Because no one will ever fly Delta again. Can't you read this forum...

(honestly, I expect no change. I also expect the great majority at posters leaving Delta will come slinking back in a few weeks or months ).

Exactly. Imagine the crowd here with Delta's ear for a few hours ;)

You may laugh and sneer as you like :rolleyes:, but it is a loyalty program.

https://en.wikipedia.org/wiki/Loyalty_program

Bye bye. :)

David

Why don't we try something different? We have several people in the boat of," OMG, this is great" and others don't like the changes at all.

I would like to hear some predictions from our experts like Bubba, pbarnette, etc on how Delta in 2014/5 will look like. Especially on these questions:

1. Will upgrades be easier to obtain for PM and DM?
2. Are the lounges less crowded?
3. Is Skypriority less congested?
4. Is Delta more profitable because of these changes?
5. Is Skyteam a strong alliance for the customer?

And it still is a loyalty program. The standards by which you are loyal are changing. DL is going to be MORE loyal to those MORE loyal to them with cash.

The T&Cs do not call it a loyalty program. I'll take that over someone's Wikipedia entry anyday. And, BTW, even the Wikipedia entry calls it a marketing program.

It delivers perks to valuable customers. The rules clearly state definitions, rules and parameters can change at any moment.

The only place "Loyalty" is mentioned is in a disclaimer!

They don't, actually. Base is 10 pts/$, other points are mostly multipliers.

Like rollover?

Generally, what one does, the others might or might not follow. If they don't follow, the first one usually (not always) retracts.

By definition, the benefits I get benefit me. Delta benefits indirectly: by providing those benefits, it causes me to do more flying on Delta (even when another airline has a slightly better price or schedule). If Delta stops providing me with benefits, Delta will get less revenue from me (and from my Delta Amex spend).

I'm willing to pay for the service I desire. Some of it, I pay in cash. Other times, I pay indirectly in total revenue ("loyalty").

Want loyalty, buy loyalty.

For a value of "most" being you? Or do you have a pointer to a reliable survey showing that?

When someone flies less on Delta, then Delta gets less business. You're welcome to believe that kettles will magically appear to fill those seats, but that won't be convincing until you explain why those kettles aren't there now.

The fact that load factors are under 100% implies that there are no such non-Elites because they aren't buying those fares now. Or do you mean that Delta will lower its discounted fares to attract them?

What happens the following year?

Besides, if your spend is under the DM requirement, you can fly 150K MQMs, get an even larger rollover, and require an even lower CPM to make PM.

Which "cost"? Selling below marginal cost is seldom effective (but see "loss leader"). Selling below average cost, but above marginal cost, is often the difference between profitable and otherwise. This applies especially hard for vanishing inventory (e.g. tickets).

Why aren't they selling to that "someone" now?

Carrier-imposed fees are included in revenue dollars, only taxes and government-imposed fees are not.

Even IF diamonds were to decrease in numbers, it won't help the SC congestion. The problem is with giving Am Ex cardholders free access and selling the groupons and day passes, not giving a diamond a free SC membership.

If someone is flying Delta 125K miles a year and they can't make the MQD, chances are they will just get an Am Ex and charge $25,000 a year on it. I sure wouldn't go out of my way to get an Am Ex card and charge $25K a year on it to be silver, but if I was a diamond flying 125K miles a year, I sure would.

And even if someone drops from DM to PM, there is a good chance they will could have an Am Ex plat card that will give them access anyway. I am only a PM and just pay for a membership since all my flights originate out of DTW and most of my return flights are from airports with a SC.

Finally, somebody who understands profit and loss. Very nice post. ^

David

Point taken. Among my friends who travel for business, this is the norm, and in both large companies I've worked for, this is the norm, but you are correct. I don't have actual statistics to back this up. When I was an Associate at a boutique law firm in the early nineties, we were handed the purchased ticket and told when to be at the gate.

I'm looking at this from my vantage point as a professional working for a large company. YMMV, absolutely.

DL has no interest in courting those who don't make the airline and flight decision but has great interest in courting those of us who make the decision many times a year and often wind up flying expensive fares.

Maybe the non-Elites will magically appear. Maybe they won't. I've said that that's DL's gamble, and time will tell if it pans out. Many of the low revenue elites pay a little bit more to fly DL, but won't pay an extraordinary difference. DL is looking to keep those who do pay an extraordinary difference. But if the low-revenue elites lose status many will go back to simply price and/or schedule for which DL may still be the answer and then they'll still be filling the seats, just filling them as a passenger without status. I have no idea if DL's new strategy will work - I won't profess to be an economic expert. The next few years will be quite interesting, especially as we wait to see if the other majors follow suit or if they launch methods to welcome these lower-revenue elites with open-arms.

I am sure there are plenty of people that this will be true. Again, we have to work in a world where the majority are not FTers. Most of the assumptions below are not true for FTers, but are true for the "real world"

• American Express makes good money off of the Delta Cards
• Many Delta Card holders DO NOT pay off their cards each month generating large profits for American Express
• Even MRers that run $25k and pay it off each month through their Delta Amex card generates cash for both American Express (through the Interchange Rate) and Delta (through Amex's purchase of Skymiles and MQMs)
• Delta makes money off of the American Express base in two ways. Kickback from American Express through sales of SkyMiles and MQMs and greater likelihood of Delta card holders booking travel on Delta to take advantage of the free bag and any other benefits
• New system removes SOME MRs that don't generate profit for Amex and Delta.

I shouldn't have a problem under the new system. I travel for work and based in a hub. I have (and likely will continue) to do near mileage runs (I don't do true MRs, as I tend to go somewhere on a MR rate and stay a few days to enjoy the place).

I see the MQMs as a higher challenge than the MQD. The MRs will simply lower my average cpm over the year.

I would find it difficult to generate the $25k on my credit card without pulling some significant tricks. My business travel is on my company Amer Express. I can't pay my mortgage or other big bills on my Delta Amex. I don't have anyone in college to launder Financial Aid through and I am single and live within my means.

Good thing I don't have to worry about doing it!

For those of you who believe you know if this change will have a positive or negative impact upon Delta's bottom line its pretty easy to leverage that knowledge:

If you think it will benefit by increased revenue (profits):
Either purchase the stock or Call Options

If you think revenue will drop:
Sell Short (if uncovered VERY risky!) or purchase Put Options (much less risky)

If you think it won't make much difference:
Sell Call Options (covered) and Put Options (covered)

To be honest, us as frequent flyers DO have legal inside information.

We see the load factors.
We do know what our company is doing as far as corporate travel (and therefore can make assumptions on other companies)
We know who is flying (if most in front are kettles or upgrades, less profit for airline)
We know what fares are selling (via EF)

Not sure I'd agree with that. Short selling leaves you open to (theoretically) unlimited loss if the stock skyrockets, but put options will be far more sensitive to smaller movements in the stock price. You're limited to losing the amount you paid, but you're much more likely to lose more $ overall. Of course, you also stand to gain more from smaller drops in the stock price. I'm not sure I'd call that less risky, especially given how unlikely it is for airline stocks to skyrocket.

Depends on you definition of skyrocket. Delta is up nearly 40% over the last year. I've been on the wrong side of a short when the stock went up 40%, it was VERY painful. With a short, you can lose everything. With options, you can only lose your investment. That is how I am defining risk in this case. Everyone can define risk how it suits them best. :)