RustyC

There are any number of ways DL could have addressed the "fairness" issues besides the way it did. I don't think that was their REAL motivation anyway (just because they say they're responding to requests doesn't mean that's the real reason they're doing something, or even that the comments they're listening to are representative. It's a common management-speak tactic.). Rather, I agree with The Points Guy that it's primarily a revenue play and what's taken will be well in excess of what's given. In that sense it could well be similar to the start of SkyMiles in 1995, which was on the whole a less-generous program than its predecessor. The pre-1995 program had 1,000-mile segment minimums and up to 500 on top of that for elite bonuses, plus up to 50K in threshold bonuses. Quite a bit friendlier for short-haulers and segment runners. DL and other airlines had considered programs too generous but had waited until the economy recovered from the 1992 recession (which caused a real drop in travel) to tinker with things.

One way that UA and AA could counter DL's move is just to increase the class-of-service bonuses at top levels on paid tickets. If there's any gap on RDMs, they could close it through other means rather than going to 100% revenue based. If airline programs had been revenue based from the start then they never would have gotten to be as big or prominent as they did (just compare airline FFPs in size and business handled to hotels or rental car FFPs). An analogy for that might be with credit cards: If Congress hadn't been well ahead of its time in 1974 and capped individual fraud liability at $50 for CCs, the cards never could have grown to where they are now (in the U.S.). The situation would be like in many third world countries, where banks will NOT cover losses from fraud. Yet it's all too easy to envision banks successfully lobbying against that regulation if it had come up in the 80s and 90s, even though it was one of the best things that happened to them.

DL is taking a program that was so successful that it could drive business they wouldn't have gotten AT ALL and is throwing it out for something that's unlikely to drive any additional business they wouldn't have gotten anyway. They're counting on still being able to fill planes by limiting capacity, but history shows that competition and external events make sustaining a strategy like that unlikely.

Carl Johnson

That's not possible. Pigs are intelligent, clean animals.

DIR_Cherokee

That's fine and dandy... for you... but Delta could have introduced parity to reward high fare short haul flyers better without destroying the current RDM earning ability of the very frequent low fare business travelers.

I am basically a segment flyer, my commute is an 800 mi and sub-500 mi route 4 - 5 times a month. I book my travel at least 2 weeks out. Under the old system my money earned me less RDM than someone spending as much or less to travel international coach, sure, but at least it guaranteed me approx 5200 RDM per trip. Now that drops to around 3000 RDM per trip. So clearly not all segment flyers profit from this change.

Am I happy now because international travellers no longer make way more RDM than me on similar fares? NO. Why? Because they didn't just cut out the RDM earning legs from under those travellers, they cut them out from under me as well.

If they truly wanted to reward high fare travellers, they could have introduced an additional bonus based on ticket price without touching the standard distance based system. As it stands, this is more about punishing those who don't fly on high fares than it is rewarding those who do. The RDM balance is hugely in Delta's favor on this one... they'll be saving far more than they give out, especially limiting earnings to 75k per ticket, and as such, especially when they have no intention of reducing the redemption cost of award tickets, this is a clear devaluation to the program for the majority of its members.

Often1

It doesn't matter how many miles/points/Peter Bunny Rabbits a ticket generates or an award costs. What matters is your share of the award pie.

Anybody who thinks that with lower capacity, less competition and a better economy that DL or any sane carrier will be handing out more freebies. They won't.

The question is what % of the freebie pie comes to you. And, that % will necessarily be higher for HVC's than others.

The trough is shrinking. No doubt.

fireworksboy

I see a lot of people in this thread explaining how, finally, Delta has a "fair" program or how the changes were all about making things "fair" to those who pay the big bucks for short flights.

One question to those folks - why hasn't Delta been calculating miles like this since they started flying? Have they be deceiving us all these years?

Hope to revisit this thread a few years from now and I hope DL has had to recalculate their program again by then. Squeezing customers isn't always the answer to higher profits.

CJKatl

No, my point is I'm getting screwed on the other trips. Overall, I spent $28k last year and only flew 100k miles. (No Asia, but one Europe in there.) Where I got 225k SMs last year, I'd get 30.8k next year. Gotta love when people who call you stupid have their math shortcomings made public.

RustyC

Yep. I've been doing this through 3 recessions (1992, 2001 and 2008) and 9/11, and all those events and more caused things to change quickly in the industry. I remember being a highest-level elite on CO when they were in bankruptcy...if that had led to liquidation the miles could have been made worthless. Every time things got bad, airlines went to their frequent flyers to keep up the volume or add more business).

Things are bad now for consumers because of mergers and the cartel strategy, but thinking that can stand indefinitely is like thinking fares from ORD-LAS will always be cheap because LCCs like the route. Either some extrernal event will rock the industry again, or LCCs will eventually fill the unmet demand for tickets at more-reasonable costs, as the cartel prices have gotten to where the LCCs can undercut and still be profitable. DL's changes also seriously degrade what HAD been a powerful weapon wielded by legacies to keep the LCCs at bay. Now it could be the LCCs that have the better program, at least for some types of travelers.

CJKatl

Yes. And many of us have been pointing out the unfairness of this for years. DL finally realized there is merit in what we were saying. What might have made sense years ago no longer makes sense. Doing something just because it's always been done that way would mean we would still be using typewriters, rotary phones and carburetors.

scottsam66

You can't possibly believe DLs motivation was fairness and they "finally heard you". I can't say my opinion of that w/out violating FT rules--but I do have a bridge to sell you.
PS. It's the $$$$ it's always the $$$$.

Often1

As it is supposed to be. Remember, DL is a for-profit business with a duty to return value to shareholders.

This isn't about fairness at all, it's about thinning the herd of elites and rewarding those who return most to DL's shareholders.

RustyC

...Or, much more likely I'd argue, DL wanted to spend less on benefits and offer much less overall value now that there's less competition, so they decided to cut heavily from 80%, give a small bit to 20% and keep the rest (i.e. the "It's a revenue play" argument). But if they can act like this was somehow demanded by people (not saying how many or if it's representative), as it makes a much better cover story. Managements do this all the time with moves they know will be unpopular.

BTW, the conversion in 1995 to SkyMiles was also a revenue play, taking quite a bit more than it gave overall but helping a small sliver that was useful in playing the usual divide-and-conquer game.

These are companies with long histories of questionable practices, everything from training phone operators not to give the lowest fare to coming up with fuel surcharges that don't get lowered when fuel prices go down. Stating a reason for something but doing it for another reason is par for the course. People need to be more cynical.

Delta3MM

I left Delta many years ago when the 50% earnings on the lower fares coupled with the loss of real international upgrades occurred. I'm at United, and my only complaint there is the $10K spend requirement for 1K. I typically spend about $6K-$7K, mostly personal travel. So I can't get to 1K unless I'm willing to spend more. My decision is going to shoot for Plat on United and spend even less. Unless I switch to American. Only issue for me is I am only 120K miles away from the big 2MM on United, granting me Plat status on them. I really want to hit that. My 3.6MM on Delta gets me only Gold, and flying them another 400K just to get one more mile per cent - can't see me going there. Delta's MM program is so weak...

If I had still been with Delta, if I understand everything correctly, my $6K-$7K per year would only generate about 60K to 70K miles on Delta, vs 150K today (75K x 2).

So, I was trying to wrap my head around your statement that if you spent 28K, would that not equate to 280K skymiles (if you use the credit card are are just Plat)? Am I missing something? Seems like you would be better off because you spend more than I.

For me it's simple: I will fly the airline that offers me the best overall package. I will switch to AA over United if they keep their program the same, and still offer 8 of the international upgrades.

What either of the two other legacy airlines could do to counter Delta is to keep their programs about the same as today, but offer an either or for RDM: either miles (plus COS bonus plus level bonus) or ticket cost * x cents per mile (just like Delta). Give the high dollar guys a break and let them have more miles and let the rest of us continue to have what we currently have. United and American would eat Delta's lunch. Especially if you had a media blitz - targeted at Delta's best customers.

Then you just point out where your program is better (United has much better award availability (typically at a lower cost) and better partner network, offers six international upgrades for 1Ks vs only four for Delta DM, and American offers 8 for theirs).

Would cost them a few more miles but only for expensive tickets. They can still control seat availability. United or American could promise to keep their award structure the same for 2015, and considering that Delta won't even tell us what their award structure is until late this year, if they could never get a 3 tier system to work well for customers - and never fixed it in over 5 years - what is to make you think that 5 tiers will be all that much better? Do you really think that it's being done to improve our experience or reduce our cost - or to dole out fewer tickets by adding complexity?

Billy

scottsam66

I agree. It's the stupefying "fairness" and "they heard us" that I find almost unbelievable and naive.

RustyC

Not disagreeing, but business case studies are littered with examples of companies putting the short term ahead of the long term, or not anticipating any number of unintended consequences. Combine that with stubbornness or hubris in top management and staying with a bad move too long, and it can sink the company.

Yahoo, for example, was making a run at eBay in auctions. Yahoo's were free, eBay's definitely not. But Yahoo, at the urging of Wall Street, introduced a 25-cent insertion fee...after all, they're a business and in it to make a profit, give value to shareholders, yada yada. Unfortunately they were premature with the fee and stuck with it too long, and by the time they corrected it with an alternative that would have worked, the business was sunk (and taken offline entirely within a year).

Business travelers may contribute higher revenue per passenger, but the travel is not very discretionary and is constrained by any number of factors (hub captives, cost-control edicts, companies aggressively trying to hold down travel, etc.). Leisure travel and MRs, OTOH, are highly discretionary and, as we saw in recessions, need not occur at all.

Choice = power, and DL's mistake is in trying to thumb its nose at that, figuring that with less competition, for now, it has leverage to do what it couldn't before. But I've pointed out why I don't think today's "cartel" situation can stand (LCCs or externalities will derail it). It'll take time for the results to show, but we've seen other bad moves aimed at low-revs in the past that had to be rescinded, and I think this will become another. If UA and AA both don't go along with the full monetization it's hard to see DL going that alone, and even if they do, the market would decide. There's a lot of power not only in a real choice of carrier (including LCCs), but also in a choice being not to travel at all.

fireworksboy

So, admittedly you've been giving your loyalty to a company that, for decades, was treating you unfairly and running a scam program. They knew it was unfair and a scam and so did its (or at least some) of its customers.

But NOW they've seen the light and are going to treat everybody "fairly".

Yeah, I'm going out on a limb here and question their motive. YMMV.