At Frequent Traveler University, several of us were on a panel about the future of the hobby and what to expect next. The big elephant in the room for many has been revenue-based frequent flyer programs. I worry about them less on the earning side (although it will mean fewer miles for me from flying but I expect that non-flying activity will remain a significant part of the hobby and a hedge against these changes) than I do on the burning side (I want to continue to leverage the value of my miles by getting deeply discounted premium cabin international awards).
Randy Petersen talked about the Delta Skymiles changes – where they are shifting next year to accumulation based on the cost of a ticket, but merely adding award redemption categories rather than going revenue-based (number of points for a ticket based directly on the market price of that ticket) – and said that Delta was going to go revenue-based on the redemption side but one of their focus groups towards the end of their process scared them out of it, business travelers who all wanted to get value for their points instead of a fixed value per point. They were worried an important customer segment would defect if they went all the way revenue on the mileage burning side of the equation.
Randy also said we’ll see this change to pure revenue-based redemption eventually from Delta, that he expects the Skymiles changes aren’t done and that they’ll complete the project in the next few years.
I see those two claims as a contradiction, and it leads me to think that Delta’s reason for not going revenue-based was closer to the story I’ve gotten (second hand) all along that Delta wanted to go revenue-based redemption but had challenges with the IT.
They weren’t going to do a transparent fixed-value per point. They were going to roll things out at least six months earlier than they did but they couldn’t make dynamic (and opaque) award pricing in miles work correctly.
And they kept the award chart secret when the revenue-based earning changes were rolled out as much because they wanted to limit information to digestible pieces in order to have their messaging get through (high spenders rewarded more) as because they hadn’t actually finished piecing together what the chart looked like.
Despite big reactions to changes in the past, and like American, they had become insular enough about the changes after years of focus grouping that they were shell shocked by the reaction to the notion that they were hiding the ball on the changes. So they relented and quickly finished up the chart for travel to/from the US (only).
Now, Randy (along with a handful of others) had been briefed on the changes by Delta in advance under a non-disclosure agreement (or so Delta tells me). So he may know more than I do on this.
I expect though that what will happen is that the next couple of years will be crucial – because Delta will have real empirical evidence one way or the other about the efficacy of their changes, and that will inform their decision-making on whether to go all the way or not. And it will inform other airlines about their own direction, too.