Delta Officially Confirms New Revenue Based Medallion Program
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Delta just published a press release that confirms what I wrote about yesterday: starting in 2014, US based Medallion members will need to buck up and either spend $25,000 dollars a year on a Delta American Express credit card or spend the following amount of money in addition to accruing regular Medallion Qualifying Miles / Segments:
"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," said Jeff Robertson, vice president – SkyMiles. "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."
$2,500 in spend for Silver is reasonable, but $12,500 for Diamond is crazy for those of us who don't fly paid business class. While Delta is trying to attract high-value customers, I don't see the addition of real benefits (like valuable systemwide upgrades, for example) to actually attract those customers from other airlines.
I personally don't think making someone get a credit card and spend $25,000 is the kind of "exclusivity" that high value customers want. I think the real impetus about this move is to encourage more Delta Medallions to carry a co-branded American Express credit cards so they can hit the $25,000 spend threshold to be exempted from MQDs. The exclusivity comment is also interesting, because last year Delta gave away 25,000 MQMs (enough for silver status) during several different promotions last year, so this new move to cull the elite ranks is interesting. Clearly they've crunched the numbers and calculated that the increased spend (and money from American Express) will outweigh the "cheap elites" that jump ship to another airline. Before I make a final judgement about this new set-up, I want to know how the SkyMiles redemptions will change as well. If they force their elites to accrue SkyMiles via credit card and then in turn devalue those earned redeemable miles, I think this whole plan will backfire stupendously. I personally don't like using an airline co-brand card, because I don't like to put all of my miles and points in one basket. I may fly American, but I accrue tons of Chase points, which I can then redeem on United, Hyatt, Southwest, etc. That way, I have lots of options when it comes time to redeem.
It takes a big commitment to an airline to double down and focus all of your flying and credit card spend on that airline- especially when its Delta, who notoriously blocks partner awards (whether intentionally or not) and doesn't even allow first class redemptions on partners. While I do think their in-flight product is among the best of domestic carriers, with generally pleasant flight crew and in-flight wifi, that isn't enough for me to stay loyal. American, United and US Airways miles are just so much more exponentially valuable, that I could never justify focusing almost exclusively on Delta. American and United are both improving their products and adding wi-fi, so more than ever I am going to move my business to American and possibly United if they ever get their act together from a customer service perspective.
So basically, the biggest question remaining is what will happen to redeemable Skymiles accrual and redemption? If it doesn't improve, then I certainly think Delta will cull more than just "cheap" elites as savvy travelers take their business to other airlines that provide real and transparent value through their frequent flyer programs.
What are your thoughts?