Delta Shakes Up SkyMiles but Fails to Give The Details Needed to Evaluate the Change Properly

Last week, Delta announced a major overhaul of the SkyMiles program that changes points-earning from a mileage-based scheme to a revenue-based one. Even though I’m not a big miles and points guy, I’ve had a lot of people ask me what I think about the change. Considering how many details Delta has left out, my response can only be, “I have no idea.” But I don’t mind the revenue-based idea in theory.

Delta, like most airlines, has two different kinds of miles. Those used for elite status qualification (called Medallion Qualifying Miles, or MQMs at Delta) aren’t changing at all. The elite status earning method announced last year will stay the same.

What’s changing is how you can earn redeemable miles; those which can be used to get award tickets. Starting in 2015, you will earn redeemable miles based on the fare you pay instead of the miles you fly.

Now, I don’t earn Delta miles. When I fly Delta, they all go into my Alaska Mileage Plan account (because I’m smart like that). But if I did earn SkyMiles, we can use last week’s Savannah trip to illustrate an extreme example of why Delta is doing this.

In the existing program, I earn the number of miles I fly. Last week, that was 1,946 miles to Atlanta, 215 to Savannah, and then the same on the return. That means I’d get 4,322 miles for that trip. Had it been booked in a much higher fare class, then I could have earned a 50 percent bonus to reward me for buying a higher fare. But this one was super cheap. And because of that fact, I would earn far less in the new program. Here’s how earning will work.

New Delta SkyMiles Earning Chart

As a general member, I get 5 points per dollar spent. But it’s not total dollars spent. It’s just on the base fare and any airline surcharge. For my absurdly cheap ticket, the base fare was $5.70. So I’d get 30 miles… if they round up.

Of course, this is an extreme example, but it shows why they do this. I paid virtually nothing for my flight so Delta wants to give me virtually no points. Had I paid $1,000 for my flight, then I’d be getting 5,000 points. And if I’m elite member, I get even more. Silver gets 7 points per dollar, Gold gets 8, Platinum gets 9, and Diamond gets 11. Oh, and if you pay with your Delta American Express card, you get 2 extra points per dollar.

What about partners? Glad you asked. This is where things get complicated… I mean, more complicated. This new accrual method only applies for flights booked under the “DL” code or for tickets issued by Delta (or by a travel agent on Delta’s behalf). So in short.

  • A Delta flight operated by Delta or a Delta Connection partner sold under a Delta flight number (like Delta 80) will earn points per dollar spent.
  • A partner flight sold under a Delta flight number (like Delta 9147 operated by Alaska, for however long they remain partners) will earn points per dollar spent.
  • A partner flight sold under a partner flight number (like that same previous example but sold as Alaska 407) on a ticket issued by Delta or by a travel agent on Delta’s behalf will earn points per dollar spent.
  • A Delta flight operated by Delta or a Delta Connection partner sold under a partner flight number (like Alaska 5768 operated by Delta) on a ticket not issued by Delta or on Delta’s behalf will earn some form of points per mile flown.
  • A partner flight sold under a partner flight number (yep, Alaska 407) on a ticket not issued by Delta or on Delta’s behalf will earn some form of points per mile flown.

Get it? Great. You must have your doctorate. But those last two bullets are a little vague. How will they award for partner flights? All we know is that points will be awarded “based on a percentage of distance flown and fare class paid.” That sounds similar to what they do today, but the way Delta is talking about it makes it sound like changes are indeed coming. What those changes are remains a mystery until sometime later this year.

So what’s the bottom line here? Is it good or bad? We have absolutely no idea. What we do know is that on the whole, it seems people are going to be more likely to earn fewer points when they fly unless they’re super elites buying very expensive tickets. That may seem bad, but there’s one big piece missing. How much will it cost to redeem those points?

Delta has failed to tell us what the award chart will look like, but they have confirmed there will be a new award chart. All we know is the general direction, and that is somewhat maddening. There will finally be one way awards at half the price of a roundtrip (whatever that may be). That’s good. There will be a points + cash option. That’s nice for flexibility but we still don’t know how many points or how much cash. There will be more award availability in the lowest redemption category but there will now be a mind-numbing 5 levels for redemption.

That’s all well and good, but how many miles will we need for that “low” category? The only thing we know is that domestic awards will “continue to start at 25,000 miles, and One-Way Award Tickets will be available starting at 12,500 miles.” If that’s true, then this looks like a devaluation, because you’ll earn fewer points but still need the same number of points to get an award ticket. But even that’s murky, because if Delta makes more seats available at the low level, then it could end up being a good thing for a lot of people.

If this is confusing to you, then you’re completely normal. There are so many changes with so many questions unanswered that it’s impossible to really evaluate this fully right now as a traveler. But what about if you’re Delta?

We still don’t know enough, but in general, this move makes sense. Delta wants to make it easier to get free flights for those who buy expensive tickets than for those who buy cheapies, and this will accomplish that goal. But because of the complexity of the partnering system, it can’t go to something like Southwest or JetBlue where redemption is also based on the dollars of the available fare. So it’s a hybrid that will serve its purpose.

Usually when it serves the airline well, the people who get into the mileage game won’t be happy. If that’s the case, then Delta has probably accomplished its goal.


51 Responses to Delta Shakes Up SkyMiles but Fails to Give The Details Needed to Evaluate the Change Properly

  1. Andrew C says:

    It wasn’t written as “lowest redemption category,” it was “lowest redemption categories” – I suspect that will make a big difference. But in any case, you’re being too kind – we know how this will turn out, we just don’t yet know where on the scale from bad to awful it is.

    • Carl says:

      I saw that distinction. I’m sure they are counting at least two of the award price levels (maybe even three) as being the lowest redemption categories.

      It could really hurt if only the very lowest level is ever available for partners to redeem, e.g. if you are trying to use Alaska or Air France or Korean but need a connecting DL segment.

  2. Olamide says:

    Cranky do that many people seek cheap tickets to get miles? It just seems like such a small lost of revenue plus I thought delta was also tough on redeeming those miles?

    • Noah says:

      there are a good number of mileage runners, but that isn’t really the point to punish them so much as reward others. Mileage programs have changed dramatically over the past few years, and this change is in line with what Jetblue and Southwest have already done. Delta has stated skymiles should be a revenue generator, not a cost center.

      Back in the old days, distance and price were highly correlated. Today, they are not. Airlines price based on demand. So DL has a lot of people who spend a ton of money each week flying short sectors who contribute to more in profit, but do not reap as many award benefits. From a elite perspective, these people can still earn status on segments, not miles. But they get hurt in the award area. Think LGA-BOS ($300, ~200 miles) vs. LGA-FLL ($120, ~1000 miles). *Prices reflect monday morning one-way flights. Is it “fair” to give 5 times as many miles to the FLL customer who is less profitable? There are certainly going to be tradeoffs for Delta and customers.

    • CF says:

      Olamide – I don’t know of many people who do mileage runs just to get redeemable miles. It’s been much more common to do mileage runs to get elite status, but this change doesn’t impact elite status earning.

      • David SF eastbay says:

        people used to do mileage runs all the time to get to the next level to get a free tkt as an example. Once when I worked for TWA a guy flew from BUR to LGB for the min 750 miles that would get enough miles for a free ticket. He was excited as he thought he’d have to fly a greater distance and pay more money.

  3. David says:

    Delta isn’t going far enough on this. Miles flown is a measure of how much it costs Delta to carry you. Fare paid measures revenue. Delta should reward customers based on profitability.

    Take the fare paid. Multiply by a number based on miles flown. The smaller the number of miles flown, the bigger the multiplier. Then alter the multiplier a bit to reward elite members versus others, and also encourage credit card holders.

    If Delta have a long term plan, in 3 years time they will ‘adjust to better meet customer demand’ so that only profitability is rewarded and people flyibg long haul on bargain basement fares get (almost) nothing in loyalty rewards

    • David says:

      Alternatively have a loyalty points multiplier that severely penalises deep discount coach fares versus full fare coach

    • CF says:

      David – Yeah, if they could tie it to profitability then it would be the most beneficial, but that’s very hard to do. On the surface, you would think that someone who paid $300 to go from LA to SF would be much more profitable than someone who paid $300 to go from LA to Paris, but that’s not always the case. Maybe on the long haul flight, Delta had empty seats and that $300 is pure gravy for them. But on the short haul flight, it was full and they weren’t able to sell a $500 ticket because this $300 ticket was sold. The point is that profitability isn’t very straightforward in this industry.

      I agree that awarding points based on yield (revenue/miles flown) would get closer to that, but it’s also much harder to communicate to your average traveler. Then again, this isn’t simple in the first place, so…

  4. Jim M says:

    Sky Pesos have just become the Zimbabwe Dollar of the mileage world. My response? Meh. After a while playing the mileage game is more trouble than its worth.

  5. CP says:

    One thing I don’t yet understand: is it points per dollar spent ON THE ENTIRE TICKET or points per dollar spent on EACH LEG?: e.g., if I buy a roundtrip ticket to LAX for $500, do I get (assuming I’m non-elite, non-AMEX) 5x$500 for each leg, or 5x$250 for each leg?

    • Noah says:

      Its points per dollar spent on base fare. Not taxes or fees. It doesnt matter if you book as one way or round trip, each dollar is only counted once.

      So if your roundtrip is $500 pre-tax and fee, you will earn:
      500 x 5 base miles
      2500 MQM (assuming NYC)
      2 MQS
      500 MQD

      • thor says:

        Each segment and it’s pay/code is computed separately. If one segment is a Y class and another is K class, award miles and MQM will be different.

        Noah, in your example please note that ACTUAL flight miles are.. 4,930.

        Delta has deflated ACTUAL (MQM) miles and reward miles by over 1/2 . Unless you suck up and pay for the American express whereby you can get your reward miles at about 2/3 of what it was and your MQM or elite qualifying miles is still at more than 1/2 deflation.

  6. Matt Weber says:

    I have long believed that the mileage based awards programs were an example of the insanity that is rife in the Airline Industry. Realistically, the Frequent Flyer Program should reward the behaviors that are the most profitable for the carrier, the most. Given that many discounted coach fares yield less than the Available Seat Mile (ASM) cost, rewarding people handsomely for buying tickets that you lose money on is the height of insanity. You really want to incentive your customers to do the things that are going to make you the most money. This is precisely what the Delta changes are intended to do. The pure mileage programs in fact incentivized the bargain hunters, on whom you were unlikely to make money on. To paraphrase Herb, ‘Just Plane Stupid’.

    • Ron says:

      Not so fast. For a profitable flight you need the revenue to be higher than the cost, but if you price each seat above the mean cost per seat-mile then the plane might not fill up. Those cheap fares that are below the mean cost may be the ones which bring the flight above the profitability threshold, if the alternative is for these customers to go elsewhere and for the seats to fly empty. So you do want to reward these customers!

      • Christophe says:

        Well, you might want to thank them for their business, but not really reward them !…

        • Ron says:

          No, no. You do want to incentivize these people. You have a bunch of planes flying domestically with empty seats, so you sell them to mileage runners at a price that’s below the average cost per seat-mile but above the marginal cost, and this creates a small profit. And then you reward these mileage runners with premium seats that would have otherwise gone empty, so the redemption cost is still lower than the profit you made on the mileage running. It is a matter of properly allocating costs — if your revenue management is working right, then mileage running and redemptions should only be possible where your (marginal) costs are very low.

  7. tharanga says:

    I had the same reaction – no info on the partner airlines, no details on redemption. I’ll just add that they’re promising a better web interface for redemption – hopefully that’ll include the partner airlines. What they have now couldn’t get any worse.

  8. Noah says:

    For those people who travel regularly, they will still earn more than others. Therefore, they hold a larger share of miles. While earning is down and redemption prices remain, you might think this is a devaluation. What DL hasn’t said is what will happen to inventory and if it will be easier to get low-level award space (other than moving to 5 tier system).

    I wonder if the long term plan is to peg skymiles redemption to cost of ticket in dollars. Jetblue and Southwest currently do this–a fixed ratio of dollars to points earned, and another fixed ratio of points to dollars awards. Therefore all sellable seats are available for awards, and prices fluctuate the same in cash and points, removing the ability to exploit good awards.

    • Randy says:

      Noah, I believe that if they did this and used the SWA model of points to dollars, it might not be as bad of a drop and virtually unlimited flights to use your points. I am not a SWA FF by any means, but after 5 or so one-way flights, I have enough points to get a decent ticket somewhere. In addition, using partners on SWA to earn points adds up fast too, compared to other programs. It’s funny how they compare this to the Southwest model of points for dollars, instead of miles, but then don’t follow through with the redemption model being the same.

    • MeanMeosh says:

      I wouldn’t say that a pure revenue-based redemption system completely eliminates the ability to exploit good awards; it just adds an extra step in that you have to pay attention for fare sales at the same time. As a simple example, WN currently has a fare of $256 for a DAL-SAN roundtrip for a late April departure. Under their redemption system, that equates to a little over 12,000 miles. That’s a pretty good deal if you ask me, since you are getting an award for half the points cost compared to a saver award at one of the legacies (plus there are no capacity controls, so no gaming the availability of saver awards like DL seems to do).

    • CF says:

      Noah – Delta has said that it will be easier to get low level award space now. We’ll see if that’s true when we can start searching on Jan 1 of next year. But they do say it should be better. And that makes sense if they’re handing out fewer miles.

      On the Southwest redemption system, I can’t see it for one reason… partners. It would be really tough to peg redemption to dollars when partner airlines are involved.

  9. TomTX says:

    All loyalty programs should be based on how much you spend.

  10. Ron says:

    Cranky: isn’t it the case that your Atlanta–Savannah segments earn a minimum of 500 miles each?

  11. JayB says:

    Keep it as complicated as you can, like the fare structure. And, make the customers believe they are getting something for free, even if they can’t figure out what is happening.

    It looks simple, but it isn’t. Base it on something most customers won’t know (the fare and any carrier-imposed fees, but not the total price DOT has tried so hard to make carriers show). And, of course, UA and the rest will copy the program., hook, line, and sinker, plus any more complicated they can think of.

    So the carrier wants revenues. Wouldn’t it be better to base it on the carrier’s profit from the business the customer brings. Don’t need a program for that.

    And, loyalty? Who does DL want to reward: the guy who flies once a year at some outlandish price, paid by a client, or the poor sucker constanly being loyal to DL but who uses due diligence to find the best fares. One ticket, $1,000 or ten tickets, $99 each? DL apparently wants the former. I’d call the latter the better customes.who ought to be rewarded.

    Well, that’s life. But, you don’t need these high-cost admin programs to find and reward your best customers.

  12. thor says:

    1. Medallion Qualifying Miles will now be Mythical Qualifying Miles. NOT actual flight miles.
    2. It’s clear American Express is the puppet master of Delta Mileage program.
    3. Your comparison, Noah, to Southwest and Jetblue are like an apple to a banana… both good but definitely not the same.

    I’ve flown over 1.5 million (ACTUAL) miles with Delta. Platinum last year and either Platinum or Diamond for the past 9 years.

    Frequent flyer programs are (or were)…. based upon mileage.

    Now, Delta has discarded this guide, milepost, standard… null and void and supplanted it with the dollar. This may be the end of the true “mileage” programs.

    My recent flight segment PHX to ATL: 1578 actual miles at $288, M Class

    Current Progarm = 3,174 miles (ACTUAL FLIGHT MILES).
    2015 progarm = 1,440 miles (Delta Mythical Qualifying Miles)

    LESS THAN 50%

    Guess this is what you get when Delta sold it’s soul to American Express. People should be aware that if you use an American Express card, you can almost “make up” the difference for credit miles but NOT elite qualifying miles.

    Makes more sense why Delta has all but trashed relations with their Sky Team alliance members.

    I fully expect Delta will change the lifetime status program next. Not that it’s worth much now as the entire program (mileage earned and elite status definitions) have, devalued by approximately 1/2.

    Ed Bastion and Richard Anderson should be ashamed. I wish the Board of Directors at Delta would cut your compensation in 1/2 and say you need to pay/work twice as much for any awards, which will likely be unavailable but when the board finishes making up the rules, we’ll tell you!

    • Jason says:

      I could very well be wrong ( wouldn’t be the first time), but I’m fairly sure they are not changing the way MQMs are earned. Those will still be mileage based as they are now. I thought it’s only the amount of redeemable Skymiles that is going to be pegged to revenue.

  13. Ron says:

    Cranky, can you explain a bit more about how airlines determine which tickets are profitable (and thus need to be incentivized)? It’s a difficult problem because it involves a hypothetical alternative — how much this seat would sell for if the current ticket were not sold.

    To me it seems that more than trying to incentivize high spending, Delta is just trying to reduce costs by not giving out unnecessary incentives: if price-sensitive travelers are mostly ones that don’t care about miles (mileage runners being the exception), then giving them miles is an inefficient way to earn their business. But that’s a big “if”, because many road warriors are also price-sensitive.

    • CF says:

      Ron – I wish I could, but I can’t. Airlines have a hard time identifying what exactly a profitable customer is. They look at things like dollars spent and miles flown but those are just proxies for actual profitability. Maybe the airlines have gotten better at this lately, but it’s an area that has long needed some real work.

  14. VC745D says:

    I’ve had friends spend weekends doing “mileage runs” and thought, “This is how you want to spend your life?” The same is true of FF programs in general, and now, even moreso. Use up your DL miles and forget it, I say. Life is too short. Forget wasting the time to figure out all the changing rules–flying commercially is too unpleasant to waste any more time on it than you have to.

  15. Maarten says:

    I am a DL Diamond Million Miler and I would like to get other readers’ thoughts on the following options before me:

    1. I could continue to concentrate on DL, I could probably get to Platinum status annually. As a small business owner I am very cost conscious so I will always book lowest fare. On the other hand, a lot of my flying is international so the length of my flights add up.

    2. I am a Lifetime Platinum Elite on KLM/Air France’s Flying Blue, and I could ditch my DL account and pile all my DL and SkyMiles partner flying on my FB account. My question is whether DL will reciprocate the FB Platinum Elite status on their flights (e.g. upgrade to Premium Economy, etc.).

    3. I could change the address on my DL account to my second home in The Netherlands. I think I read somewhere that as a non-US based SkyMiles member, a lot of these new qualification measures do not apply.

    4. Switch completely to AA, where I have Platinum status. At the moment their program is still generous both in collecting as well as using miles. This is probably a matter of time, but the USAir integration may be a sufficient distraction for the next 12 to 18 months to keep this program in the “more attractive” column.

    I would love to get some feedback on these options.

    • CF says:

      Maarten – The changes here only are for redeemable miles, so this isn’t an issue for your elite status question. But on point 3, I do believe that’s true that only those in the US have to pass the Medallion Qualfying Dollar threshold.

  16. Sanjeev M says:

    Its tough to determine what loyalty is. Is it the traveler that flies every week for business (even if its on those $99 fares) or is it the once a quarter JFK-LHR J class ticket that’s $4000?

    My guess is that DL didn’t go to revenue-based for elite status because there’s more to loyalty then immediate spend. The recurrent elite business pays off only in the long run. However in terms of awards the whole thing is complex as it is, so it does simplify things.

    I have heard comparisons to hotel programs (e.g. Starwood) where elite status is based on stays but redeemable points are based on room rate. And then they have 5 categories of redemption. That seems to work out nicely because it’s clear what hotel is in what category, so you know how many points you need to attain to get that stay you want. So I think it’s a lot clearer if DL pegs its flights to 5 categories (e.g. ATL-DFW is always Cat 1: 12500 and ATL-AMS is always Cat 3: 30000, and ATL-AMS-BOM is always Cat 4:40000).

  17. David SF eastbay says:

    Maybe I should be glad when Delta mergered with Western I was lost in the system and never got my Western miles moved to Delta, I just said the heck with DL and built miles on AA/UA so don’t have to deal with all this since Skymiles never seems to have anything nice said about it.

  18. stan says:

    delta has converted airline rewards programs to match hotel rewards programs

    so, at Marriott status is achieved in hotel programs based on nights stayed, so a stay at the JW Marriott = a stay at the Springhill Suites

    however, you’ll earn rewards points based on spend. $400/night at the JW qill get you 4000 points, while $100/night at the SHS will get you $1000

    both earn you 1 night toward status

  19. MeanMeosh says:

    What I don’t really get is how this new system truly adds value for high-dollar FFs, at least until we get more details about how the entire revised program. What I mean by that is, as it currently stands, although you earn more redeemable miles, you don’t earn status any faster by buying up a bunch of full-fare coach/business/first class tickets than you would today, because that’s still based on flight miles. Is a Platinum Medallion really going to be interested in a wheelbarrow full of shinplasters for their SkyPesos account, unless DL is actually serious about improving award availability? Maybe I’m missing something, but it seems to me that if they want to really incentivize higher spend, DL should either 1) make elite status qualification revenue based, or 2) increase the MQM multiplier for higher-bucket fares. Otherwise, I just don’t see the great value proposition – with the caveat, of course, that my opinion could change depending on how DL re-does the award chart and award availability.

    • CF says:

      MeanMeosh – Delta says it will improve availability, so I can see that being attractive. If you fly for business all the time and get a ton of miles, it would be nice if you could actually redeem them for your family to to [insert vacation destination here]. So if this actually happens then I think it would be a tangible benefit.

  20. Dave says:

    All of these programs need to be done away with completely. They do very little to improve the travel experience and are pretty much a rip off for most travelers. Delta and the others need to concentrate more on customer service which in the long run will draw more passengers than any so called loyalty plan. The fares really need to be re regulated. Passengers will then look at the best service and routing rather than how many miles they may or may not gain by flying a particular airline.

  21. Gary Pickholz says:

    you seem to be missing the forest for the trees by focusing only on the US airlines in the Big Three mileage programs.

    For international travelers, each of the Big Three offer partner programs substantially better to the US partner alternative. Substantially better, even for flights originating in the US.

    More accurately, the US airlines have all but given up on competing for the international business traveler (wise decision) and have restructured their programs to capture medium haul domestic travelers and corporate programs that can be locked away.

    For the individual traveler, however, less time should be spent focusing on nuances of Delta and far more on alternative partners within the Big Three program offering substantially better value for the mile of membership.

  22. MVM says:

    Can anyone provide some email address for Delta corporate leaders? I advocate that we put some teeth into our collective complaints by not just talking among ourselves, but making sure the top guns know we mean business (or rather, we mean to pull our business).

    Also,I encourage everyone to contact Delta (identify yourself as a SkyMiles member) and reiterate TPG’s complaints. ALSO — please send your comments regarding your disgust for Delta TO YOUR LOCAL AIRPORT. In my case, Little Rock is trying to build itself as a modern airport with the coolest airlines. Dissing Delta will make an impression on them.

    • Ron says:

      You can tell Bill and Hillary Clinton National Airport (yes, that’s the official name) that if they want my business, they’d better get some airline to fly nonstop to Los Angeles. Seriously, I’d visit my relatives in Arkansas more often if there were convenient flights.

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  24. Carl says:

    As much as anything, the recent changes in the mileage programs show the effects of consolidation and lowered competition in the industry. When there were 6 or 7 major network carriers, the mileage program could be a meaningful differentiator for customers, particular on competitive routes. Now that we are down to three network carriers plus Southwest and a few niche carriers, they don’t need to compete as hard, whether on price or rewards.

    DL has long had the weakest mileage reward program. While many of the elite recognition benefits were good, and DL has the reputation for a superior product (and I say reputation for because in my experience their fleet is horrifically inconsistent, and connecting through ATL can be a roll of the dice, their people do seem happier), most other aspects of Skymiles were very weak. Terrible award availability at low levels and a terrible website. Difficult to upgrade international flights. Terrible partner availability. Almost impossible to find award space to gateways for international trips. No award changes within 72 hours.

    Although unsaid in all the rhetoric, I suspect that the new program will award far fewer program miles in total, so this is about cost cutting as much as anything else. Maybe award more miles to a small fraction of higher priced tickets is an added benefit, but far more important is that they will be awarding far fewer miles. For a 5000 mile cross country round trip, the break even is going to be somewhere around $1100 including taxes and fees. And that’s roughly true for the elite levels as much as general members. since Gold and Platinum today earn 100% bonus and Diamonds earn 125% bonus – the bonuses are going down as compared to the general member. And no fair counting the credit card miles since you can already get them today. So DL will be awarding far fewer total miles.

    It’s not really clear that they have to award more miles for the most expensive tickets. Most people who are buying those tickets are buying them because they have to fly and the flight is already full or they are buying last minute. Will they fly at high fares more often because of the earning structure? That’s certainly not the kind of employee who I want working for me, who would buy a higher fare in order to earn a higher reward on company expense. So to the extent that a loyalty program should motivate additional purchase or additional revenue or share shift, I don’t think the higher reward on higher fares will function that way – the last minute high fare purchaser is buying because they have to go, and it’s the flight that gets them there.

    What will be interesting is if UA and AA don’t match this DL change and elect to remain more appealing to travelers who value their reward points. If that is the case, will they be able to attract meaningful market share form DL?

    It is often said that the mileage programs are profitable for the industry. I’m not entirely sure how they measure that, but certainly if the majority of miles are purchased by credit card companies and other partners, and fewer awarded for flights, then perhaps it enhances the profitability of the program, but does it damage its desirability for customers? Will I be less likely to be loyal to Delta and to use my Delta Amex? Certainly for a customer who travels and has a choice of carriers and values the miles, DL may be less attractive now.

    The final piece of the puzzle the redemption chart, and we don’t know how that will turn out. We do know that it is extremely difficult and expensive to redeem on DL today, and that many other mileage currencies are better.

    I’m not a fan of this, and I hope UA and AA do not follow.

    • Maarten says:

      I think this is a very insightful and good answer/POV. It taps into this conflicting feeling I have, which is that – on the one hand – as a business person I totally understand why DL is doing this.

      The mileage banks are overflowing, and there aren’t enough seats anymore to award all those award tickets and free upgrades as seat capacity has not grown that much (fewer empty seats in general) and the top tiers have swelled to unmanageable proportions. So I get all of that.

      DL is also one of the most well run (as a business): they have been profitable for a while, have made smart investments (I find their product attractive and far more predictable vs. AA) and seem to be doing well. I admire all of that.

      On the other hand, as a DL Diamond MM I am frustrated. I have witnessed the demise of the value of “my” miles, the decrease in my “ROI” on the $$ I directed their way.

      And so (as per my earlier post) I am switching my allegiance to AA/One World where I find more of the benefits that matter to me.

      For me, first and foremost it is about price. I am a small business owner and every dollar counts. If DL does not recognize my loyalty, or recognizes it less so with fewer miles/bonus/etc. due to the fare base I want to book against, and AA/One World is more lucrative, I would perhaps pay up to $1,000 more on an international business class ticket to secure a significant amount of miles towards my status.

      And the reason I am prepared to do so is that I get the “ROI” I am looking for from my investment with AA/One World, which is that I can have my 12-and-a-half year old son (he finds that distinction very important!) fly between the UK, where he goes to school, and the US in business class (more attention to him – more piece of mind for dad).

      I will not ditch DL/Sky Team/Flying Blue. But where they were my go-to partner in the past, they now have become a “maybe yes, maybe not” option which I will consider if AA/One World does not offer me decent fares, or has inconvenient departure times or connections, etc..

      So in that respect, the change in DL’s loyalty program has cost them my loyalty. Will that break their bank? Probably not. But as Carl said, if AA does not match (don’t care about UA…) they may benefit from that. For now they have gained MY loyalty and if a lot of other DL top tier frequent fliers think and act the same way it may lead DL to rethink.

      If however AA and UA follow suit, then I am the one to rethink (again). Would DL then regain the upper spot based on product and benefits? Or would I not care as then truly everyone is the same?

      Only time will tell.

    • Ron says:

      Carl, I think the idea is not so much to get people to buy higher fares for the miles, but rather for those people who need to buy a high fare anyway to book their flights on Delta rather than on a competitor. If indeed the extra miles cause the high revenue, last minute crowd to shift their business to Delta, expect the competitors to quickly follow suit.

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