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As part of its sweeping SkyMiles changes announcement, Delta said that part of the reason it is instituting a new revenue-based mileage-earning structure is, “The updated mileage-earning plan, for travel beginning Jan. 1, 2015, will better recognize frequent business travelers and those less frequent leisure customers who purchase premium fares.”
I wholeheartedly disagree with the sentiment that Delta is all about focusing on premium and business travelers, but sadly many people are taking the bait, including Randy Petersen, editor of InsideFlyer magazine and founder of Flyertalk, who told the AP: “If you’re a corporate traveler, the IBM guy, this is good for you. The infrequent traveler clearly is the loser here. Frequent-flier programs are no longer for them at all.”
This is just silly for a couple reasons – not all business travelers are buying super expensive tickets. In fact I know people who work at IBM and you can’t just purchase a full-fare first class ticket for any flight you want. As for the statement that frequent flyer programs are no longer for the infrequent traveler, that is just not true considering the easiest way to rack up a boatload of frequent flyer miles is by getting credit cards. You don’t even need to step on a plane to start flying on award tickets around the world, so how can you say that these programs are not for infrequent flyers? I’d argue the opposite – that it isn’t even about flying anymore, but rather spending.
While I don’t think anyone will argue that the new fare-based earning system is geared toward travelers who purchase premium tickets, but is the entire program as a whole more generous for those travelers compared to other frequent flyer programs? Let’s take a look at the SkyMiles program and various changes and announcements Delta has recently come out with to put it to the test.
The Business Traveler
I spent four years as a road warrior recruiting top university students across North America for Morgan Stanley, so I definitely come from a business traveler mindset. In my opinion, work travel can be exhausting, and my primary concerns were having flexibility and feeling like I was being taken care of with personalized service and things like elite recognition and lounge access. I also recognized that it was an amazing opportunity to rack up miles and points so that on what limited time off you do have, you can blow it out of the water and have some amazing trips. Having met a lot of TPG readers and heard from you, I know a lot of you are in the same boat.
So with that in mind, let’s see if what Delta has done to the SkyMiles program lately is really mean to woo and keep business travelers who want to maximize their time on the road to take great leisure trips.
1. Medallion Qualifying Dollars: Delta also hailed this sweeping change to its elite status program – where you must spend between $2,500-$12,500 per calendar year on airfares depending on your elite level, or $25,000 on a co-branded Delta Amex in addition to flying the miles/segments necessary – as a boon to business travelers. According to SkyMiles Vice President Jeff Robertson, “Adding a revenue component to the SkyMiles Medallion program ensures that our most valued customers receive the best program benefits and a more exclusive experience.” But I do not see any actual benefit to this – it’s just another hoop to jump through. Some people might say that this will thin the elite herd, and perhaps that is true – we’ll have to see what the Medallion program looks like come 2015. But in the process, the airline is also turning its back on a huge segment of its most frequent flyers who fly a lot but on discount fares that are often mandated by corporate policy. Corporate travel also often mandates flying on the cheapest carrier- even for those super-expensive business class international fares. To add insult to injury Delta does not count partner travel towards MQD’s unless you book them through Delta and make sure they are Delta codeshares, so a KLM ticketed $10,000 ticket to Europe might earn $0 MQD’s if you’re not extremely careful! I know a lot of business travelers who are at the mercy of their corporate travel department and cannot justify spending more to get their flights ticketed as a Delta codeshare, so sadly the MQD program is negative for many business travelers who need to rely on global alliances and partnerships. See: Determining What Spending Counts Toward Medallion Qualifying Dollars
2. Diminishing Partnerships: Global airline alliances and partner airlines are key to business travelers who need to get around the globe and earn elite status while doing it. However, Delta recently moved to punish travelers who need to fly on partners by slashing the amount of Medallion Qualifying Miles they earn, and flights ticketed on partners (rather than through Delta) do not even earn MQD’s, which could severely hamper elite status and thus mileage-earning in the new 2015 program. Is punishing traveling for flying on partners something that is good for international business travelers?
3. Lounge Access Restrictions: Delta recently jacked up the price of lounge membership from $450 to $695 (for the same level of membership/guest access), and that new basic Individual memberships at the $450 price level as well as access from co-branded credit cards like the Delta Reserve and partners like the Amex Platinum would only include the cardholder him/herself, so no bringing work colleagues on work trips, or your sweetheart on your leisure trips in for free with you thanks to your membership anymore. Do you think business travelers enjoy paying more for lounge access and not being able to bring in any guests for free via credit card memberships?
4. Award Chart Devaluations: Not only did Delta announce a major devaluation to its award chart that would increase redemption levels on most premium international awards (by up to 25% in some cases like North America to Europe and Southern South America) and go into effect for travel booked for on or after June 1, 2014, but a few months later, it decided that that was not soon enough and announced another smaller devaluation that just went into effect February 1 where domestic business/first and both economy and premium awards to Hawaii among several others went up 5,000-10,000 miles. So if you were racking up all those miles from work in the hopes of using them on a great international award…you better keep saving because you’ll need more of them!
Now, part of Delta’s announcement yesterday was that it would be restructuring its awards into a five-tier system, but the airline didn’t release any details on those, which leads me to believe that they, too, will be negative. However (and I’m no PR professional here), I think that if the redemption changes were truly positive, they would have released them yesterday to counterbalance the bad news that they dumped at midnight on a Tuesday. Something leads me to believe that after Delta has revamped both its earning structure and elite status program to be revenue-based, though, that it’s not going to be long before the redemption side is as well meaning those business class awards are going to skyrocket- potentially at a greater pace than the earning ratios have been increased/decreased based on the fares and routes you fly. So basically your business travel could get a whole lot less rewarding.
5. Same Day Confirmed Changes: As I said, one of the most important considerations for business travelers is flexibility. Meeting times change, projects come up, emergencies happen – you’ve got to be able to change your itinerary at a moment’s notice, and it’s important to pick an airline that lets you do so easily…or at least doesn’t penalize you with huge fees for doing so. In April, however, Delta seriously gutted the ability to use Same Day Confirmed flight changes, mandating that a traveler’s originally purchased fare class must be available on the new flight in order to switch to another flight on the day of departure. The airline positioned this as an enhancement because they opened up the window to change your flight to any flight on your day of departure versus just within 3 hours before or after. However, the $50 fee still applied to Gold/Platinum/Diamond Medallions who wanted to change outside of that 3 hour window – so clearly the move was a revenue play for Delta. Under the new rules, you could still standby for a seat ($50 for Silver Medallion and non-elites) or if you wanted to confirm and your fare class was not available, you’d have to rebook into an available class, usually at a $150 change fee plus re-fare. Well, they must have gotten an earful because they did backpedal on this one and allow Gold and higher Medallions to confirm onto a flight within 24 hours of departure. However, the fare class requirement still stands, which is a major downside in my opinion. I’d rather have the option to pay $50 to Same Day Confirm within 24 hours under the old rules (as long as there is any availability in your cabin) than having the fee waived, but having to switch into your same fare class.
Additionally, Delta has pulled upgrade availability from ExpertFlyer (a favorite tool amongst business travelers), which is not an enhancement, no matter how you slice it.
6. Restricted Transcon Upgrades: The transcontinental routes from Los Angeles, San Francisco and Seattle to New York are among the most heavily trafficked and profitable for Delta (and the other legacies), and are usually brimming with business travelers. While upgrades used to be complimentary based on Medallion status, back in December, Delta announced that complimentary upgrades for the transcontinental BusinessElite routes (currently assigned at the gate based on availability) will no longer be a general Medallion benefit. Instead, Diamond Medallions can select to upgrade on those routes (and other international routes) using new Global upgrades or miles. They may be redeemed for the named Medallion member and up to one travel companion in the same reservation, and the named member and the companion will each require a separate certificate. On the plus side, Global upgrades will be eligible on pretty much all paid fare classes for International and Domestic BusinessElite routes): Y, B, M, S, H, Q, K, L, U, T, X or V classes, and upgrades to Hawaii from LAX/SEA/SFO and SLC are now eligible for complimentary Medallion upgrades, which is a nice change for leisure travelers, but probably not too many business travelers. The bottom line is that Delta is making people pay a premium for their BusinessElite product. I’ve personally spoken to a lot of business travelers who are not happy that this has been taken away, and have asked Delta to explain how this is an enhancement for business travelers. No answer yet that I know of.
7. Website Issues: One of the most frustrating parts of being a Delta customer is trying to use its website to book awards. The Delta award search engine is broken, plain and simple. Not only is it impossible to search for both economy and business class at once, or to use the calendar function with most partners, but it is extremely difficult to find much partner availability – even when it exists – and you have to be very specific about routing and what your search requests contain in order to find the space. Delta also blocks all partner first class awards, meaning you can’t even book them at all. If there’s one thing you want as a business traveler, it’s an efficient, functional web site to book travel, and Delta’s is fairly miserable on this count.
8. No International First Class Product: I keep reading that Delta is making these changes to cater to “big spenders.” Even if you’re a lucky business traveler whose company pays for business class – that is as good as you’ll get. On carriers like United and American, you can upgrade from business to first class, getting an even more exclusive experience (think AA Flagship service) and a roomier seat. If you’re a super-rich leisure traveler wouldn’t you want the ability to travel in first class internationally? Beyond that Delta also blocks all partner first class awards so if you like high-end travel, SkyMiles is not the program for redeeming for those sorts of travel experiences. For instance, if you’re an American Airlines flyer, at least you can use your miles for a first class award on Cathay Pacific or British Airways, or you can use your United miles for Lufthansa or ANA first class (granted, at exorbitant levels now), but Delta won’t let you book that Korean Air first class award. How is that business or premium-traveler friendly?
Lipstick on a…Plane?
I’m not saying all this to bash Delta again and again. They’re a business and they have shareholders. But I do believe they feel like these SkyMiles changes will improve the bottom line because they will be giving less value back to their frequent flyers. This is a revenue play, pure and simple, and not simply an enhancement of benefits for the “premium” and “business” traveler.
It is within Delta’s rights to devalue their program, but it is also within the consumers’ rights to vote with their wallet, and that’s what I’d encourage anyone to do if they’re unhappy with Delta’s recent spate of devaluations and negative policy “enhancements.” If not, you can be sure that other airlines will continue to devalue their programs at alarming rates, which I’m hoping United and American don’t do, and Delta learns a hard lesson that consumers do want value from their frequent flyer programs. I started breaking up with Delta last year and I’m happy I did. No airline is perfect, but there are hugely valuable programs out there and I think they should be rewarded. So, Delta, as far as I’m concerned, you’re officially dumped.
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