Last night I spent an hour on the phone listening to Delta’s take on their frequent flyer program changes. Their spin on the media coverage is that they’re happy with the messaging — the stories aren’t all positive, but that their core message is getting out (“business travelers benefit”).
I don’t think that message is entirely correct. You have to average paying 20 cents per mile in airfare just to break even in miles earned across the entire year. And 20 cents is a lot (remember that the minimum average revenue to earn elite status is just 10 cents per mile — $2500 spending for 25,000 mile status, etc).
Since business travelers are also leisure travelers that’s a pretty high average fare, and business travelers won’t benefit until their average is above that.
What’s more we don’t even know that earning more points will be better under the new system, since we don’t know very much about what redemption is going to look like. Delta hasn’t told us yet, and they say they won’t until the 4th quarter. Each mile could well be worth less.
Despite Delta’s claim to me that they’re happy with the coverage, I don’t think I’ve seen a positive story about the impending frequent flyer program changes yet.
Here are a few pieces that I was involved in in some way and haven’t linked to previously (so excludes ABC’s World News Tonight and my interview with WTOP Radio), some are just a straight-up retelling of the facts (though perhaps a straight up retelling just sounds bad, to me).
- My ABC News Good Morning America appearance talking Delta frequent flyer mile changes. They just had me explain more of the ‘what’s going on’ than offering insight into winners/losers or how to play the game going forward.
- Big Changes to the Delta Skymiles Program: What You Need to Know – my contribution to Conde’ Nast.
- Yesterday’s post on Delta program changes was reprinted at Business Insider.
- Joe Brancatelli‘s column is on the Delta changes and he thinks it’s crazy that Delta shared details of their new planned mileage-earning structure but not its mileage-redemption structure. And he adds:
It’s not for nothing that Gary Leff, a well-known blogger who specializes in points and miles, called the program SkyPesos and the derisive moniker has stuck.
And as an added off-topic bonus, a couple of months later my TV interview on airline fees is still bouncing around and airing on local television stations around the country. Syndication can be better than network, I think! And NPR links to my post yesterday pointing out that despite articles about first class envy, the world trend is away from first class and towards business instead.
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I honestly can’t believe there are a few pieces that you didn’t immediately link to. How is that possible?
Gary: Just burned all but a few of my Delta miles. Looking for a new carriage driver out of DC, particularly to see family in Europe. Too bad. Enjoyed the ride in the 90’s and next decade.
SpyPesos? A typo?
@mark you’re on a roll! 🙂
SPY pesos?
I think SLY pesos is more apt.
Wow, Gary, you’ve done a really nice job of getting the word out. I too am puzzled by Delta’s argument. Based on my admittedly anecdotal observations, the overwhelming numbers of leisure travelers already don’t get anything from Skymiles. They will continue to shop for price and be unaffected by the changes since they never cash out any awards anyway. This program appears to be intended to shed excess Elites — and if you’re flying 25K-plus miles a year odds are extremely high you’re flying for business. I think the real idea is that they figure there’s no need to reward the loyalty of business travelers, since they must fly anyway. However, they can’t come right out and say so for political reasons. Do I have that right? These changes clearly target the frequent flyers in an effort to get them to go away or fly less often at higher price = same income to Delta for less work.
Thanks Gary.
Come on, Delta didn’t honestly think this was going to be warmly received, right? Are they idiots? (Don’t answer that.)
OTOH, considering their coordinated release of the information, maybe they actually did! Seems they have the same PR adviser as LeBron James…. maybe they should have booked a 1-hour slot on CNBC to tell business travelers how great this is for them. Call it ‘Our Decision: You’re Screwed’
Don’t ask me how the SpyPesos typo got in there, I’d swear I copied and pasted the paragraph from the article but it is correct there. In any case, fixed 🙂
I think DL is happy with the messaging because the nuances that you and Joe Brancatelli are pointing out are not making it into the MSM stories, even some of the stuff you’ve been interviewed for. The public is being told this is to benefit business travelers, but they are not being told that earning rates are likely to decline for all travelers and business travelers may be hit the hardest.
If I was DL I would be reasonably satisfied. The business traveler has been told they are the beneficiary by most of the MSM.
Given that the skypesos program will become even less valuable (is that even possible?-leave it to Delta!; this would afford them the opportunity to compete more on price, as they no longer have to put as much cost into the ff program. (though we are missing a key part in the burn ratio which comes out in Q4) Now do I realistically think that Delta would reduce prices because they have less overall cost in their ff program than everyone else? Heck no! But, it could allow them to “compete” more vigorously on routes where there is competition. For example, out of Seattle. This is a shift in strategy and the other airlines will be watching closely. Hopefully we all boycott Delta and it makes a difference. Pardon me while I get the new teeshirts made that say “Anybody but Delta”
Delta invading Seattle was akin to Napoleon invading Russia. With the 2015 Skymiles change, so begins the retreat from Moscow, with the crude and crafty General Parker and the bumbling and vainglorious General Smisek picking off the abandoned spoils of the once proud Delta Grand Air-mee.
I agree with Mr. Brancatelli that the real disgust is in Delta’s move to reveal only half of the changes leaving 6 months before we can see the rest. I travel for business and often book less than 2 weeks out, so I might be OK with the changes… but I’m left hanging knowing only half of the new program. Debating status matching out in Q3 – it’s annoying because right now I can only base my decision on a guess.
@jimltravels- DL will HAVE to compete on price after this mess. The marginal traveler has no incentive to choose them now. It’s a really odd move by them. Almost as if they are trying to make an “elite” program. As if anyone cares…
And I thought the reaction to Southwest’s 2011 announcement of its revenue-based program was negative! Hundreds of customers vented on blogsouthwest, but the storm blew over quickly and Southwest probably gained revenue.
The crux is whether the new program attracts enough new profit to offset the profit from existing customers that it repels. Southwest appears convinced that their new program exceeded that requirement. I am not at all convinced that Delta will.
If you are a high-fare customer, will you choose Delta in 2014 based on greater points earnings even though you have no solid idea what those points will be worth in 2015? I doubt it.
Southwest’s new program made it easy for new customers to compute the value of their earnings. It was 10% of ticket price for leisure fares, with higher percentages for elites and refundable fares.
As Brancatelli says, Delta’s value proposition is a black box until the new redemption levels are announced. The absence of that announcement shows Delta’s competence in running the SpyMiles program to be almost as low as its honesty.
Of course Delta is satisfied – they knew this would get mostly bad press (particularly from the many blogsters who are like the typical small dogs who have lots of bark but no bite). But to those that matter (full fare biz travellers), this will be seen positively.
Of course, if DL grossly devalues in Q4, they could face a revolt. But that’s an eternity away for most people and many will have likely forgotten.
In the meantime, I wonder how many blogsters will be pimping Amex DL cards? That said, Amex might be furious – all those cards could get cancelled if people abandon DL. Might be some decent signup offers coming that pimps like DP can gush over…
Delta’s miles don’t expire and are challenging to use. So there are a lot of them out there. With new earning the rate of growth will slow, but there reamain a lot out there.
This makes it highly improbable that each mile could be worth more after the redemption shoe falls, unless the new earnings are a different currency with different redemption value. Miles will be worth either the same (or far more likely less) in the new 5 tier redemption scheme, at least for the rewards that will actually be available.
Imagine the blowback if Delta had released the redemption details too and an actual value judgement could be made
If you are that tired of DL’s bullying, vote with your feet and go to another airline airline. Hit them where they hit you – in the wallet.
Cancel your AMEX DL card and tell them why. There are a load of other AMEX cards waiting for the taking and without the L’s arrogance towards and contempt for the FF.
You can’t make people respect you, but you can stop them from disrespecting you.
So let me get this straight. Media coverage on this topic is all negative so you put ALL THE LINKS OF JUST YOURSELF up. So there was no other coverage that said anything different or added any value that didn’t involve your bloated ego/face in it?!?!?!
Like NONE?!?!
Awesome. You are the aviation Bill O’reilly of my dreams, Gare.
“Since business travelers are also leisure travelers that’s a pretty high average fare, and business travelers won’t benefit until their average is above that.”
Most ‘normal’ (ie, non-flyertalk) business travelers use miles for leisure travel and family vacations.
Seems to me giving them more points than other flyers when they travel for business will make them happy.
And THOSE are the customers DL wants.
Now retired, and downsizing to a smaller house, I’ve been tossing out lots of old records. I came across a box with printed mailings from all the airline programs I belonged to, beginning with UA in 1981. Among the brochures was one from DL circa 1994, a program I belonged to since ’83 but didn’t use much until a job relocation to Atlanta in ’94. Transatlantic awards included two free business class for 150,000 miles. Zounds!
@bruce – this blog has a broad audience but it’s also my personal blog and in many ways i write it for my family the way i did in 2002 when i started. sorry to waste your time!
@Bruce You are so right, this blog isn’t good enough for you. Why don’t you go read some other blog that’s classy enough for you, and leave this one for us slubs that actually like it “just the way it is” ? 😉
OK – so if I want to use miles for an award next February – I am not going to be able to see what I can do until September? I may be a bit of an oddity – but we do plan 9-10 months in advance if we can to get the premium space (for example, I got VS/DL business class low miles for November in January LAX-LHR/AMS-ATL-LAX). Not sure how that would have worked if we wanted to travel in March…..
@gary nothing wrong with being proud of your accomplishments or even telling your readers about your feats, but at least be more up front. Using a hot issue affecting thousands of flyers as a disguise for an obvious self promo comes off as unscrupulous–and insulting to your readers’ intelligence.
The changes for redemption don’t go into effect until January 1, you should be able to redeem at current rates with the current table through December 31, 2014 for travel through the end of the airline schedule at that time (basically much of November 2015)
I was wondering if the reason delta didn’t reveal the new redemption award chart is because they’re hoping folks will burn their ff miles in 2014 at whatever level they can find now thus leaving less of those miles on the books in 2015. If there are folks out there, like me, who don’t trust deltas “new and improved” award calendar they might be looking to burn miles now for fear of what is coming later. And, delta must make a boatload of money off the Amex credit card because they are rewarding that spend more than the BIS they say they covet.