In case you missed it between the 787 grounding and American’s new livery, Delta made a subtle but important change to its elite qualifying structure beginning in 2014. How much you spend will now be taken into account. While some won’t like this change, those are the people Delta wants to stop rewarding anyway. I like the idea, but there are some issues with how it’s being implemented.
The current method for qualifying will remain in place. You need to either earn a certain threshold of Medallion Qualifying Miles (MQMs) or take a certain number of Medallion Qualifying Segments (MQSs). There will now just be an additional threshold of Medallion Qualifying Dollars (MQDs) that has to be met. Here is how it breaks down for 2014.
The key here is in the calculation. What qualifies as an MQD and what doesn’t? That’s where we see some problems.
- Only fares and airline surcharges count toward qualification. Government-imposed taxes don’t count.
- Any flight sold under the Delta code counts. This includes Delta, Delta Connection, and any codeshare sold under Delta’s name.
- Any flight on a ticket sold by Delta counts regardless of the airline. That means you can buy from Delta or the ticket can be issued by a travel agent under the 006 ticket designator. (You can’t just issue anything, like a United roundtrip, on 006 ticket stock – there has to be a valid Delta segment in there.)
- Some consolidator and bulk tickets won’t earn any MQDs. Ancillary purchases (bag fees, change fees, etc) don’t count either.
- You can forget about all this if you have the Delta Amex card and spend $25,000 in the year. Then the MQD requirement is waived.
That’s the basic structure, but it does leave some questions. What if you buy a ticket on another airline that includes a Delta segment but it’s a single fare? How will it be pro-rated? That may be a minor concern considering how many people do that, but there is a much greater concern.
The Joint Venture Problem
Delta has a lot of joint venture partners. That includes Air France/KLM and Alitalia in the Atlantic. Of course Virgin Atlantic will have one as well soon. And there’s Virgin Australia in the Pacific. I think there might be some others as well. A joint venture here means that Delta isn’t supposed to care which airplane you fly, the money will be the same either way for Delta. Yet if you buy a ticket from Paris to the US on Air France, that won’t count toward MQDs and that’s a bad, bad thing.
I’m going to assume that this is simply because they don’t have the revenue tracking systems to implement this properly, but this could present some real issues for travelers.
Time for Math
Let’s forget about that for a second and do a little math. The ratio here is that you must spend at least 10 cents a mile for the minimum number of miles required for each level. In other words, if you fly 25,000 miles, you better spend $2,500. But if you fly 45,000 miles, then you still only have to spend $2,500 to qualify for Silver. But since 50,000 miles qualifies for Gold, then you have to spend $5,000.
For most elite members, this shouldn’t be hard. I mean, if you’re silver, one roundtrip in business class internationally will qualify you straight away. Heck, it might qualify you for gold too depending upon how much it is. Let’s say you don’t fly like the big ballers, and you do a monthly roundtrip between New York and LA in coach. That’s about 60,000 miles assuming no bonuses and that qualifies you for gold. Now you need to spend about $415 per roundtrip plus taxes and fees to qualify, so let’s round up and call it $500 even though that’s probably too high. That’s not out of the ordinary by any stretch in today’s pricing environment.
Or let’s say that you fly weekly from LA to Vegas. Assuming you get the 500 mile minimum earning, then you’ll also be gold. And you’ll need to spend under $100 per roundtrip to qualify.
The Losers
Who gets left out here? It’s those people who are trying to game the system to get maximum value. Those crazy mileage runs that net a ton of miles for cheap? Those aren’t going to cut it anymore. People who are always on the lookout for some super cheap fare to earn a few extra miles during the year might find themselves out of luck. And that seems completely fair to me.
It also leaves people out in the cold who fly other airlines, even joint venture partners. That doesn’t seem to fair to me at all, and it should go beyond just joint venture partners. If you can earn MQMs on SkyTeam airlines, you should be able to earn MQDs as well.
Excluding the partner issue, will there be some corner cases who find themselves in trouble despite doing everything right? I’m imagine so. Hopefully Delta can look at those on a case by case basis. This goes into effect for the first time in 2014, so Delta will want to watch closely to see if there are any unintended consequences. But I don’t expect there to be many.
[If you have more questions, Delta has set up an FAQ with some answers.]
63 comments on “Delta Introduces Medallion Qualifying Dollar Hurdle for Elite Qualification”
It seems that people who are Delta FF members, but go on an Air France operated flight using an Air France issued ticket will not see the money spent count towards the MQD threshold. This seems like a remarkably bad idea.
The most obvious conclusion if that Delta FF members will make much more an effort to get anything issued on Delta ticket stock, with the consequence that when things go wrong (weather, technical faults, etc), it’s Delta that ends up liable for fixing a passenger’s itinerary
Forgot to add – if Delta can’t track a monetary spend on tickets, why take this approach at all ? Why not instead just have a multiplier for miles based on ticket class. If you fly full fare Y economy, you get 100% of miles flown. If you fly part discounted economy, you get just 50% of miles, and deep discount you get 25% of miles flown. Much easier to solve from an IT / systems viewpoint, and still kills off the mileage runs and all the non-profitable people with elite FF membership.
I wonder how the accumulation partners feel about this?
Obviously the largest category – the credit card issuers – are covered, the encouragement to use the card is there. Any high spending / infrequent flying card holder they buy miles for is still covered.
However, in terms of the other partners (not just airline, but hotel, car rental, etc), this means the points they are buying are worth somewhat less. There are going to be a segment of collectors who will care a bit less whether Hotel A offers Skymiles and Hotel B does not. Which is what Hotel A are really paying for in the first place.
Have I got that right? I guess same concerns will come from airline partners?
Most FF programs don’t provide elite qualifying miles or points for hotel or car rental partners, so it really doesn’t change anything in that respect. All you got were a few extra miles before, which you’ll still get. Where it DOES make a difference is with SkyTeam alliance partners if you can’t book the flight under a DL flight number or get the ticket issued with a DL ticket number.
Mark – As MeanMeosh said, this doesn’t really impact non-air partners because those almost never qualify for elite qualifying miles. But for air partners in SkyTeam, I think there could be some concern. Still, they aren’t going to really care unless they see a major impact on the business. Every airline does its own thing for frequent flier programs, so I imagine they just take a wait-and-see approach with these things.
Yeah its weird that DL is not including AF/KL/AZ/VS on this. Especially since high dollar international business class spend is the kind you want, even if its on your partners.
I would have thought the requirement would be spend $X OR fly Y miles/segments. Not both. As mentioned the dollar limits are not that high so people who are serious about status and fly for work will still make it no problem.
i’m platinum on delta, and if my travel schedule remains the same this year, i’ll easily make that again. if my travel habits change there could be challenges.
however, i think that this really affects the skyteam alliance. there seems to be no benefit to using partner airlines anymore. could the alliance crumble, or perhaps trigger similar restrictions from the non-delta airlines? we’ll see…
Seems like the mileage runners are probably racking up spend on the Delta card anyways, especially if they can earn MQM on them. I really don’t see what this adds to Delta besides making someone up top feel like they’re not being gamed by mileage runners.
What would be nice to have is MQD as a qualification metric. If I spend X, they’ll give me gold. That would be good for short haul, last minute flyers. Heck, if you make MQD thresholds before MQM thresholds, i’d argue that you’re a better customer for delta as you’re giving them higher margins. If i’m flying CVG-LGA on last minute $1,000 fares with no service. That should be better than a discount first ticket for $1,000 from LGA to MCO connecting in ATL.
It seems to me that it’s a fair system but, as others have said, not earning dollars on SkyTeam members is problematic. I’m elite on Delta but try to fly Air France when going international and it’s typically easier to handle special requests (meals, kids) by booking the flights through Air France’s own website.
Wouldn’t the majority of SkyTeam partner flights be available under a DL codeshare flight number and/or available via delta.com on a DL ticket number anyway? I had an extreme example several years ago where I had to fly DEL-ICN-LAX-DFW-ORD-DEL, no mainline DL flights anywhere in there, and I was able to buy the ICN-LAX segment, operated by KE, under a DL flight number. Seems like the majority of partner flights would thus be unaffected.
Where I can see this being a problem is if you are out of the country for an extended period of time – for example, a one year work assignment to Europe – and use SkyTeam partners exclusively to build up status. In this example, I’d imagine intra-Europe flights on AF wouldn’t be available under a DL flight number or with a DL ticket number, so you’d be screwed. Unless, of course, you could earn status on Flying Blue and then just use reciprocal privileges on DL (easier said than done, I know).
MeanMeosh – No, there are plenty of routes where you can’t buy the codeshare but more importantly the fare may vary dramatically. I just looked in Sabre at July 14 (random summer day). LA to Shanghai shows plenty of availability on China Eastern but the Delta codeshare shows no availability.
The joint venture partners might have things tightened up a little better but there are still issues.
Agree – recently converted to Delta and made platinum the first year by flying Delta domestic, JV and Virgin on transatlantic flights and AF from Paris to Asia a couple of times. The total spent was way beyond 15k with several long-haul business class ticket, yet only 5k of that was on pure Delta. It wouldn’t work for me with the new system.
BA has a better system with tier points for more “global” travelers… It works across the alliance, and rewards spending indirectly. Still gold there and probably shifting all flights back to Oneworld next year, bye bye Delta.
Beyond that Skyteam is really bad compared to OW or Star: I flew Korean from Asia to the US, biz, and it did not help much to build status on Delta…
“””””….those are the people Delta wants to stop rewarding anyway”””””
That says it all.
Another group that DL “wants to stop rewarding” are those who qualify for status by segments only. The Diamond-elite members who earn the status with only 35 trips (140 segments) because they’re based in JAX, TPA, CHS, CLT, etc. and start every trip with a connection in Atlanta will have to pay an average of ~$350/trip. Not outrageous, but that’s more than many of the flights that are available now.
I agree. DL should change segments to mean one-way trips. While it is beneficial for those of us trying to make status, it doesn’t make business sense. It encourages people to choose flights that connect (which may cost DL more money) even if its not as convenient. There is no greater benefit to DL for you connecting when there is a non-stop option.
Totally agree here.
Living in Atlanta I have nonstops on Delta almost anywhere. Why should someone in Birmingham, AL or Jacksonville, FL get elite status quicker just because they have to connect through Atlanta?
The further irony is that those connecting through Atlanta are usually paying less than those of us here in ATL. On the face of it, that makes sense (they are “paying” connecting passengers for their inconvenience) but in these cases it is still fewer dollars in DL’s pocket.
JM
The reason Delta needs to reward flyers that connect is that someone that flies out of a non-hub usually has to connect. I could make AA, UA, US, or DL my carrier of choice. It equally inconvenient to fly any of them. If DL were to decide to take away segments as a means of obtaining elite status, I’d just pick another carrier.
Would a Diamond in ATL start flying AirTran or take connections everywhere because DL rewards people living in Jacksonville or Birmingham get more segments? Doubtful
Screws the front cabin/high margin/low handling cost customer, who makes the spend threshold but not the MQM or segment threshold (like today, BTW).
If I understand correctly, flyers today do not earn status by simply spending. So anyone “up front” who is making the spend threshold but not the MQM/MQS isn’t currently elite. Did I understand correctly?
It’s also irrelevant. Someone spending money upfront is already getting the perks of status; after all, they are spending the money on first or business so the biggest perk of status, namely free upgrades, is moot.
The reality is that the legacy carriers are increasingly looking to snag individuals who are going to be paying for J tickets straight, not for people who want to upgrade into them. The frequent flier themself is not necessarily the money maker they used to be, and from a profit margin standpoint, some may actually be money losers.
Honestly computers and the ability to microanalyze profit and revenue on a pax by pax basis has signaled the end of the royalty of frequent fliers. More and more airlines are realizing that their frequent fliers are often not worth the significant extra investment.
I qualified for silver on Delta last year based on just two very long international round trips. Total cost was around $2800, not sure how much of that was taxes. So I may or may not have made the cut if MQD were in place. These definitely were not mileage runs, but I did look for the best cost/convenience option. Am I the kind of person Delta wants or doesn’t want to reward? I don’t know. I know that for me, miles and elite status are a distant third after convenience and cost, so maybe there’s no reason for them to give me miles…
At $600 a throw close-in for Shuttle tickets, an average of monthly, one would spend more than twice that and never come close to a threshold. Who wants the business?
see this chart: http://www.google.com/imgres?imgurl=http://ourpax.com/wp-content/uploads/2012/04/Loyalty-matrix.png&imgrefurl=http://ourpax.com/uncategorized/ffps-stop-rewarding-the-wrong-customer-get-the-experience-right/&h=866&w=886&sz=255&tbnid=vh3Z0zj41eqL3M:&tbnh=91&tbnw=93&zoom=1&usg=__tjOSIi5c-QMDi7InN0Cb80iiYbE=&docid=NWJe8_ulvOkt3M&sa=X&ei=4IL9UMmPJoP-qwGtzoGADg&ved=0CHQQ9QEwBw&dur=304
It makes me think that I should start off 2013 by joining AirFrance’s frequent flier program and earn there (especially because I fly a lot in Europe). Any downsides to this approach?
BRog – it depends on whether you want upgrades on domestic flights. If you’re in the AF program and you’re doing a lot of domestic US trips on Delta, you won’t get the free upgrades. But if you’re doing mostly Transatlantic on AF, then there are advantages to being in Flying Blue instead anyway (like better award availability).
“It?s those people who are trying to game the system to get maximum value. Those crazy mileage runs that net a ton of miles for cheap? Those aren?t going to cut it anymore. People who are always on the lookout for some super cheap fare to earn a few extra miles during the year might find themselves out of luck. And that seems completely fair to me.”
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A major blow the individuals that do this; multiple, unnecessary segments racking up tons of miles they don’t deserve. Weekend fares from Timbuktu through Kalamazoo and a stopover in Waterloo. That’s about 3/4 of the people who post on flyertalk.com
I’d be curious how much money DL makes on these people though. Realistically, they fill seats that wouldn’t otherwise sell. And how much more expensive is it to handle a gold over silver or silver over no status? Is it really more than the spend on “mileage run” flights.
I understand DL wants to weed these people out, and that is fine, I’m just curious what the effect would be between lost direct revenue (not mileage running) and lost indirect revenue (non-elite may not be loyal)
Handing out status is a very expensive proposition since it discourages people paying for first and business class. After all, why pay for those when status, in many cases, can lead to free upgrades? One of the biggest complaints at flyertalk is the “drying up” of upgrades; the reality is however that what airlines are doing are getting better at matching the supply of seats with the demand for paying first class customers. If a flight is leaving with almost nothing but upgraded status pax in J, then those seats are almost a waste.
This perverse incentive where individuals are discouraged from paying more in order to qualify for “free” upgrades from the standpoint of the airlines is frankly kind of ridiculous. Your talking about someone paying anywhere from a couple hundred to a couple thousand less per ticket.
Timbuktu – not a good travel destination now – it is in Mali, and currently overrun by islamists.
Is it really worth it to alienate JV-fliers in order to squash the mileage running crowd?
I like that DL is going this way but it still doesn’t address those that travel more infrequently but on very expensive last minute fares. For example, I often travel MSP-YYZ. That’s only a 680 mile trip or 1360 R/T. When I make that trip it’s at best 5 day advance purchase. Usually the fare is $1000. Lets be generous and say $200 is taxes. If I go once a month that’s $9600 MQD per year but only 16,320 miles. Although I’ve spent enough to be Platinum my miles and segments still keep me out on even silver status. Delta needs to have something for the high profit traveler that says regardless of miles you’ve earned status on what you spend.
I’ve griped about this for years. A friend of mine travels to Thailand for work a few times a year. He easily gets platinum, or diamond, every year due to miles. Meanwhile I’m lucky to get gold traveling in USA/Canada but travel many more segments and my gross fares each year are much higher. The only system that can’t be games is one that is 100% dollars spent.
Exactly.
Completely agree with this. I spent over $25,000 on fares in 2012, however only had enough miles/segments to make silver. Perhaps delta feels the “high profit traveler” will continue flying delta regardless of whether or not they are rewarded with elite status.
At least you can get their Amex and spend $25k, which isn’t really all that hard to do if you charge your groceries, utilities, and taxes to the card.
Also, DL really reduced the MQM you earn when you buy a ticket on any SkyTeam carrier. You get the feeling it’s really not a team at all. I might have to get status on another carrier starting in 2014.
JV may be “metal neutral” but hardly “mileage neutral”.
1.Only fares and airline surcharges count toward qualification. Government-imposed taxes don?t count.
The above will be interesting and cause trouble I would think. Except for Latin American Delta’s fuel surcharge shows on the ticket as a YR tax. If DL is only looking at fares and surcharges (which show on ticket as a Q charge and is included in the base fare), will they also include the YR tax amount since that goes to the airline and not to any government?
A roundtrip from the USA to say Dubai is about a 1000.00 fuel surcharge coded YR in the the tax area. That is a lot of money going to DL which should be taken into account and not treated as a ‘government tax’ to be excluded.
Another point is now flyers will start paying attention more to just how much of their ticket price is taxes since those will not be included.
it probably would have been easier for us if DL just included tax and raised the $ qualificaitons…chock up the tax differentials (international vs domestic especially) as system inefficiency and maintain more simplicity
Who cares? I dont fly Delta anyway…..There are other modes of transportation…Doesnt Delta and the lot get it? They arent the only one around any more…….Have you ever heard of cars (like the one in your driveway), Amtrak If you want to take the train, Geyhound like the bus system if you have time….Lets face it Flying Aint what it USED TO BE
no it isnt, despite record fuel and other costs, ticket prices are down since 2001 and even more since deregulation. It may not be glamorous, but its cheaper. And DL doesnt care if there are other modes of transportation, they care if they are profitable, as all companies should. The idea of fighting for marketshare is outdated, the profit imperative has finally come to aviation
Have fun taking Amtrak or Greyhound to London or Tokyo, or taking the three days to drive your car across the country instead of a 5-hour transcon flight. And yes, in many ways flying “ain’t what it used to be,” but most tend to forget that in the glory days of air travel, flying was so expensive that only the very wealthy or those with extremely generous expense accounts could afford it.
Ask any Eastern/Branniff Employee how well their company is doing?
So my travel agent says: “Wow! Look at that great $99 fare I just found you!”
I say: “You’re fired! You knew there was that $1,100 fare there, and you took the liberty of wrecking my hopes of getting status!”
Please! There’s gotta be a better way to reward customers for their loyalty, which, I submit, often has little to do with how much they spend.
…just my 2 cents, but Airline reward programs should be based on $$ spent. I think the whole frequent flyer concept is going bye bye.
Had it been possible in 1981 to automatically track revenue, that would have been the basis.
Also… What makes a loyal customer? I’m sure most businesses care more about how much $$$ you spent overall then how many times you shop their.
Not really. High spend less high servicing and channel costs can make for a poor customer PNL and value.
Don’t forget the other blow to SkyTeam partners: the mileage chart changes.
50% MQM for all Korean Air economy fares starting 3/1 (E, H, K….the normal ones. Not that super cheap Q one).
FML. I am based in Korea and kept my SkyMiles and just made Silver last year.
I expect American is contemplating a similar move. What’s unfair is to not include change, baggage, etc. fees. Revenue is revenue, regardless of whether it’s butt-in-seat or not.
Dan – My guess (and its only my guess) is that adding baggage fees, change fees is 1) difficult to track and 2) since card holders are exempt from a first or second bag fee (silver with Amex gets 2 free bags) and gold, plat, and diamond get 2 free bags in Y, it’s a fee paid mostly by non-card holding non-elites, which are the customers DL is least interested in.
Bye Delta. I’m taking my business elsewhere.
I’m very concerned when any business feels they need to “weed out” customers. If a traveller is loyal to them…why worry about how much they paid to patronize your airline? It can’t be because there’s no room up front…just got back from San Antonio…both flights were offering $75 upgrades at the counter. An unused seat is a non-revenue producing seat, plain and simple. So Delta’s going to punish people who do the research and find cheaper fares?? That money goes into their coffers like all the rest of it…I fail to see a problem with that.
You must be pretty upset when you go to a sporting event and there’s empty seats near the field and you’re up in the ‘nosebleeds.’
Believe it or not, there are actually passengers who really do purchase FC tickets, so when an upgrade of “just because” would make myself irate along with many others in the FC cabin as well.
I spent the last 12 years of my working career doing the big bucks flights on Delta (3-4 $4000-$5000 a trip full Y class) that got me my million miler status and am now at 1.3 million. After retirement, my trips will drop to a couple a year to asia. Deltas reward was lifetime silver which gives me none of the elite perks (fast security, free economy plus…..) It now looks like the $5000 MQD dollars will keep me from ever making Gold again…
Good. You’re not spending that kind of money anymore. Why should you continue to be rewarded for it?
Perhaps loyalty to Delta for 12 years and 1,300,000 miles of actual travel? The $200,000 or so that the fares brought them?
Delta now seems to think that past loyalty, when there were plenty of other choices, is not worth anything. This now will make me utilize my 3,000,000 miles on free tickets and then dump them like yesterdays garbage.
Weeding out the “over-entitled”, as UA’s CFO would term them.
Consider this policy change a litmus test for moving towards a 100% spend-based reward/elite system. Within five years, you will no longer see mileage tiers or segment tiers…only spending tiers.
Last year I missed gold status by about 7000 miles. As I understand it my rollover miles will count to status this year but since I don’t have the MQD’s to go with them I am no closer to status. It seems they just killed the rollover part of the program.
HINT!! irregardless of where you live, if you initiate the DELTA FF account using a European address, thereby opening a European Delta FF account, these new Dollar Limits do not apply, for me nohing has changed, I am that small minority who maintains Diamond status every year only because I fly frequently between Seattle and Milan, I always go for the lowest, dirtiest, cheapest fare I can find… rarely do I pur chase tickets directly through Delta. With complementary free upgrade to business class every time, and I make the miles to maintain my Diamond status, It works for me
There should be other considerations other than this metric. E.g. I have been a loyal Delta flyer for over 30 years, and my entire nuclear and extended families are loyal at my bidding. When I was US-based, I was able to fly Delta more often because of greater availability, but when I am assigned abroad my Delta options are limited to the 2-3 transatlantic trips home per year, sometimes at company expense (read higher class tickets) and sometimes at my expense (read thrifty— we are a family of four). I purchased a ticket recently at $1300 for which I received less than $600 in MQD. I read that members living outside the US are exempt from the MQD requirement. I live abroad for work, but have always used a US mailing address for simplicity and consistency. (Ultimately, my mail gets flown from the US to my overseas office by my employer.) I currently choose not to use my foreign address because the local postal system is generally not very reliable, nor safe. However, I’m considering changing this as a means to address this Medallion qualification issue, and am wondering about the “cons” of doing this.
There should be other considerations other than this metric. E.g. I have been a loyal Delta flyer for over 30 years, and my entire nuclear and extended families are loyal at my bidding. When I was US-based, I was able to fly Delta more often because of greater availability, but when I am assigned abroad my Delta options are limited to the 2-3 transatlantic trips home per year, sometimes at company expense (read higher class tickets) and sometimes at my expense (read thrifty— we are a family of four). I purchased a ticket recently at $1300 for which I received less than $600 in MQD. I read that members living outside the US are exempt from the MQD requirement. I live abroad for work, but have always used a US mailing address for simplicity and consistency. (Ultimately, my mail gets flown from the US to my overseas office by my employer.) I currently choose not to use my foreign address because the local postal system is generally not very reliable, nor safe. However, I’m considering changing this as a means to address this Medallion qualification issue, and am wondering about the “cons” of doing so.