s SkyMiles Problem Is Short-Term Greed

On Friday, former United Airlines CEO Oscar Munoz appeared on CNBC’s Squawk Box. Andrew Ross Sorkin asked him about Delta SkyMiles changes that generated such an uproar: “there’s only so much space on these lounges…there’s only so much space up front on these planes.” And Munoz acknowledges that the reasons behind Delta changes were capacity restrictions.

Delta says they’ll modify plans to make elite status much harder to earn, looking only at spend amounts, and limit access of premium cardmembers to their lounges.

Munoz offered that with the tradeoff between monetizing short term and investing in long-term customer relationships, “Brand reputation and customer satisfaction and appreciation are really critical long-term values that you need to create and maintain.”

Sorkin pushes back, though, that Delta’s “best customers were standing in line and couldn’t get into the lounge, for example.” Munoz bought into the framing, and suggested – like Delta did – that the changes were essentially a marketing problem. He says that can’t go from everyone being welcome to “what feels like” no one being welcome.

This buys into Delta’s framing, that they had little choice to do something and just didn’t sell it to customers correctly and that is frankly all wrong.

Delta wants us to believe that they are just trying to solve a problem – that there are too many elites for the benefits available like upgrades and club access. They have no choice! Victims of their own success!

However lounge crowding is a function of:

  • Amex Platinum card access. Everyone with a Platinum card flying Delta can use their lounges, which is something other airlines don’t do. In fact, Chase’s premium travel card doesn’t get lounge access with its main U.S. airline partner United. More people with access means more crowding.

  • Declining Delta reliability, compared to pre-pandemic. More passengers spend more time in lounges during delays.

  • Lack of dedicated business class lounges. The eventual introduction of Delta One lounges will help – United and American already have business class lounges that relieve the pressure on United Clubs and Admirals Clubs but delta was behind the curve on this. Their business class passengers all use Sky Clubs.

And crowding remains an issue:

Delta has been selling its first class seats, for less than they used to. With about three quarters of first class seats monetized there are few seats left for upgrades. It’s actually worse than that, considering that there are low yielding routes where first class seats aren’t frequently sold at high levels. Getting upgrades on popular routes like cross country flights from New York and Atlanta are nearly impossible.

Yet Delta plans to further monetize the cabin. Their President Glen Hauenstein describes ‘what’s next’ as doing for first class what they did for economy with Basic Economy and Comfort+. That’ll make upgrades harder even with the SkyMiles changes they’ve planned, rather than easier.

What Delta should be doing is adding first class seats to the extend that demand has grown six or seven-fold, with plans to monetize those seats further. They shouldn’t treat premium cabins as a fixed pie.

The truth is that planned Delta changes weren’t about scarcity of benefits or too many Diamonds (CEO Ed Bastian was mistaken about the number of Diamonds, claiming that the pool had doubled – he was using outdated information).

It was all about squeezing customers for more American Express spend because Delta is trying to move from $7 billion in revenue from American Express to $10 billion. But they went too far. Delta says they will roll back announced changes but they will just dribble out the changes rather than doing it all at once… slow boil customers hoping they don’t know any better.

Delta was never offering more for customers who gave more and plans to push even harder with more changes in the future. They have a road map and they’re just slowing down the march, not changing course.

The airline is taking payment from American Express now for infrequent customers to access lounges via Platinum cards, and pushing their most loyal members to spend more than they make on the airline’s credit cards merely for access to a limited pool of benefits.

They’re cutting back on Platinum lounge access, but the infrequent Delta customer is fine with 6 Sky Club entries per year. They’re still choosing those customers over Delta Diamond members reaching $35,000 qualifying dollars spending less than $75,000 per year on a premium co-brand card.

It’s Delta’s short-term greed for Platinum cardmember lounge access from Amex, and pushing for Amex spend to redistribute a limited pool of upgrade seats, when the lesson of the premium cabin demand they’ve experienced may be that they should be expanding the pool of premium seats.

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. It is a good thing I am retiring next year. I have flown Delta exclusively for the past 8-9 years with good results. Never quite made Diamond, almost always made Platinum one way or the other. Free Agency it is after the Reserve card runs out next July.

  2. Gary – If Delta goes forward with the limit of Skyclub visits to 10/year for those spending less than $75k, what sort of compensation should a cardholder expect if the lounge is still at capacity? I think $100 cash is appropriate. I’d like to see DL address this question.

  3. Gary – I take it you have a source in terms of the number of Diamonds. What is the correct number in terms of growth of Diamond passengers?

    I think 6 visits for Amex Platinum cardholders is fair. I don’t think it should be cut down entirely. Again, the best option for that card is to continue to add and expand more Centurion Lounges.

  4. JoeSchmo – I would expect Delta to offer at most 100 Skymiles in that situation, not $100 🙂

  5. @ Gary – OK, so we all now know loud and clear that Delta is dishonest and greedy and doesn’t care about anyone but themselves. At this point, rehashing the same thing isn’t going to change anything.

  6. I don’t blame Delta for making the changes. They’ve been getting away with it for years and everybody just kept eating it up. Whether it’s constant devaluations or declining customer service for elites everybody just kept believing the program was worth it. Deltas only lawyers argued in front of SCOTUS that skymiles were worthless. Maybe a few people are starting to see the reality. Every day I’m glad I got off the hamster wheel years ago.

  7. LOL @ Oscar Munoz talking of how to make airline better when he completely mismanaged the Dr. Dao situation….even calling the incident Dr. Dao’s fault.

  8. “ What Delta should be doing is adding first class seats to the extend that demand has grown six or seven-fold, with plans to monetize those seats further. They shouldn’t treat premium cabins as a fixed pie.”

    In context it seems like your argument is “upgrades are rare, so they should add more first class seats.” Why would they add premium seats just so they can give them away as free upgrades?

    It’s like telling a hotel they should create more suites to give them away free to diamonds.

  9. I just got my third status MQM boost from my Reserve card and guess what? Now, everything is going on my Chase Sapphire Reserve. I’m not canceling the card because I will use the lounge access until 2025 – but if you think any charges are going on there, it’s not happening. I will buy a Sky Club membership if need be (I live in DTW so I have no alternatives)

    So I hope this was all worth it Ed and co. I’m stuck with Delta as I live in a fortress hub but you can kiss $90k of spend goodbye. I only had the Reserve card for status building and lounge access. Skymiles are useless.

  10. With all of this I am starting to wonder if Amex pushed hard for these changes. My personal theory is that they have a massive amount of data about who has both a Delta Amex and a regular Amex and also who is approved on the backend for a second account that is not with a Delta branded card if they request it. My thought is that they are sick of paying MASSIVE amounts of money to Delta when they have their own rewards currency and lounges that have to be cheaper to operate then giving Delta a percentage of swipe fees.

    I think Amex pushed for changes that they think will drive people to spend on non Delta accounts and Delta had to basically say yes since you are not going to anger your best customer also if it got out that they were in a disagreement with Amex and the partnership was maybe not going to drive as much revenue it would tank the Delta stock. Since like all big us airlines lately they make most if not all of their profit by being a credit card marketing company.

  11. Thanks for the article. Delta needs all of the bad press they can get! And Oscar Munoz is a complete disgrace. If you don’t like Delta, come to United where we will drag you off the plane! What a quality airline!

  12. I have flown Delta a long time. I have flown over 4.5 million miles with them. Upgrades are a joke . They don’t happen. I can’t tell you the last time I got one .

    The lounges are an absolute disaster. They have to do something.

  13. @Phx_Flyer ,

    I wonder too if AMEX is getting fed up with Delta.
    Remember, AMEX dumped Costco when they became too greedy and wanted AMEX to plug their deficits. I wonder if there will come a time when AMEX dumps Delta too.

  14. Amex should be ashamed of themselves..pAYING FOR a PLAT AMEX CARD AND ONLY GETTING 6 SC VISITS A YEAR??? NUTS

  15. “Chase’s premium travel card doesn’t get lounge access with its main U.S. airline partner United.”

    Actually it does. The JPM Reserve card comes with United Club access as an unpublished benefit.

    The difference is that JPM Chase does not hand out Reserve cards to every Kettle with a pulse and $695. The Amex equivalent is probably the Black card (est. 20k cardholders).

    The easy solution would be to limit DL lounge access to Centurions, though the new spend requirement may have the same effect.

  16. Enough already, Gary. We know you hate Delta, and your efforts to highlight this story over and over is nothing but an effort to generate click baits.

  17. @Ed, You have that backwards. Costco dumped Amex because they got a significantly better offer from Visa. Don’t forget, it was the Costco CEO who told Ken Chenault at Amex that they’re “just another vendor”. It was a major loss for Amex, and essentially forced them to overspend on Delta to ensure they had at least one significant co-brand.

  18. I am a Delta Silver Medallion. After my Romer trip next month, I will be changing credit cards. Delta has really made a stupid decision and has alienated many loyal customers.

  19. I wish I could talk to my dad about these changes. He was a million-miler on Delta (and that includes spending about half his career flying Eastern almost exclusively). I remember about 20 years ago, he was flying a lot of international flights out of ATL on DAL. He said that even though he was platinum, he never got upgraded because there were too many diamonds. I remember how excited he was once: he had to fly to LGW on Father’s Day. I was working (as a co-op) at DAL at the time (mid-90’s). At the time, passengers had to check in at the gate to get on the standby list for upgrades (or at least that’s how Dad understood it). When he did, he told the gate agent, “my son works for y’all and he promised me an upgrade for Father’s Day,” in a joking manner. In the end (probably because Sundays (especially Father’s Day) is not a big travel day for elites) he got his upgrade. Note that he was 6’3″ so the extra legroom was a real treat for him.

  20. When I spoke to Delta and I’m a Diamond member, they told me that the reasoning behind all these changes was because they have TOO MANY elites! They want to “lower” the numbers of elites because “most” elites are getting status via promotions (basic fares or signing up for credit card promotions) and that 90% of elite members are NOT purchasing FULL Y or F fares. They have too many people at their clubs at well. When I asked why we don’t hear about this with American or United they told me they didn’t have an answer. Well guess what? I’m done with DELTA. I called American and they matched my status with Delta (Executive Platinum, One World Emerald), gave me 15 systemwide upgrades (all domestic, Caribbean, Mexico, Alaska, Canada and Hawaii). They lost a good customer that gave them 60K in revenue yearly! Whoever the senior leadership that made this decision should be terminated.

  21. The whole Delta deal means, I will not hunt for Delta flight next year, what happens, happens.

    3 million miler (not that Delta offers anything for 3), I will use my gold status from time to time, but staying loyal to an airline that has no loyalty to me, no more. I have so many better choices for flights to Asia and the middle east where Delta does not compete even in coach.

    Sorry Delta you broke the illusion of actually caring about passengers.

  22. I’m sorry, but you’re missing the main point.

    The airline industry has so consolidated that it is a de-facto monopoly. Delta, United and American no longer really need to compete for customers. They will restrict flights, collude on prices, and slowly we will see flying become more expensive and less pleasant and less reliable. Which is what happens when we stop enforcing antitrust. It’s not ‘short term’ greed, it’s how monopolies operate. What did you expect?

    Private profit does not promote efficiency; competition does. A non-regulated de-facto monopoly will eventually turn into the same thing that we saw in the old Soviet Union.

  23. The Delta police just attacked current MQD Waivers.

    BEWARE: If you cancel your SM American Express Plat or Res – Delta resets your MQD Waiver to ZERO. That’s right, even if you have well passed the $25k Waiver level, you lose the Waiver. Thought you were going to be safe for next year, think again! Be very careful of your timing if you intend to cancel the card. There are NO stated Terms & Conditions regarding an earned Waiver going away, but they’ve nonetheless taken the position that without a valid Plat/Res AmEx you are no longer worthy of the Waiver you earned.

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