This is not a points and miles blog, and I do not personally care one bit about airline status. With that background, I understand that my point of view on this subject comes from a very different perspective than most of the noise that’s out there. It may not come as a surprise to you that I really don’t mind the new, dramatic changes that Delta has rolled out to its SkyMiles Medallion elite status program as well as its lounge access rules. Could Delta have rolled this out differently? Sure. And will I still like it in a year? That depends.
Though I don’t want to get too much into the weeds, we do need a summary before we can really get into this. So… Delta has decided to make the following changes to elite qualifying starting in 2024 for earning 2025 status:
- Medallion Qualifying Miles (MQM) and Segments (MQS) will be eliminated, and qualification will now only be earned through Dollars (MQD)
- MQDs can now be earned not just by flying and credit card spending but also by booking hotels and rental cars through delta.com and booking Delta Vacations
- The MQD waiver that credit cardholders had is gone
- Annual MQDs required to earn status are increasing dramatically:
Further, when it comes to lounge access:
- SkyMiles Reserve Amex cardholders will be limited to only 10 lounge visits per year
- Amex Platinum (not SkyMiles, just normal Platinum) cardholders will be limited to only 6 lounge visits per year
- These limits are waived if you spend more than $75,000 per year on the card
- SkyMiles Platinum Amex cardholders will no longer have lounge access included
- Cardholders with lounge access will not be allowed in the lounge if they are traveling in basic economy
I left out a few smaller changes, but you get the point. As you can see, this is universally bad news for a whole lot of customers, which is surprising. Usually airlines like to try to have some kind of good news threaded in with all the bad so they can lean on it. This time, what Delta touts as good news is the fact that it is a simpler program now that there’s only one metric. Simplification is generally a nice thing, but that’s not going to make anyone happy who is about to drop levels because of the huge increase in qualifying.
I wish Delta would just use different messaging instead of trying to sugarcoat it with this silly “simplified” pitch. Delta should just have gone with reality. I know it sounds crazy, but Delta is trying to solve problems here, and it’s going to do it effectively. That’s the headline. Rip the band-aid off.
First, Delta loves to say how if everyone is elite, then nobody is. Presumably Delta is trying to manage its program to a certain number for each level of status. I would imagine that ideal number has probably changed over the years, because the benefits have been diluted. The number one benefit, for example, is an upgrade, right? But Delta was busy crowing last week that it sold 74 percent of First Class seats in August. There are fewer upgrades to be had, so the number of top tier elites has to drop if the benefit is going to be valuable.
This time around, Delta decided to really lean into the amount of money that travelers spend instead of how much they fly. That means they had to make some guesses about exactly where the numbers will land, but clearly the numbers were too high before for Delta’s comfort level considering the current state of affairs.
Now here’s what we get to the “evil genius” part of this plan. The big shift to revenue combined with the much higher qualification threshold now makes having a Delta credit card essential if someone really wants to reach a higher level of status. Amex loves its Delta credit card program because it’s the biggest in its portfolio. (It became even more important when Costco flipped to Visa.) Delta loves its credit card program since it brings in billions of dollars a year, but it has made premium experiences like lounges worse due to so many people now having access. Because of this, Delta has created a monster where it loves and hates its financial overlord. (Delta is not alone in this, by the way.)
With this new elite qualifying plan, Delta adds value to the Amex cards by making them essential for climbing the status ladder, and by doing that, the airline is able to cut back elsewhere. This is what enables the lounge-access change. Everyone who has walked by a SkyClub is well aware that there is an overcrowding problem. Credit card signups have worked too well, and the lounges can have lines to get in. Delta has tried to lighten the load in a few ways, but it couldn’t make a meaningful dent unless it tackled the Amex problem.
This MQM shift provided cover for Delta to put restrictions on lounge access for Amex cardholders, hopefully lightening the load enough that lines will disappear and travelers may actually be able to find a place to sit. (As with elite status, I do not personally care about lounge access at all, so I again have a very different perspective.)
Customers love to complain about SkyClub overcrowding, but they also complain about any devaluation of their benefits. Andrew wrote a joke in last week’s Cranky Weekly Review that was actually the most correct statement I’ve seen so it’s worth repeating.
The idea that there are too many Delta elites and too many people in SkyClubs is generally accepted by most customers. Most want the herds culled exactly up to the point at which they qualify for Medallion status and club access — anything less is too generous and anything more is ruining the program.
But what are they going to do? If they are in a Delta hub away from the coasts, they aren’t going anywhere. Even if they’re in New York or Boston, are they really going to start flying the chronically-unreliable JetBlue or if in New York, trek across the Hudson to fly United? (Yes, some wll do the latter, but the risk is lower when it requires an airport change.)
The real risk is on the west coast. Alaska is undoubtedly waiting with open arms in Seattle while LA is anyone’s game to play. But Delta, unlike American, still has a very strong sales team so you can be sure that in places like Seattle and LA, there will be ways to sway the corporates by granting higher level of status. I think the risk is relatively minor.
Perhaps the bigger risk is in the spokes, and especially Austin, Charlotte, Chicago, Dallas/Fort Worth, Denver, Fort Lauderdale, Houston, Indianapolis, Jacksonville, Kansas City, Las Vegas, Miami, Milwaukee, Nashville, New Orleans, Orlando, Philadelphia, Phoenix, Portland, Raleigh/Durham, San Diego, San Francisco, Tampa, Washington (Dulles and National), and West Palm Beach. Those are all cities that have lounges today, but most travelers in those cities can’t fly nonstop to their destination on Delta.
Think about why this matters. If someone is flying from Atlanta, they are probably flying nonstop. That means if they want lounge access, they only want it before their flight. But someone is starting in one of those spokes, they are most likely connecting. That means they’d want lounge access in their hometown as well as in the connecting hub. In other words, the 10 lounge visits for those Reserve cardholders get used up twice as fast for someone in those spokes.
So, yes, there is some risk, but it all feels pretty minor in the scheme of things. This change allows Delta to control its elite numbers more directly by having only one metric. It also helps Delta to simultaneously increase the value of having a credit card while making a dent in the lounge over-crowding problem. That’s no small feat.
Why, then, do I say that next year I may feel different? Think of it this way. Let’s say you fly roundtrip from Atlanta to DC every week. Fares are high at this point in the demand cycle, so maybe you’ll be paying $500 roundtrip. But what happens when the economy turns down and fares drop? If you’re still traveling the same but only paying $250 roundtrip, then you’re earning half as many MQDs.
If Delta is truly managing to a number, then the qualifying thresholds should actually decrease when we’re not at the demand peak and fares decline. If that happens, then I think Delta is doing this right. But if, as most people have to assume based on the program’s track record, the number never goes down, then it’s just all a song and dance to justify the jacking up of the threshold. We’ll find out eventually which way it goes, but I still think this move makes sense right now.
81 comments on “Delta’s SkyMiles Changes Make Sense Despite Angering Everyone”
Delta is making a mistake by simplifying their FF scheme to focus just on MQDs. Yes, revenue is very very important, but it’s becoming a bit of a blunt tool. Simple schemes are difficult to manipulate… complication in rules would allow Delta to have all sorts of variations where Delta wants them. Delta needs to bring in some sort of sub-clauses to their FF scheme so they can bend it where they need to.
Before anyone accuses me of being a former Skyteam flyer… my most flown airlines over the last 10 years are all LCCs, and I don’t get free or reduced cost lounge access or upgrades from any of them.
I think if Delta truly wants to be a luxury brand, making elite status truly elite matters.
I do think this may alienate many people, but planes are full, so Delta doesn’t necessarily care, and they earn their premium with a better product. They simply offer a more reliable and better experience than their competitors.
And of course, if they do lose too many people, loyalty is very fickle. A few bonus promotions, new challenges or matches, and minor tweaks and they can get a bunch of people back.
There was a lot of doom and gloom when AA when to loyalty points. And I do think there are issues with the program (much easier to maintain elite status than earn it). But AA didn’t face desertion. Delta won’t either. People who live in hubs are still hub captive. Competitive city fliers may stay or may leave. But it isn’t free having too many elites. And some may find that Platinum on Delta instead of Diamond, is still more valuable in this new scheme than competing airline status.
source: DL Diamond, AA Platinum (down from EXP).
Delta isn’t a premium brand, regardless of how much it thinks it is. It is a network airline. It happens to run itself slightly to a bit more slightly better than its next two competitors. It has better profit margins as a result. Premium carrier though, it isn’t.
It does have premium pricing for international awards, though ;)
CLT does not have a SkyClub. It does have a Centurion Lounge, but that’s about as far from the Delta gates as you can get while still being in the airport.
Except they actually decreased the value of having the Amex cards at the same time, especially if you have anything other than the Reserve. I held the Platinum and with my flight patterns and about $50k in spending on the card, I could usually make Gold or Platinum status. The same spend next year will get me squat. I would have to spend almost $300k(!) on that card to get the same benefit. Even with the Reserve I’d have to triple my spend.
I also don’t care about lounge access but holding status is nice for help during IRROPS and generally free upgrades to at least Comfort+. But the kick in the teeth with the MQD potential from card spend is driving me away from the Amex spend, not towards it. I just got approved for the Chase Sapphire so Delta/Amex are going to lose all my spend and probably a decent amount of flying that would have gone to them. From what I’ve seen, this is what a lot of others are doing now – so I think Delta overreached and are going to have a much harder time hitting their stated goal of getting Amex spend to $10 billion.
Yeah, I don’t see these changes as benefitting Amex and spend on Delta cards. Not only don’t those cards earn very few MQD, but they also are generally have a poor earnings return compared to something as simple as a no annual fee 2% cashback card. So every dollar spend towards MQDs comes with an opportunity cost. Hopefully people do the math.
Airlines are limited in competition by the lack of landing slots. Credit card programs are an important industry crutch. If you are a profitable enough customer, you may receive a bump in status at Delta’s discretion (execs at large corp. accounts will be ok). Flying has many miseries but so does running a low margin airline with a unionized work force.
Most Delta employees are actually not unionized.
Maybe frequent travelers should form a union, too ;)
Very few airports in the USA are slot controlled (LGA, JFK, DCA). Lack of slots is absolutely not a limiting factor for growth or competition.
You can boil all this down to one simple economic Maxim. Supply and demand.
At the end of the day, FF programs are intended to drive revenue. But when you have tons of revenue already, you don’t need to offer as many inducements.
These airlines have more customers than they need. With the demand and supply limitations, they just don’t need to give as many FF benefits as they do. So they are tightening it and up, and if you don’t like it, tough.
A mention was made of what happens when the economy slows and fares drop. Again, supply and demand…when that happens, Delta (and everyone else) will suddenly flip and start offering more inducements and to bring customers back.
The cycle will continue.
Thanks for clarifying the situation, Cranky. Until now I thought this was a make-work project for the shill team of Tim and Rene!
Cranky has explained this situation so much better than those mileage whore blogs. I mean whore as in in a nice polite way way of wanting something so badly that you completely compromise your integrity. Oops, guess that is not so nice, just the truth.
I wonder what a certain commenter here thinks about the changes… you know the one who thinks that Delta is the perfect airline.
Simplification to a degree is a good idea. The programs generally have become too complex for “civilians” to truly understand. But I think the spend requirements are just set too high for the program to still be a motivator to focus spend at Delta. Silver status doesn’t offer a ton of benefits, but it also didn’t cost $6k in Delta spend.
The MQD spend from the $550 Reserve card is only 1 MQD per $10 spend, so if you spend $20k, you get 2k MQD and are 1/3 on your way to silver. For mere mortals that just doesn’t seem a realistic way to earn enough MQD to make a difference. And the $250 Delta Platinum card is worse in that it only earns 1 MQD for every $20 in spend.
Granted, there are a few new ways to earn MQD – car rentals and vacation packages (and hotels?). Some people will be able to use those to make up the gap. I usually am able to find better car rental deals elsewhere, so it comes at a cost. And I am not a vacation package deal buyer.
The “if everyone is Elite, no one is Elite” phrase is often cited, but I don’t think many lower level elite had unrealistic expectations what their elite level would actually get them. Maybe a slightly nicer seat in coach, a free bag, and early boarding. So why struggle towards $6k if you can just hold (not even use) a $100 airline card?
The real winners here seem to be those travelers who fly a lot on OPM (other people’s money) and already spend a ton with Delta, but feel there are too many competitors for reliable upgrades to F.
Disclaimer: I am not a frequent Delta flyer and never was motivated by Skymiles (which also also relatively poor redemption values for the redeemable miles and a weak alliance with Skyteam). So these changes don’t affect me directly. It will be interesting to see how other programs respond, and how this works out for Delta.
Delta could have moved more traffic through other hubs, build more or expand current SCs in ATL. There are many options but Delta chose to stick to customers.
So exactly how many elites in each tier in SM program? vs AAdvantage or Mileageplus? Is it really to the point that Delta thinks it needs to make their spending threshold 1.5-3x of other programs?
I don’t think the 1.5X -3X numbers are accurate. Here is a comparison:
https://frequentmiler.com/earn-elite-status-aa-vs-delta-vs-united/
As for the number of elites in each tier, that probably is a closely guarded secret. It would be interesting to know, though.
Oliver,
That’s a good article – many thanks
Not a DL FF (UA 1K) but these changes make sense all around. I think DL could have softened the blow by including a reduced threshold for segments flow (similar to UA). At present, you can become a UA 1K with only 18K PQP (MQD equivalent) but a certain number of segments flown. Seems like that would have been a decent compromise for the true road warriors. To your point on the reduced earning requirements for the following year, Cranky, it’s essentially what the airlines did during Covid. My fear now is that UA will follow DL’s lead and increase the 1K threshold beyond 24K PQPs.
I fly once a month internationally but usually only PE so getting to $24K in spend already is a stretch. $35K will never happen.
As for lounge access, some of us discovered a nice workaround when ITA Airways (worst airline ever) status matched all airline status upon their launch; therefore, my Executive ITA status get me Elite Plus status on Skyteam which grants me access to the Skyclub – without ever having set foot on DL or ITA for that matter (but I’ll occasionally fly KLM because they’re actually a really good airline). I’m sure DL loves me for that.
It’s all a game.
The UA segment count (PQFs) is not for road warriors. It is to reduce the revenue requirement (PQD) for spoke-originating travelers, who earn segments at 2x the rate of nonstop hub-captive flyers (because the spoke flyer is connecting).
In other words, UA wants to make sure spoke flyers have an easier (lower) $ level to reach. Hub captives will fly UA anyway. Delta is choosing not to offer this reduced threshold to spoke-originating flyers.
AA, in the opposite direction, doesn’t care if you ever fly – just spend on credit cards.
Being Austin based the greatest change that stings is the lounge access. While the bulk of my travel is on United, I still tried to fly Delta when it suited my schedule, especially on routes where I would have to connect anyway. I never really cared about the status as I would usually only qualify for Silver, but having the lounge access was nice during layovers. With the new changes I’ll only get 6 visits, which goes quickly having to connect. It would have been nice to see them give access for 6 itineraries instead. Thankfully the Austin airport has plenty of good food/beverage options so I won’t need to burn one there if I arrive too early.
As far as the upgrades, I have a want First, buy First mindset and typically would book C+ anyway. The massive increase in MQD thresholds makes me wonder if UA and AA will up their requirements as well. United Platinum spending requirement is now basically equivalent to Delta Gold.
I guess I’m passionately indifferent about it. If I were in a spot where I only flew Delta, I’d make Silver easy, maybe even Gold without any supplementing from any of the other MQD earning opportunities. As it is, I’m a 15 minute ride from DCA. I’m going to fly AA a bit. I’ve predicted these changes will not have much of an impact on Delta’s financials at all. Might even improve them. We’ll see if I’m correct.
One thing I’m less certain of is the changes to Sky Club access from the SkyMiles Reserve card, and to a lesser extent, the Amex Platinum (which I carry, primarily for Sky Club access). I think we all know crowding is an issue, but I’m just not sure I would have visit-limited the Reserve product. The credit card products that provide club privileges for Delta’s competitors (AA and UA) actually provide a membership into their respective lounges. Delta’s top of market card provides “club access” and will now be limited to 10 visits. Yes, I know you can drop 75K in spending on it and have unlimited access. I might’ve upped the annual fee on the Reserve card and left off the visit restrictions for that particular product. That’s just me, and I know Delta and Amex have access to numbers that I do not.
In the end, we’ll see how it all pans out. I’m really rather curious. I do not think “status quo” was viable, but is this too much? Time will tell.
I also find it odd that Delta won’t have one co-branded card that gives a full lounge membership. With all of my United flying recently I’ve been thinking of picking up a United Club card and it’s odd that Delta travelers won’t have anything similar to utilize.
This is the beginning of Delta trying to find an even more sweeter sugar source than Amex for its card portfolio, by separating lounge access as a card benefit.
My feeling is that the lounge changes were primarily driven by Amex. It seems they’re intent on only providing perks to those who spend $75K on their cards rather than people like me who pay the AF then large keep it in the back of my wallet and only use it for the perks.
The two pieces that will be interesting (at least to me) to see is:
1. Does Amex put similar restrictions on CL access to Platinum cardholders and/or introduce a “tweener” card that keeps the perks for a higher AF?
2. Does Delta make changes to their lounge “membership.” Right now, so long as you have status you can buy an individual membership for $695 and avoid the $550AF card/$75K spend. I wouldn’t be shocked if this is changed or eliminated.
I spent $75k+ on my AmEx Platinum in 2021 due primarily to my wedding and work travel that let me use my own card. My current company requires us to use a corporate card and I’m not planning on getting married again so I doubt I’ll ever hit the $75k in spend on that card again. Too many other, better options to place spend on.
As I mentioned in an earlier post, I’m a big believer in want First, buy First and DL usually has a reasonable premium for a buy up. The loss of lounge access on connections is really what sucks but I know that’s been their primary issue for years now. If DL offers a direct out of AUS that UA doesn’t, I’ll likely still fly them as the lounge access isn’t needed but for connecting itineraries I’ll be avoiding them.
Cranky,
I’m surprised that you are “onboard” with these changes. So why doesn’t Cranky Concierge increase their pricing by 400% if this is such a smart move.
Loyalty is a two-way street. Delta either forgot that or doesn’t care. A Diamond Medallion who doesn’t use AMEX
Your assessment is in line with how most rational observers assess Delta’s changes rather than the relatively few but vocal naysayers that have written pages and pages of dissent. People invariably look at changes in the world around them based on how those changes impact them. A very small number of people can understand why the party that implemented change did it. Andrew is correct that most people wanted changes to Skymiles elite status and SkyClub access – as long as it didn’t affect them.
One blogger called Delta’s changes “the master stroke of genius of the decade for the airline industry” and notes that only Delta could have done it because of the billions that Delta has invested in its product over the past five years and continues to do so. While some may argue with that assessment, Delta is strategically in a far better position relative to the industry than it ever has been and continues to grow its base of premium passengers far faster than any other airline. No other airline has grown its presence in major premium travel markets such as NYC and LA as much as Delta has and that is in addition to major growth in Boston and other west coast markets. Less apparent is that Delta has overtaken American not only as the 2nd largest network carrier in most UA and WN strength markets but that trend has also been seen in a number of secondary markets across the country. The “density” of AA’s route system – frequent flights to secondary cities – now is just to CLT and DFW as ORD and PHL are now “niche hubs.” Many flights to those hubs as well as at CLT are on regional jets even as DL has replaced hundreds of regional jets with mainline aircraft. The result is that Delta now offers more first class seats and more comfort plus cabins than any other airline in the world on a larger mainline network than AA or UA. Further, there is ample data to show that Delta’s service is higher quality, more reliable, and elicits less negative feedback.
Consumer choice is always personal. Some people will change their spending patterns as a result of Delta’s changes but Delta has said that they are signing up one million new Skymiles members per month and converting 1 in 8 of them to Amex cardmembers. Amex and Delta looked at mountains of data to figure out how and where to “cull the herd.” The notion that they will be hurt or that they made a mistake is as laughable as the notion that some people will find satisfaction by running to another airline and their loyalty program. As that other blogger said, if people are willing to swallow their egos and degrade their travel experience, they can certainly leave Delta. They just need to get what they want out of other programs before those programs also change the rules. DL’s financials are still industry leading and the positive gap will only grow.
Delta did a poor job in its initial communication and their subsequent messaging. I would have expected a lot more from them. Instead you have many loyal Delta flyers who are extremely upset with zero communication from them.
Back in the early days of travel, a purchased membership, or guest invitation was required for lounge access. I purchased membership Western Horizon Club (to become Delta’s Crown Room) for years. Although it is now expensive, it is still available for those who value club access (and likely part of corporate contracts – although with AA that could be questionable).
Except it’s not – unless you’re already a DL elite.
Cranky, there are a few things here that especially don’t make sense to me.
First, restricting lounge access to 10 times per year is really punitive to people who are connecting, which oftentimes are the people who have the most alternatives. If I’m in say Portland, I can probably fly there direct on Alaska or Southwest, but if I choose Delta, one of the perks is having access to the lounge before I leave. But if I hit the lounge in Portland, my connection town and then hit the lounge before I come back and in the connecting town, I’ve burned 40% of my lounge visits. This just seems like an extra shove out the door to people who live in other airline hubs or competitive smaller markets like say Milwaukee. Any thoughts on that?
Second, this seems like an extremely disruptive change that isn’t actually going to reduce lounge crowding for close to a year and a half. These changes aren’t really going reduce lounge use until early 2025, except to the extent that people are already cancelling Reserve cards. They could have had a more immediate result by decreasing the access window to 2.5 hours from 3 or increasing the cost of the Reserve card by $150. They have given themselves 18 months of uncertainty for no major immediate benefit. What about a 2 hour access window for Silvers and Reserve holders and a 4-hour window for everyone else, or something like that? It just seems like a really blunt solution.
Third, I don’t exactly see what the harm is in making Silver somewhat attainable for people who fly an average of once or twice a month. My annual airfare spend won’t be more than probably $7,500, and there is no way that it can all be on Delta (I’m in a small town with more choices on Alaska and United, my boss sometimes wants to fly Southwest, sometimes Delta is just too expensive, etc.). Making Silver unattainable to me seems silly. The actual costs to the airline come at the higher tiers. The benefits of Silver can basically be replicated with a $250 / year credit card. Sure they don’t necessarily want me to be Platinum, but I don’t understand why they wouldn’t make it attainable to achieve a benefit that costs them little (a few upgrades that weren’t going to be sold, access to early boarding, free bags that I could get with the credit card, etc.). They will easily cost themselves a few thousand dollars of year in revenue from me. No question. And I know that my few thousand dollars of years in revenue means nothing, but lose a few thousand dollars of year in revenue from a meaningful percentage of their SkyMiles members, and you’re talking real money.
Thanks as always.
Jim, your comments seem to be in the literal sweetspot of what CF referenced that Andrew wrote in Friday’s Weekly Review.
You’re saying you want the changes right up to where you are. You believe your flying should be enough for elite status, and Delta not granting it to you is “silly.” You’re making Delta’s point for them.
The airline obviously put a lot of time and research into this — we can agree or disagree on the merits, but your stance of drawing the line exactly where you stand is the whole point.
Perry – Your point is directionally correct and I don’t totally disagree. In my case, I have been Platinum since before Covid due to a combination of flying and credit card spending, so I’m not exactly drawing the line where I stand. In my particular case, it used to be a lot easier for me to justify staying in Seattle for a couple of extra hours (because Alaska has more flights) or taking a layover or paying $150 more for a ticket on Delta than it will be going forward. So Delta is going to lose some — not all — of my spending.
“ They could have had a more immediate result by decreasing the access window to 2.5 hours from 3 or increasing the cost of the Reserve card by $150. They have given themselves 18 months of uncertainty for no major immediate benefit.”
That fee increase wouldn’t be effective immediately for most cardholders either.
Oliver — agreed, although I think that it would start to phase in more quickly.
“This just seems like an extra shove out the door to people who live in other airline hubs or competitive smaller markets like say Milwaukee. Any thoughts on that?”
DL has left most of the upper Midwest on autopilot, letting AS and others take their market share one airport at a time.
*AA, that is…
Completely agree with AA moving in, in the Upper Midwest!
In South Bend (where I live) when I first moved here in 2016 it was just Delta to MSP, DTW, and ATL, with United just to Chicago and Newark (year-round/seasonal on and off, this ended in 2018), Allegiant. Airfares always felt super-high.
AA arrived in 2018 first with two daily flights to DFW and CLT, there up to 3 flights daily (and very seasonal football weekend round-trip flights to LGA, and DCA). When AA arrived, they were the only airline to offer 70 seat Bombardier-CRJs and offer First Class seats on any flights (regularly, football weekends have always been in exception) to South Bend. Delta and United were entirely 50 Seat CRJ-200s (with 50 seat ERJs on the Newark flight when its operated, and occasionally on the Chicago Flight, Football weekend an execption). Delta is now 70 Seat CRJs with their retirement of 50 seaters (so the same as American) but their regional jet pilot shortage resulted in the loss of Detroit until it was just restored a few weeks ago (and just once per day instead of multple-frequencies pre-pandemic) and the frequency of MSP down to once per day and ATL down to twice per day (at the worse of the pilot shortage over the Winter). American seems have mantained 3x per day to both DFW and CLT.
There is still a loyalty to Delta here in town from them being the largest airline for such a long time. (I ran into someone I know, who’s a Delta elite loyalist, on a flight from MSP to SBN who said she was flying back from North Carolina, totally out of the way going to MSP, and I wanted to ask why she didn’t connect/fly non-stop from Charlotte).
Delta, it was nice while it lasted. I’ve been there since day one flying out of CVG until we moved to PHX.
Now I have to spend even more with the Platinum Amex. Great, but living in Phoenix, Delta has minimal presence, so the spend on air travel with them is a lot more, takes longer to get to places, and the number of flights is inconvenient. Award levels are extremely high making the miles I have pretty much useless since connections cost a lot more. At least I have American (groan) and SWA (bigger groan) to fall back on. What’s next Delta? Lifetime MMstatus going away?
The reality is frequent flyer programs have outgrown their usefulness.
If you live in Phoenix, it makes no sense to fly Delta unless your corporate travel policy requires it. Why would you want to spend extra time, flying out of your way, as you mentioned?? When you say AA and WN make you groan — what is it that makes Delta so much better? I’ve flown all those airlines – there is no consistent difference. If you must have First Class, AA has that. If you want a nonstop, AA and WN can do that (out of PHX).
> The reality is frequent flyer programs have outgrown their usefulness.
This is a great point. What (truly) are FF programs trying to achieve at the margin, in terms of quantitative metrics, and what are they actually achieving?
For many (if not most) people in the upper middle class or lower (who, say, fly a couple of trips a year for business and a vacation trip or two per year with the family), paying even a slight premium occasionally in order to pursue FF miles/points in hopes of getting a “free” trip rarely makes rational economic sense.
Again, what marginal benefit are the FF programs hoping to achieve for the airlines?
Most serious elites are road warriors whose employers pay for their flights.
Are the FF programs hoping to push the road warriors to stretch the corporate travel policies and pay a small premium occasionally to use their preferred airline? Are the FF programs hoping to get the top execs to nudge their procurement people to make sure that a given airline is included as a “preferred” carrier the next time the company negotiates with the airlines? Are the FF programs hoping to push those on the margin to spend more with affiliated credit cards?
I know their are exceptions, and maybe I’m a cynic, but I guess I just don’t see many consumers bending over backwards to pay a lot more in order to be “loyal” to a particular airline or hotel chain. If anything, the travel companies have trained consumers to NOT be loyal, by frequently devaluing points/miles and by offering status-match opportunities.
It’s pretty clear that the airlines use mileage programs to drive revenue; both by enticing loyalty for booking them and also by using the associated credit cards.
It’s part customer service and part just plain ol’ pricing strategy. It’s certainly not purely about loyalty.
The benefits for the airlines seem quite clear, IMO. The real question to me is why so many travelers are so obsessed with chasing status.
Right. The loyalty programs low the airlines (and hotels) to sell a ton of miles to partners to feed the addiction of people who may or may not chase status. And then give them a seat that would have otherwise flown empty.
low -> allow
The “give away a seat that would have otherwise flown empty” is the part that I question a little (not entirely) at least in the current environment. I don’t think that one can assume that every award seat (or even most award seats) would have otherwise flown empty, given that most rewards travel is booked many weeks ahead of time.
To your point, the marginal costs & marginal revenue loss of giving away a seat that truly would have flown empty is near zero. When planes are very full, however, as they are now, and with much more sophisticated revenue management and pricing models in use, I think it’s safe to say that the marginal revenue loss of “giving away” an FF awards seat has increased compared to 5 or 10 years ago. The amount of miles/points that pax pay for many FF award seats has increased over time, as well, and dynamic award seat pricing models help balance things for the airline, but there’s a balancing act & a tradeoff.
Great point on the revenue from selling miles/points; that could well be the ENTIRE goal of FF programs, even ignoring travelers. I agree that airlines earn a lot from selling miles/points to credit card companies and other business partners; it’s a huge source of revenue when one looks at the airlines’ financials, to the point that one could argue (and some people HAVE argued in the comments of this blog) that certain airlines have transitioned their businesses to generating/selling miles instead of simply transporting pax & cargo.
I guess I am more focused on how FF programs drive revenue as a result of affecting consumer’s flying/buying behaviors directly with the airline. I’m admittedly biased (I really, really don’t see the point as a consumer in spending more time or money to chase status/benefits, except in rare edge cases), but I wonder how many people are really spending gobs of extra money (even if it’s their employer’s extra money) to chase miles/status in FF programs… Maybe I underestimate it, or maybe that small number of people spending a lot more are be generating a HUGE amount of additional high-margin revenue for airlines.
Ultimately, I think that if a large airline were to “green field” a loyalty program (i.e., design its first loyalty program from the ground up, without having to deal with the implications of legacy FF program[s]), there’s a good chance that the airline would probably design a loyalty program that operates differently from many of the FF programs we have now, even if one believes that the airlines are slowly transitioning their current programs more towards the “ideal”… I can’t say how such a green field loyalty would be different, or in what ways, as I don’t have the data or insights, but such a project could be a fun project for a student in an MBA program, or for an internal consulting or strategy team at a big airline.
Exactly. My days of global road warrior are over and the perk of getting an upgrade now and then isn’t worth brand loyalty, especially moving from CVG to PHX a couple years ago.
The original intent of FF was brand loyalty. As you state, someone flying a couple times a year isn’t going to be rewarded. In the early days, airlines would basically throw benefits at you. Did I game the system back in the 80’s? Sure did. When I was flying CVG-BOS-CVG monthly, DL’s minimum flight miles earned was 1000. Upgrades for high-milers was 500, so guess who still earned miles plus first-class bonus? That lasted a couple years.
Now that I’m retired, getting back on a plane is pretty low priority, with air travel a bigger PITA than ever. So goodbye DL AMEX, I don’t need to pay a premium for a credit card for miles earned. My Chase Visa gives me cash back and they were thrilled that I told them I’m shifting purchases over to their card.
I collect miles by flying and using my credit card (especially the bonuses!) I’ve never understood these multiple tiers of “status,” and never bothered with them. I like getting a few free economy flights and that’s good enough for me.
And paying a $650 annual fee for a credit card so you can get “free” food in an airline lounge? That’s the height of stupidity, IMHO. I bring my own food, arrive as late as possible, and find an uncrowded corner to wait that final half hour. But then, I’m not an elitist.
Brett, I’d be curious to see if someone predicted this in your Houdini 2023 post :)
$20 says Delta rolls out FUEL SURCHARGES so they can water down MQDs even more. $1,200 fare to London? Nope. Its only $500 because there’s a $750 fuel surcharge on it…
oops.. $700 fuel surcharge. Haven’t had my morning caffeine yet.
haolenate – MQDs count fuel surcharges!
I think Delta’s rollout communication for this has been downright terrible. The “simpler” concept makes sense on the surface, I’ve been flying Delta with work the past 2 years and each year I got to the MQM target before I was even 70% towards the MQD, so I get the focus on 1 category. But they’ve basically increased the cost of SkyClub access from $495 to $6700 (Silver + Fee) in about 2 years. Plus they keep sighting that “Customers complain about crowded clubs and long lines” which I find super misleading. I’ve had the opportunity to go to about a dozen Sky Clubs across the US (Including in hubs like Detroit and Salt Lake City) and 85% of the time I walk into the club no problem. That last 15% I’ve stood in line for less than 10 minutes and once in, I didn’t think it was crowded. The more I look into complaints it’s very obvious that they have serious issues at 2 airports, Atlanta and JFK. But they take the feedback and instead of fixing the issues at their source, they claim a systemic problem of overcrowding and this is a good path to fix it.
For TLDR Purposes, this whole “This is simpler and fixes people’s complaints about overcrowding” is a REALLY poor and see-through excuse for “We just want to be richer and exclusive.”
I seem to be missing the issue with the lounge access. I get that no-one likes loosing a benefit that was always ‘gratis’. If lounge access is that important, one can purchase and individual membership for $695 or $1495 for you and two guests and there doesn’t seem to be a restriction on the number of visits. If Delta wants so much more AMEX spend for “free” limited use access with status it would seem to me more worthwhile to purchase a standalone club membership than to go crazy trying to spend up to the new levels.
I think you are exactly right, Sean. Indeed, a Delta representative a LGA confirmed this to me last week at LGA.
Don’t forget you need to be at least FO to purchase that membership
The changes seem really radical. If their goal is to reduce the ranks of all elites and make the SkyClubs pretty empty, I think they will succeed. If this doesn’t affect their bottom line, we can expect United and AA to come up with their own high bars to obtaining status.
On the other hand, I’m hopeful that Silver Medallion will have more value in the future.
There are a whole lot of changes all mixed together here that make it difficult to analyze and isolate them and their impact.
DL wants to cull the elite rolls, so every elite status becomes harder to earn.
DL is choosing to use dollars spent as the only criterion for elite status for flying, no credit for segments or miles. Fine, I suppose, since that recognizes flyer paying for premium fares and higher fares, and you want to treat those flyers well in terms of disruptions including waitlisting. However it does not recognize flyers who marginally choose to fly FL instead of a competitor on flights with empty seats or that are competitive. At the risk of over-rewarding captive customers and under-incenting customers with competitive options.
DL wants to maintain its Amex relationship and Amex revenue so it’s awarding elite status to members who spend a lot on their Amex cards… while it keeps the value of the miles awarded for spending below the industry average. But it’s at a low marginal rate.
For passengers who don’t need the elite status bump, it’s insane to put spending on DL cards. There are literally hundreds of cards with a better earning reward for spending. So unless you value the elite status bump the spending gives you, don’t put spend on DL cards at all. Since the elite levels are harder to attain, few members should be interested, unless they are simply unaware.
DL has devalued the cards as to lounge access.
So for a member that pays attention, here is what it all means. Elite levels are harder to earn. Credit card spending can help, but at a low rate, and the redeemable miles earned are worth less than alternatives. Lounge access is limited.
DL may calculate that they have enough hub captives or uninformed members that it doesn’t matter or not much will change. But really at virtually every level of the program there are significant negative changes. Your flying behavior will probably yield a lower level of status. You can try to compensate with the credit card, but it takes a lot spending to move the needle, and there are better places to put the spending. You now get limited lounge access.
The rationale choice, unless you are constrained by your company, is only to fly DL when it’s clearly the best choice for schedule or price (and use your limited lounge access and companion certificate) and otherwise shop for the best flight on any airline, and don’t waste the value of your credit card spending on DL. Get a Chase Sapphire Reserve or Capital One VentureX card for your spending.
Delta’s moves illustrate just how little the US airline industry has changed since it was deregulated. Knee jerk reactions to economic conditions of the moment are how the industry has always operated. The airlines are raking in big profits because demand continues to show strength as people want to go places they couldn’t for 2+ years due to the pandemic. This will eventually abate somewhat and perhaps at a more accelerated rate should the economy trend downward. Corporate demand hasn’t evaporated, but it has changed, probably for good. The airlines can’t depend on corporate contracting the way they did until March 2020 to carry their profits and subsidies the poor unwashed masses sitting in steerage. Now, steerage is their bread and butter, specifically those that pay up for Premium Economy or Business Class.
The credit card companies own the airline frequent flyer programs and eventually, those loyalty programs will be spun out from the airlines entirely. They don’t work the way they did in the 1980s and 1990s. It makes sense for the industry to tie spending to loyalty. The problem is that spending is assumed to be fixed. It’s not.
United and American will try to buy out Delta elites, give them a year of their top tier programs, and then turn them away with the experiences they offer, relative to what is perceived to be Delta’s finest.
The industry is headed, whether the government likes it or not, toward further consolidation. It can’t make money. Never could. Never will. JetBlue will end up with American, Southwest with United, Alaska with Delta and Spirit and Frontier will finally have their merger. It’s all only a matter of time. No one in the late 1990s would have predicted DL/NW, CO/UA, and AA/US, but it happened and this level of integration will indeed happen again.
One point that appears to be missed at times – Look at the cost of lounge access.
If you don’t have lounge access, and you buy your Starbucks, or whatever, your bagel, burger, hotdog, cocktail, etc. and tally up that cost for the year it is probably more than you paid for lounge access.
Now that the pure cost of lounge access on its own is going up, that calculation may not be in your favor as often, but it’s worth bearing in mind.
I know there are people who can’t stand the lounge coffee, or the food selection…but that’s another story!
It’s the time cost. I can pop into the United Club, get my beverage and a snack, and be seated enjoying my “in-between flights” time – while the person without lounge access is still stuck in the Starbucks lines, waiting to order. Club access is the difference between a pleasant connection and a rushed, stressful experience on the hub.
Given that it is so difficult to staff airport co concessions, one cannot assume access to food and beverage during a connection time lass than 2 hours. Which means you’re adding in the cost of your time of you book a longer connection.
My time is worth the cost of Club membership, which is paid by the annual fee of my United Club Visa card.
Another point missed in all this is when (not if) the next downturn occurs, Delta will be in a very weak position after burning so many bridges with its current elite and club base. Loyalty is a two way street, and since you can bet all the carriers will be offering promos to lure people into their ranks during a downturn, Delta’s handling of this and sheer hubris in general will not be so easily forgotten when money and travel budgets are tight.
Nope. They’ll offer double MQDs for a quarter if it gets too bad. Back to 2008!
I live in what was a Delta focus city, but still a market with considerable Delta point-to-point service, and easy ATL connectivity. I’m a status United flyer, though, simply because being a status Delta flyer in the Southeast isn’t that special. My airport has a tiny UAL club that’s great – and I get a decent amount of upgrades. My reason for not flying Delta came down to the fact that status wasn’t that rare, and thus not that valuable. Cull the elites and perhaps Delta becomes a more attractive option for myself and others.
This is a genius move by Delta. You want something? You buy it! Clear and simple.
The days of upgraded first class, low-mileage trips overseas and basically free access to lounges is over. Since the merger wave that reduced the legacy carriers to three, there’s just too many elite frequent fliers. With airplanes 90%+ full, the marginal cost associated with free tickets is huge.
Cranky, American got it right! It’s the network that matters. I fully expect American, United, Southwest and Alaska will soon follow!
Full disclosure: I’m a United 1K and have been for most of the past 20 years. I’ve been elite level frequent flier on United since 1989. I expect this eventually will affect me, but so what? Just buy it!
You realize that many business travelers are limited by expense policies in what they can buy?
Sounds like you just would be okay if the loyalty programs were outright canceled.
This is going to be a wildly unpopular take in this crowd, I know, but I think the industry as a whole (and regulators) should step back and consider the morality of rewards cards… especially ones whose benefits are purely based on dollar spend thresholds. Its a massive redistribution of wealth UP the economic spectrum. Working class folks rack up debt, pay interest & fees, then rich folks get lounge access and first class upgrades with those profits. I’m actually generally a free-market guy but if I was an elected official, I’d crack down.
Ummm, when did it become required for working class people to pay interest? It is a CHOICE to spend on a credit card and not pay off the balance each month.
If you’re so worried about that, maybe we should just ban credit cards??? Because some people can’t handle it? Freedom means having the option to make decisions, good or bad, and reap/suffer the consequences.
I figured this was coming and probably shouldn’t take the bait here, but if you think its a choice to have unpaid debt, you should probably get to know working folks a little better.
Most debt comes from the costs of living essentials… food, transportation, housing, child care, medical costs, etc. For pretty much anyone below the median wage earner in America, those expenses are greater than their income. There’s not much choice in not paying it off. Credit Card companies absolutely prey on this dynamic and encourage it (marketing to folks with marginal credit scores, allowing minimum payments that don’t even offset the interest accrued each month, etc.).
We’ve set up a hampster wheel of debt that turns the economic struggle of teachers, mechanics, waiters, police officers, fire fighters, etc into free flights for us doctors, lawyers, and business executives.
There is an easy choice. Live within your means. Whatever those means are.
Go look at the aversge house from the 60s. Three bedroom 1 or 2 baths, 1,000 square feet. No cable, no internet, no satellite.
We want to have the same kinds of jobs as people did then, work four days a week, have paid child care, etc…but we want to live like we see on TV.
Is it easy to live now? No. But live within your means. Borrowing a bunch of money on credit cards won’t get you there.
Sorry, but I have to call BS on this.
“We’ve set up a hampster wheel of debt that turns the economic struggle of teachers, mechanics, waiters, police officers, fire fighters, etc into free flights for us doctors, lawyers, and business executives.”
Teachers, police officers, and fire fighters are all union jobs that pay very well. A friend of mine is police officer, and he earns over 6 figures a year. My fiends who were teachers all made more than me even though I worked in IT my whole life. In addition to making more than me they also only worked 9 months per year.
I’ve also had many friends who were waiters, clerks, etc. The ones who were smart realized that the way out of their situation was to get an education, or learn a trade. The ones who didn’t do this were stuck in low level jobs their whole life.
“turns the economic struggle of teachers, mechanics, waiters, police officers, fire fighters, etc into free flights…”
How exactly does the credit card debt of one person, or group of persons turn into a “free flight” for someone else?
The people getting the high tier rewards credit cards are much more lucrative to banks than those who cannot pay off their debts.
The banking industry does have many problems but they aren’t caused by them selling airline perks through credit cards.
Never an argument that is going to be well-received on a predominantly US-populated blog (although I sympathize with many of your points).
“…(although I sympathize with many of your points).”
LOL
If you’re going to virtual signal, you should at least use the “appropriate” wording and phrases.
Substitute “I’m in solidarity” for “”I sympathize” and you’ve got yourself a winner.
A couple comments:
The notion that Delta is giving up its dominance in the Midwest to AA or anyone else is considerably contrary to facts. As a result of the Northwest dual hubs in Detroit and Minneapolis, Delta gained the position of being the largest airline in the Midwest, that has not changed and it will not. AA is actually the SMALLEST of the big 4 in the Midwest (and, no, DFW is not part of the Midwest).
And the bigger point is that Delta’s presence in elite heavy markets including NYC, BOS and LA is much larger relative to its competition than ever.
As for communications, this was bad news for many people. There is no nice way to sugar coat it and there is no value in continuing to drag out the process. Delta made repeated policy changes to limit SkyClub crowding and they didn’t work. These latest moves WERE the nuclear option but they will solve the problem of an excessive number of elites relative to capacity.
Airlines set up a monster with loyalty programs that have become the most successful in the world – and none did it better than Skymiles, as measured by revenue it generates for Delta.
It all had to come back down to reality and Delta, the most profitable airline, is in the best position to do it. And others will follow.
DL created its own monster via the relationship with Amex and awarding too many rollover miles. Unlike UA and AA which only have one credit card that includes lounge access, and essentially charge for the lounge via that annual fee with a discount for having the credit card, DL has both a lounge credit card (the Reserve) as well as giving all Amex Platinum cardholders access. The Amex Platinum card has value on its own for non-DL elites via Amex’s own lounge program, the airline fee credits, other credit offers like Uber and digital media and trusted traveler programs, as well as earning 5x for airfare purchases. Basically every frequent traveler ought to have the Amex Platinum card.
Clearly they are trying to right size the lounge access, but they are kneecapping their lounge credit card in the process. DL gets $7 billion from Amex. They haven’t invested in enough lounge capacity to earn the $7 billion.
As to the problem of too many elites, they accrued far too many rollover miles and made it too easy to retain top elite status. They are trying to correct that problem, but they have made top elite unattainable for too many of their flyers.
The value proposition is extremely poor for most frequent travelers. Hub captives may have no choice. Informed travelers have better options open to them. DL is betting that there are enough hub captives and uninformed travelers. Ones who don’t much care about the loyalty program also should not have motivation to put spend on the DL Reserve – they are better off putting their spend on Amex Platinum or Chase Sapphire Reserve or Capital One VentureX.
I think the non-hub captives will move the spend and loyalty over time. I put my money on people being motivated by their self-interest. But because many of the changes don’t take effect until 2024 and 2025, it will take a couple of years for the full impact to be felt, and by then there will have been more changes both by DL and by the other airlines. May you live in interesting times.
Those MQD numbers are pretty high. And this year was already higher than last. But, fine. I’ll go from Platinum/Gold to Silver. It’s the changes to the Delta-branded Amex cards that really are striking. The curtailment of the MQD waiver, and restrictions on lounge access. I was thinking of getting one of those. Not anymore. They made that decision really easy!
The changes to Delta´s medallion status requirements are terrible for those of us who live outside the US and do not have easy access to US credit cards. I have been diamond medallion for several years in a row and recently hit a million miles. Delta talks a lot about loyalty but it seems they are thinking about it in one direction only.
Well, I am late to the party here, but only just noticed just how much this program has changed. I have been a Platinum card holder for the last several years and have used it exclusively in day to day spending in order to earn Silver/Gold level benefits. I no longer travel for work, so any sort of preferred status (priority boarding, free bags, the occasional upgrade, etc.) that came from simply using my credit card was a nice perk and made it easy for me to justify the annual fee. Since I am no longer likely to even make Silver based on card spend activity, I will be canceling my SkyMiles Amex and looking for better options.