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Delta’s New CEO: Giving Away Upgrades for Loyalty No Longer Makes Sense

New CEO defends segmentation and lack of upgrades at industry forum.

Delta Air Lines’ new chief executive believes that cabin segmentation is good for the airline industry, all while defending the lack of upgrades for their most loyal flyers. Speaking at the Skift Global Forum, Yahoo! Finance reports Ed Bastian told the audience their multi-class plan creates actual value for flyers in each cabin.

“Ten years ago you’d have a business traveler paying $800 and sitting in a middle seat next to someone who bought their ticket six months earlier sitting in the aisle seat for $69,” Bastian told the audience, According to Yahoo. “You have to find a way to create differentiation in consumer minds, and you have to give them choice.”

In 2014, the Atlanta-based carrier refreshed their in-flight product by adding five different classes, ranging from the international and long-haul premium product Delta One all the way down to the no-frills basic economy. Each class comes with different amenities and offerings, with a wide range in pricing. According to Bastian, this method allows flyers to justify what they pay for their ticket, as he claims the “one size fits all” approach no longer works aboard aircraft.

The era of free upgrades could also be coming to an end as well. Bastian went on to explain that because premium seats represents the best of the carrier, offering them to elite flyers at no cost to them hurts the carrier.

“Any business where you give the majority of your best product away for free doesn’t work,” Bastian said, as quoted by Yahoo. “This is the best real estate on the planet, and while we appreciate the loyalty of flyers, we couldn’t continue to give it away.”

Despite the focus on purchasing tickets, Bastian said the new revenue was being injected directly into the carrier, citing a $3.4 billion terminal improvement project at New York’s LaGuardia International Airport (LGA). The comments mark the second time Delta has put loyalty aside in search of profit: In 2016, the carrier told Bloomberg that changes to the Delta SkyMiles program allowed flyers to “control their experience” instead of using miles for free flights.

[Photo: Shutterstock]

Comments are Closed.
Rancher October 30, 2017

A Delta apologist could not have said it better than the person making the last response. A few weeks ago Delta “upgraded” me to a middle seat near the front of coach. When I said that was no upgrade, that I wanted my old exit row seat back, they said the deed was done... get over it. Several times in the last year I have called Delta regarding their computing of miles, awarding of perks, and other assorted non sequiters in their frequent flier program. Lower level workers always agree with me, but have no power to act. When a supervisor comes on the line, she invariably refers me to a clause that says Delta can do whatever they want to do, even if it runs counter to their stated rules. While I realize that Delta needs to pinch its customers, especially its best customers to give the CEO a few million dollars more every year, the company’s arrogance can be truly astounding.

SMHarman October 21, 2017

So the American upgrade monster is being tamed to something more akin to the European model. This is also happening when the discounts for the domestic first / biz cabin are increasing. You want to sit there, pay to sit there. We'll put you there if we have oversold coach but don't expect it, be delighted it happened.

FullFare October 9, 2017

I don't understand Delta's game. They want us to pay $15000 in spend on flights or $250K on a credit card to make Diamond----and then say the perk of Diamond (upgrades when available) is going to be trashed---is just plain nuts. Who would buy into this game? I went from UA over to DL 3 yrs ago because DL did, over time, produce more reliability. DL didn't give a damn that its FF program was the worst in the world. We'll see now how much FF programs matter in the world. UA's has traditionally been the best. I'm switching to them. Am already lifetime Premier Plat with 2.3 mm lifetime miles. If I had known DK was going to do this 3 yrs ago (when I switched), I wouldn't have given 700K medallion miles to DL. I figure I can get to 3mm on UA in another 3 yrs if I stick with it. I'm a patient investor, and can stay with this for the long pull.

kpspero October 6, 2017

Delta is not the only game in town. One can defy the hometown airline (DL) through loyaty to another (AA) and reap the bennies of FC upgrades if willing to bend a little. In this day and age of commercial travel , if you don't bend a little and still feel entitled,enjoy the peanuts.

FlyerJLL October 6, 2017

What free upgrade is he giving?? I have spent $30k for the privilege of a "free" upgrade. Ed do you know what Delta does and what a Frequent Flyer program is?? It appears not :(