FTers,

Over the last several weeks, I’ve been pretty quiet out in FlyerTalk, primarily because we’ve been very busy here working to consolidate our two airlines and our respective loyalty programs. Wanted to share with you some of the highlights of where we’ve come, a few facts that you might find interesting, and what we are currently working on:

• Organizationally, we will be consolidating the NW and DL loyalty teams into one organization, and will likely be accomplishing this throughout 2009. We intend to consolidate the two loyalty programs into one program, that we are fully committed will be “best-in-class,” and will align the organization along with the program integration needs.
• The program integration will occur prior to the end of 2009, unless we run into any major technology or contractual hurdles. At this point, we don’t believe we will have any major hurdles, and should have the programs integrated in 2009. With that said, we have two co-brand contracts at this point, between US Bank and American Express, and we are currently working through these contractual issues. For both of our co-brand card holders, the miles you are earning from either card are safe and you will have even more ways and routes to redeem with the combined network. Again, for all SkyMiles and WorldPerks members, your miles will be safe and your status will be secure.
• We also have very different technology platforms, and have selected the NW loyalty platform as our ultimate base. As a result of this choice and these ultimate contract resolutions, the exact timing of integration in 2009 and how program benefits roll-out is still up in the air.
• In terms of program benefits for 2009, the two elite programs and rewards programs are already today very similar. You can already earn and burn on either airline, and with the launch of elite reciprocity just three weeks ago, you can now be recognized as an elite on either airline and use your complimentary upgrade benefits when flying either NW or DL. The prioritization of customers is now integrated, and all Platinums will clear on NW and DL operated flights together, prioritized within tier by fare class. NW and DL customers are prioritized first, and then other airline customers who we have an alliance with, clear thereafter. We’ve seen many people comment on the belief that it will be hard to upgrade, and for most of you, it will not be a material or noticeable impact. This is true primarily because NW customers and DL customer travel patterns really don’t overlap that much. Where you will see the most impact, is in hub to hub flying – particularly MSPATL and DTWATL. In fact, we will likely be upgrading aircraft in these markets anyway, which should provide more seat availability.
• In the next 30 days, we will be announcing a few additional program changes that will better align our two programs even more closely. The intent is to have the two programs almost identical throughout 2009, and for customers to be indifferent as to which program they play in. Given complexity in technology however, there will still be a few differences during 2009, but both programs will operate side by side and look almost the same.
• During 2009, we will integrate the two programs and consolidate mileage balances in a 1:1 ratio. We will consolidate elite-qualifying mileage balances and recognize Northwest MillionAirs. During early 2009, I anticipate that we will announce and launch full mileage pooling between customer accounts, that will allow you all to move miles back and forth between your NW and DL accounts.
• I’ve gotten many questions about recent program changes made by other airlines in the last few months, and I anticipate you’ll see very little change to the NW and DL programs prior to consolidation. After integrating the two programs, we may announce a new elite program later in 2009, however that is still up in there. We did however make a few recent announcements, which I know you all are aware of, including removal of the fuel surcharge on award tickets, elimination of the curbside check-in charge, we launched elite upgrade reciprocity, and made changes to baggage allowances. We have matched the other airlines on their first baggage charge, as we were the only airline out there without a first baggage charge, and reduced the second baggage charge. Medallions are still allowed two free checked bags up to 70 pounds per bag, however as you know, that was reduced down from three free checked bags. The number of Medallions that are impacted by this is minimal, since the vast majority of customers when flying out of town have less than two checked bags each.
• As much as I’d like to move to paperless, the PMUs will remain out there in 2009 and will unfortunately remain being paper. Given the technology hurdles that we have to overcome, we had to make a choice between completely eliminating them and waiting for technology on the NW platform to be able to imitate these, changing the PMUs completely in the next couple weeks to be ready to communicate for 2009 (which would have been impossible technology wise) or simply use them one more year. The decision was the latter, and thus on the DL side, you will continue to have the PMUs as they are today moving into 2009. I anticipate something different, a better upgrade and paperless as we move into 2010.
• The three-tiered award structure was launched in September, and in the first 30-days, the number of award seats sold is up compared to the 30 days prior, and the average price of an award ticket is down slightly. In fact, over 65% of customers who previously chose the last-seat “Choice” option are buying down to the lower mid-tier level. Thus, for those who believed it was our way of reducing the number of award seats or raising prices, the initial data does not suggest that. We’ll provide more facts around the new award structure over the next few months as we gather more data, however this is a win for both customers and the airline. People are moving their non-saver redemptions to less peak flights, which is saving them from having to pay previous “Choice” rates and driving less revenue displacement on our most-peak flights.
• I had a couple questions on this as well, Pay With Miles and PerkChoice will continue to be offered in the DL and NW programs, respectively, as we operate them side by side.

Those are the highlights of what is going on integration wise, and hopefully this provides some insight into timing and where we are going. By the way, I've reviewed the recent posts around "Choice Seats" and we are relooking at this program, and will make changes as necessary based on overall customer feedback. ’ll share more over the next few months as we continue to make progress.

Til next time,

Jeff