A Week Later: My Thoughts on Delta's SkyMiles Changes and Those Still to Come

Last Wednesday, Delta accidentally posted their future Medallion program requirements and we first learned the new term Medallion Qualifying Dollars. While they quickly pulled down the site, they ended up re-publishing it the next day and releasing an official press release confirming the changes. The biggest piece of news was that you no longer qualified for Medallion Status by Medallion Qualifying Miles or Segments alone- you now also have to qualify by Medallion Qualifying Dollars or by spending $25,000 annually on a Delta co-branded American Express Credit card.

In addition, they bumped up the earning on many full-fare first and business class fares to 200% and changes some coach and business class earnings from 150% to 100%. Nothing too radical there and some people who buy relatively inexpensive Alaska Airlines first class fares jumped for joy.

Don't Think This Is The End of It
There are many more changes to come. Yesterday Delta announced a final restructuring of the fare classes between Air France, KLM and Delta. It is a bit complicated, but you can read about the changes in this Flyertalk thread- essentially, the fare codes used for domestic Medallion upgrades will now also be used for the inventory for mileage/Systemwide upgrades. What this could mean is that people using miles and Systemwides would be on the same playing field as Medallions, meaning if Delta starts adding more advance inventory, they could try to get as many people to redeem "cash (systemwide or miles) before the 7 day mark when they process "free" upgrade to a Medallion. Or if they hold inventory back until departure, they currently prioritize those using miles to upgrade over Medallions, which is similar to what United has done with their frequent flyer program, greatly prioritizing those who use instruments to upgrade over complimentary elite upgrades.
For those airline geeks interested, the new lineup of Delta fares will be: Business class: J, C, D, I, Z, O (Medallion and mileage/SWU upgrade inventory), Domestic First: F, P, A, G, R (Medallion and mileage/SWU upgrade inventory), Economy: Y, B, M, S, H, Q, K, L, U, T, X, V, E

Medallion Reactions So Far
The reaction to these changes has been mixed: some Medallions who already hit those spend thresholds were pleased that (hopefully) many wouldn't and thus the elite ranks would be thinned out, meaning more upgrades for them. I do believe that the Medallion ranks are overinflated, but that is a direct result of Delta giving away elite status more handily than any other carrier in the world- with numerous credit cards offering huge Medallion Qualfying Mile paydays (the Reserve card alone gives out 10,000 after your first purchase and up to 30,000 more with $60,000 in spend- compare that to the American Airlines Executive Platinum card that gives a maxmimum of 10,000 Elite Qualifying Miles with $40,000 in spend). Delta also gave thousands of people 25,000 MQM bonuses when they transferred at least 50,000 Amex Membership Rewards points to Delta in 2011.

However, there were many Delta flyers angered by the changes (see Jaunted's article on this subject), especially leisure flyers who don't meet the Medallion Qualifying Dollar thresholds and who don't have Delta co-branded American Express cards. Another big group of flyers angry with the changes were those who fly SkyTeam partners that aren't marketed and ticketed as Delta tickets, will not count towards the Medallion Qualifying Dollars requirement per the official FAQ page,

"MQDs are the total of the SkyMiles member’s spend on Delta-marketed flights (flight numbers that include the “DL” airline code), inclusive of the base fare and applicable surcharges, but exclusive of government- imposed taxes and fees.

Flight spend for travel on other airlines ticketed through a Delta channel (featuring a ticket number beginning with “006”) will also be included in MQDs."

Worst Case Scenario
Lets say you travel JFK- Amsterdam once a month for work in paid business class. Your corporate travel agent books you into full-fare business class on KLM issued tickets. You'd get 7,287 base Medallion Qualifying Miles per trip, but with the new 100% bonus on top fares, you'd be raking in 14,574 MQMs per trip. 12 times a year that is 174,888 MQMs, more than enough for top-tier Diamond status. However, in the new program MQMs aren't enough- you need Medallion Qualifying Dollars as well and if your tickets are issued on KLM, you would end up with 0 Medallion Qualifying Dollars per trip, meaning you wouldn't even qualify for Silver Medallion Status. Of course you could get a Delta Amex and spend $25,000 a year to waive the requirement, but what if you are a foreign citizen living in the US and can't get a credit card? Or what if you don't want to get another credit card, because you are about to apply for a mortgage? There are many reasons why someone may not want or be able to get a Delta credit card and while I don't think this scenario is what will affect most people, it is interesting to think about how high-value customers could still be cut out of this new program.

My Reaction
Delta is adding extra hoops to jump through and no additional benefits to the program, so I'm not impressed. I wouldn't mind the changes if there were actually solid benefits added to the program (like more competitive system-wide upgrades). Delta announced the reason for the changes was "These changes are a result of considerable research that we’ve conducted including conversations with hundreds of customers, many of whom expressed a desire to see the Medallion program truly target our best customers,”

If Delta truly wanted to make the program more exclusive, they'd choke back the amount of Medallion Qualifying Miles from credit cards and also get rid of the option to avoid the MQD requirement by simply spending $25,000 on a credit card. I actually personally feel that it is totally fine for Delta to give preference to their American Express customers since Amex pays Delta a lot for those credit card miles (especially Medallion Qualifying Miles), but lets call a spade a spade- Delta did not create these changes to make the program more exclusive.

The Real Concern
Everyone should understand that the whole concept of moving to a Revenue Based frequent flyer program is to drive more revenue. Frequent flyers who think Delta is making these changes to cull the elite ranks and make the Medallion experience more "exclusive" are simply missing the boat. Delta is betting that the increased revenue they will generate from additional American Express cardholders and decreased (or even status quo) benefits, will make up for any elites defecting to other airlines. Only time will tell if that decision will pay off. My concern is that if Delta successfully changes the game and hacks away at elite benefits and mileage value (even further than they have over the past several years) and sees an increase in business, the other airlines will follow.

What everyone should be asking is whether mileage redemptions will change as well. I would not be surprised to see them also roll out a revenue based redemption program as well- meaning that the amount of miles needed to redeem for an award flight would be pegged to the cost of the ticket (similar to their current Pay With Miles program for Delta Amex customers). If this happens, it will be a 100% dealbreaker for me, because I'm fairly certain the international business class flights I like to redeem for- like my past Seychelles and Mauritius trips, would become astronomically more expensive.

In fact, even if Delta doesn't switch to a revenue based redemption program, I still think they need to address their current abysmal state of awards. It can be near-impossible to find low-level awards on Delta operated flights and within the past year, partner flights (only available at the low-level) are becoming harder to find and even harder to actually book. I'm pretty sure if they asked their elites members whether they wanted better award availability or more "exclusivity", the overwhelming majority would ask for a working award calendar that accurately showed partner awards.

What Should You Do?
As a consumer, you always have a voice, so don't feel ashamed to let Delta know if you love or hate their new policies. Many airlines have made decisions that were reversed or enhanced due to customer feedback. These days, feedback in social media channels, like Tweeting @Delta also never hurts.

What are your thoughts? Have they changed since the news first leaked last week?
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