I’ve had a day to digest Delta’s changes, and crystallize my thoughts as I’ve talked to a variety of television, radio, and print journalists about the revenue-based changes that Delta is making to its frequent flyer program.
I shared the guts of those changes yesterday, but having given them further thought I think I have a bit of a clearer take.
We don’t know yet just how bad they are, because Delta won’t release full details. But they certainly aren’t good for the vast majority of flyers — even business travelers whose tickets cost an average of 20 cents per mile or less. (And even those paying more could still wind up coming out far behind when we see the scope of changes Delta makes to their new five tier award chart to be unveiled later in the year.)
Here are seven thoughts that I have crystallized more clearly since Delta’s announcement.
- We can’t really understand the impact of Delta’s frequent flyer program changes based on the earning details they released yesterday. We still have just a sketch of what redemption changes will look like. A frequent flyer program is half earning, and half redemption, and we only have half the picture. Still, I’m guessing it won’t be good. (Delta is going to be giving out fewer miles from flying, and that should be deflationary, but they’ll still sell miles to American Express and I’m not betting on lower prices.) If there was good news, we’d be hearing about it. Instead, Delta tells us we’ll have to wait until close to the end of the year to find out what they’re going to do. They’re making changes to the award chart, but they’re secret changes. Members will be earning miles throughout this year to redeem next year, and Delta won’t tell them how much those miles will be worth.
- Delta’s most frequent flyers are hurt the most by changes to Delta’s earning structure. This is something I’ve been mulling over quite a bit after Joe Brancatelli pointed it out to me.
Elites have to spend more than general members in order to ‘break-even’ and earn the same number of miles next year that they have earned in the past.
- The changes to mileage-earning are twice as draconian as the changes to elite status qualification. Delta changed their elite status program to require spending of at least 10 cents per mile in addition to requiring specific mileage flown to earn perks and recognition. A silver has to spend at least $2500 in addition to flying 25,000 miles, a Diamond has to spend $12,500 in addition to flying 125,000 miles. In order to break-even on the mileage-earning side, they’re doubling that bar to ~ 20 cents per mile. 10 cents was considered revenue-based for elite status, and most frequent flyers (who aren’t mileage-runners) will probably make it). Break even for points-earning is an astronomical figure.
- Delta’s portrayal of how many points you earn is exaggerated. I gave Delta’s rendition of earning yesterday, with ‘2 extra points per dollar’ for paying with a Delta co-brand credit card. But that’s not really a fair characterization. You earn 2 miles per dollar with a Delta American Express. But you give up the points earned from a different credit card. It’s not really a part of the earning structure for flying. And you’re better off giving up 2 Delta miles per dollar and earning 3 American Express Membership Rewards points per dollar (that transfer to Delta) with the American Express Premier Rewards Gold card, or earning 2 Chase Ultimate Rewards points per dollar with Chase Sapphire Preferred.
- Skymiles is opting to make their program even more complicated than before. Going to five redemption tiers amazes me. I imagine the decision is driven by technology challenges and that they really wanted to do dynamic award pricing based on real-time revenue inventory (price of award varying based on flight of the specific flight booked) but that this just ran into too many hurdles.
- For now, low fare flyers who will do badly under Delta’s revenue-based changes can credit their miles to Alaska Airlines Mileage Plan in order to still earn one point per mile flown. Delta and Alaska are ‘frenemies’ with Delta encroaching on Alaska’s Seattle hub even as they’re partners. And Delta may twist other mileage programs into not awarding miles at all, or at a reduced rate, on cheaper fares. But looking to Delta’s partners to credit Delta flights is likely to be a good strategy for those who come out behind with Delta’s revenue-based revamp.
- Pushback matters, whether or not Delta will rollback any of their changes. United just made big changes to their award chart, they won’t follow Delta quickly. American and US Airways are busy integrating their airlines, my bet is they won’t follow quickly either. Instead, they’ll watch how customers react to the changes Delta has made. So if you don’t want other US programs to follow, you need to patronize programs that reward the time you spend up in the air. We can seek refuge with non-U.S. frequent flyer programs for awhile even if all the US programs went revenue-based, thankfully, but the trend needs to be met with resistance now.
Delta runs a good airline by US standards. But now more than ever, it’s hard to justify a focus on Delta Skymiles as a preferred frequent flyer program unless you live in Atlanta or the Upper Midwest. There, of course, you may find that it’s worth giving up a lucrative frequent flyer program for non-stop flights and frequent service.