Often1

Can't expect any business, including DL, to build a business model around the flawed thinking of businesses which reimburse their employee travel in odd & outmoded fashion.

Rock bottom, it was a big mistake during the last recession to keep capacity at all-time highs and cut fares and increase perks in order to get people to fly.

So, people started making elite on low $ spends, competition is down (see NW), capacity is down and something has to give.

Smartest think is to link status to $ spend or at least make $ spend a qualification. My prediction, watch the next 12-18 months. And, not just at DL. Those who swear they're going to jump ship, won't be doing it to UA, US, AA (or whatever that is in 18 months) because those carriers will do the same.

dcline414

I disagree, especially in a service industry. And it is still VERY commonplace for employees to not be able to submit charges on a personal card for reimbursement, ESPECIALLY airfare. Many small and mid-size companies have negotiated rebates with the airlines based on spending tiers, and I've never heard of a large company that doesn't have some sort of deal in place. If companies reimburse personal-card purchases by employees, it is nearly impossible to accurately document total spend with each airline.

Spot on. This, I agree with completely.

But why would they "give away" non-BIS miles for next to nothing, while raping loyal BIS customers at the same time? If the AmEx mileage earling doesn't go down (or BIS earning go up), then the earning structure is meaningless. It will still favor tangential purchases (partner/AmEx spend) over loyalty to Delta.

And if those tangential businesses are more profitable to Delta than customers who fly K+ fares weekly, their is something fundamentally flawed with the business model that no loyalty program is going to fix.

pbarnette

Crazy talk. Do you also expect the $200 you put under your mattress today to buy you $400 worth of goods tomorrow?

Miles don't increase in value.

pbarnette

Cash flow.

You are just figuring this out? The airline business is fundamentally flawed, or at least it was as recently as 3 or 4 years ago. The jury is still out whether the current model is sustainable, but FF program rationalization will be part of any sustainable model.

Dieuwer

HIGHLY unlikely you would be able to book a 25K reward flight while the corresponding fare is $1,500. Probably an award calendar bug that shows you 25k but jumps to 100K when set and done.
If anything, when a simple TCON is $1,500 it probably means the plane is close to sold-out. At that point, revenue management probably will pull award availability.

javabytes

It's a loyalty program, not a currency. I expect the punch card from my pizza joint to still get me a free pizza after ten punches whether I take it in today or a year from now.

Dieuwer

The pizza joint can change the terms mid-way and say the punch card is no longer valid. Have you not followed the WN "free-drink-coupon-without-exp-date" lawsuit?

mooper

There are two sides of the equation: acquisition cost, and redemption cost. You can't ignore either. You are presuming that cheaper acquisition costs cause redemption costs to increase, but they haven't. If it costs half as much for some people to acquire miles (as you point out, not everyone can put their business spending on credit cards, but anyone can churn them or use them personally, and many promos are accessible to all) but it still costs 25K to redeem domestic coach, then it is indeed a good thing - award flights have halved in price. You can make a legit argument that this situation will lead to reduced award inventory, and while it is true that inventory is more scarce among all airlines now than a few years ago, the market value of the tickets they are securing is higher. Also, while it's a bit harder for Ma & Pa Kettle, with status and a little flexibility, 25K for first class on Delta is quite easy to get... I do it dozens of times per year, so I should know.

Why did you choose to redeem 40K miles for a $400 ticket? Weren't there options for fewer miles on other airlines? Do you have status and/or a little flexibility?

The 25K miles replace the cash you'd have to expend for a domestic coach (or first class if you have status) ticket. If that ticket costs $200 in year one and $400 in year two, then indeed your miles have increased in value... they save you $400 in airfare when they used to save you $200.

mooper

True, but in this case, Delta (nor the other majors) have changed the amount needed for a low/saver domestic coach ticket. They've actually improved the situation by offering elites first class for the same 25K amount. (I'm leaving award inventory arguments out of this example... I'm assuming you have the flexibility to redeem 25K for what you want to the same degree you used to.)

Also, while an airline or a pizza shop can change the terms of their notes, the government can also change the value of a currency. (Fed with the dollar, etc.) Really no different.

DelrayChris

Not all companies are this short-sighted.

javabytes

(Deleted)

pbarnette

I think it better to think in terms of expected value. If you think about it, the 25k miles don't provide you a free ticket, they provide you with the chance of a free ticket. To that end, by reducing the likelihood of you obtaining the ticket for 25k (by reducing availability), your expected value for those 25k miles has decreased. I suspect that the expected value has remained relatively constant.

Sez_Who

Depends on how selfish a point of view you want to take. Excess capacity is good for consumers, in the short run. Competition for seats is greater, more seats available for UG, and probably some pressure to tweak the FF programs up a bit. But you are correct, that would be enjoyed for only a brief period because the airlines would be back where they were.

As for fares, most of mine are at least 50% above where they were a few years ago, well above historical lows. The airlines, not the inmates (FFers), are very much in control now.

Sabai

Oh, the DL Flying Colonels model.

amanuensis

The company I work for only requires justification when the delta for Delta is >$150. In other words, I can fly nonstop on Delta instead of connecting on a different airline as long as the nonstop costs no more than $150 above the lowest priced connecting flight that would otherwise meet my needs.