New Commenter ‘AtlantaAnne’ describes herself as “a marketing professional whose expertise lies specifically in travel loyalty programs” and was all over the comments across a variety of old posts about Delta SkyMiles moving to revenue-based mileage earning in 2015 arguing that the airline is making the right strategic decisions, that Delta rewards high value customers.
…I actually applaud what delta is doing here, which is rewarding their high value customers and preserving the integrity of the (high value) in-flight experience.
When the flood gates are open and the redemption threshold is too low, the quality of the premium travel experience is diminished.
Tying mileage accrual to consumer expenditure (MQD) within the airline is the right thing to do. Miles accrued via a credit card all all fine and dandy, however those miles do not accurately portray a Delta loyal traveller, rather a person who carries and uses an Amex that is co-branded with Delta.
In my loyalty projects, I typically focus on rewarding the high value, high loyalty customer first…. And then trickle down the ladder, providing a lower tier of rewards to a less valuable, less brand loyal consumer. Make sense?
Sloppy Thinking Leads to Confusion
First, the idea that “the flood gates are open and the redemption of the threshold is too low” having anything to do with the premium travel experience completely mixes up the difference between redeemable miles and elite status — something people do often because frequent flyer programs are really two separate programs (benefits for frequent customers and free flights) under the same banner.
The rate at which customers earn miles on their tickets that can be used for free flights does not compete in a material way with the benefits that an airline awards to its regular customers.
Now, I could stretch the argument for AtlantaAnne and say that by rewarding customers with fewer miles, those who still have miles will have an easier time using them (less competition for award seats) but that’s not really the case since Delta isn’t limiting redemptions available to partners and isn’t reducing points-earning from their co-brand credit card. Indeed, they’re the opposite approach because elite flyers no longer get access to additional saver award space like they used to.
In fact, someone who carries an airline brand in their wallet and goes to it day in and day out is a loyal customer which is why Delta re-upped their $2 billion deal with American Express, and why when the airline is awarding fewer miles for travel the miles earned via credit card spend are relatively more important rather than less.
Delta Isn’t Really Rewarding High Spenders More
Delta isn’t actually rewarding their high value customer which their revenue-based changes.
They’re pushing up mileage earning for a small subset of their customers (although they’re capping that earning for the most expensive tickets) while they’re pushing up the cost of awards too.
There will be some customers who net out even, and a miniscule subset who come out ahead, but the numbers suggest that the vast majority of customers — even relatively high spend customers — come out behind.
Delta’s change to revenue-based elite status requirements means you have to spend a minimum of 12 cents per mile to earn status.
Now, if Delta had set the threshold at about 14 cents, folks spending more than average would earn more miles than average and folks spending less than average would earn fewer miles. But that is explicitly not what they did.
On net they are rewarding far fewer miles for flying than before, including to customers with above average spend.
Someone spending 18 cents a mile on tickets with Delta is spending 50% more than needed for revenue-based status, while earning fewer redeemable miles than before.
And with awards becoming more complex, with more tiers and with the elimination of stopovers, their miles likely won’t go as far either.
There are Reasons for High Spend Customers to Fly Delta, But the Mileage Program Ain’t One
Even if someone was focused on earning the most number of miles, Delta doesn’t offer a compelling value proposition. United basically aped the Delta mileage program offering the same mileage earning but with points that are worth a whole lot more.
Delta still lags behind because:
- They don’t have an award chart and make no promises about what an award is supposed to cost
- They do not offer international first class awards
- Their partners offer on average a lower quality inflight product, less award space, and fewer route options than counterparts in the Star Alliance
- Their award pricing engine is broken frequently charging more for award tickets than they’re supposed to (at least going by what the chart used to say)
The reasons to choose Delta have nothing to do with SkyMiles, which is the weakest frequent flyer program in the US among programs with international partners — which is true whether you’re earning on expensive tickets, cheap tickets, or through non-air programs.
You fly Delta because you live in one of their hubs or the Upper Midwest and they offer the best frequency and connectivity. You fly them because they have the most inflight internet including their regional fleet. You fly them because they’re a reliable airline operation. These are all things independent of miles that may appeal to a high value customer. The area where they truly lag is their frequency program.