TWA Fan 1

Not only ludicrous but also mostly likely false.

If the benefit is too one-sided in the customer's favor, the business faces the prospect of underselling its product and not earning to its full potential.

But...

If the benefit is one-sided in the company's favor, it faces the prospect of defections among the ranks of passengers whose yearly spend is considerable, in favor of tiny upsells ($19-$99).

To replace the yearly spend of one DM Delta would need to sell 151 $99 C+ upgrades, assuming these passengers' base fare is as expensive as the ones purchased by the DM...

So they're replacing a balanced model that ensures a predictable revenue stream by one that turns the product into a pure commodity, which requires far more density to achieve similar revenue levels.

Why would anyone do that?

If, as Delta claims in its PR, there aren't enough C+ seats, then the obvious solution is to increase the C+ inventory, which allows the high-tier elites to continue enjoying an important benefit and provides additiomal inventory for upsells by kettles.

rylan

Here is the line from the cut-n-paste that really got me annoyed. I responded and called them out on it.

BrentHutto

Translation. We believe there have been a lot of seats that we could have sold if they had not been given to elites. So we're going to start selling them instead of giving them to elites.

That's fairly standard quality corporate euphemism-speak for "We'd rather have the cash when we can get it".

NotHamSarnie

The alternative, customer-centric, approach would be to add more C+ seats owing to greater demand, and then sell them. The fact that people wanted to pay for C+ belies the common response that people want the lowest fare regardless of comfort. Clearly there are people like that, and they can sit in the very back of the bus in the current cramped Y seats. Perhaps airline discomfort has reached the tipping point where people are willing to pay more to avoid being like a sardine.

scracer14

I was on a project this summer where I purchased tickets Friday for Friday travel frequently. It was frustrating to have no aisle seats or C+ available to pick at booking. Ultimately, I only sat in 2 middle seats in 60+ flights.

It is a concern that someone can buy a YBM fare at T-8 and sit in a middle seat. This would be solved by holding 3-4 seats in E+ Aisles for those fares. They already hold the first row for disabled. They don't have to revamp the whole system to protect the very slim chance an elite on a YBM sits in a middle seat. Its like shooting a rabbit with a rocket launcher...

vgb2001

Here is the response I got (4 days later).


Thank you for contacting us with your concerns about the recently announced changes to our policies to our Delta Comfort + product.

Please accept our apologies for your discontent with the new procedures for allocating these seats. Your concerns are understandable. Delta continues to extend complimentary access to Medallions in Delta Comfort + seats within eligible windows. As we continue to invest in our premium experiences, we have aligned our procedures to our current Complimentary Medallion upgrade system. Your comments will be shared with our Medallion leadership team as they consider future enhancements to our program.

At least they're not trying to make any excuses in this reply, nor trying to convince me that I had asked for the change.

bubbashow

While the rollout of this has been frustrating and didn't work for me the way they said it would, I CAN see a DM and PM benefit. There are MANY times that I have bought an expensive last-minute ticket and only center seats were available in C+, and actually a flight last week from HNL where there were NO seats in C+ (and J was sold out). If they hold back, the right people in the right order will have the option of the C+ seats as it will "upgrade" by status then fare. While I don't like the idea of ending up in a center seat, let's wait to see this in practice before getting too upset.

aCavalierInCoach

This is kind of lazy business math, no? If the base fare of the two is the same, then any C+ sales are incremental. Even if it's a question of how many new C+ sales you would have to make if that DM wasn't purchasing tickets (and assuming no one is replacing them, which is probably overly conservative given the commoditization of airline tickets for "kettles"), the margin on selling C+ seats is 100% whereas that is most definitely not so for a DM's $15K in fares.

I am sure Delta has run this math and found it to be very much in their favor given the time/$ investment made in IT changes etc.

That said, only time will tell if this was financially the right decision. It was most certainly not a customer friendly one.

KevinDTW

To DL the right people in the right order is whomever is willing to pay for it first. Whether that's a non-FF booking 3 months out who wants to splurge for that trip to Hawaii or a DM booking one week out who wants to lock in the last aisle seat. IIRC DL recently stated a goal of 70% paid F via FCM; soon they will probably announce a similar metric for paid C+. Medallions will get only the leftovers.

mattp1987

And, actually, the only reason you get a banana on that route is because it's considered a competitive market which means Delta serves a meal in F despite it being 733 miles. I routinely fly ATL-SAT, and they only serve peanuts, pretzels, or Biscoff on that 874 mile flight. I just searched for a random flight next week and found C+ selling for $49 on that route.

Traveling Salesman

Here is my reply:

Dear Mr. Traveling Salesman,

RE: Case Number xxxxxx

Thank you for contacting us about Delta Comfort+�and your Medallion benefits.

We are sorry to hear that you are disappointed with the changes to our Delta Comfort+�. We are truly sorry for your frustration. As you know, for flights on or after May 16, 2016, Medallion members and one SkyMiles member companion in the same reservation will be eligible for a Complimentary Upgrade to Delta Comfort+. Your upgrade will be based on your Medallion eligibility subject to Delta Comfort+ availability at time of ticketing or anytime thereafter.

For flights prior to May 16, 2016, Medallion members and up to eight travel companions may be eligible for complimentary Delta Comfort+ upgrades, when traveling in the same reservation.

We do try to be competitive with our competition; and your feedback about this aspect of our service will be very helpful as we make future decisions for our onboard amenities. We are striving to become the global airline of choice and your comments in this area will help us achieve this goal.

Please visit delta.com/medallion for additional Medallion information.

As always, we appreciate your loyalty. We value the relationship you have with Delta Air Lines and would be delighted to have another chance to restore your trust and confidence in our service.

As a Million Miler Diamond Medallion member, you are an integral part of our customer base and we are always interested in your feedback. Thank you for taking the time to write. We deeply value your business.

Sincerely,

Kelly Green
Diamond Desk
delta.com


I like how they are interested in my feed back but never really responded to my complaint regarding the loss of the benefit of choosing the seat I want at time of booking. At least as a Platinum on American I can still choose any seat. Guess who is getting more of my business next year. Because of the lack of upgrades I have gone from Gold to Platinum on American this year.

TWA Fan 1

This is the type of analysis that is the most often done, namely the idea that C+ upsells represent "100% margin" while a DM's $15k is just essentially assumed.

Clearly, no one can predict the future, although UA went down a similar path, deeming its elites overentitled and seeking to monetize on the margin rather than cater to elites whose business is, by definition, far more predictable.

First, there is the fact that for every DM who defects from DL, you need to replace it with dozens and dozens of upsells from customers whose loyalty to spending with the airline is on a purely commodity basis.

Why spend $$ on DL C+ when I can get more legroom for "free" on B6 or WN?

Secondly, this marginal revenue approach inevitably leads to much greater density. To replace a DM's $15k achieved on 40-60 segments, you need over 150 upsells. So, in this narrow case, you've added 90 to 110 more passenger/seats just to break even on the calculation.

And that's assuming the kettles buying the upgrades are purchasing fares as expensive as the DM. Of course, it's not impossible that kettles would buy fares that are more expensive, but, on average, it's reasonable to assume that kettles don't have any incentive to buy more expensive fares, especially not if it's just for a chance to spend even more $$$ on C+.

Finally, the higher density model stretches the whole operation to and often beyond its breaking point. Overfull flights lead to unhappy ground and flight crews, disgruntled passengers, horrifying IrrOps.

Although UA actually never tried to turn its E+ into an upgrade, they did go down this path long enough to learn the hard way that it did not lead to a healthier bottom line (which is all that matters, the marginal revenue bump is only an intermediate step in calculating the P&L), and did immense damage to UA's reputation and good standing.

DL does not have most of the problems UA did when CO and Jeff Smisek took them over, but they need to be very careful not to overstep their success and turn it into failure.

The bottom line is that, yes, elites receive entitlements that, at least in a superficial analysis, would lead one to believe that they are less "valuable per segment flown."

But what the UA experience showed is that this analysis does not mean that by reducing benefits greater profits will ensue, because turning away a highly loyal customer whose annual spend is considerable to replace him/her with a fickle commodity price-driven alternative whose incremental marginal revenue bumps are tiny, is a very risky strategy that can lead to hurting the company's bottom line.

mattp1987

Yeah, I can't tell if they're outright lying or the person responding just doesn't really understand the new rules, but I don't think there's any way to read the two consecutive sentences in the email and not assume that the second is a continuation of the first.

jrl767

probably both


more ridiculous marketing drivel

what I think DL leadership has failed to understand is that the "loyal" elite member would much rather DL compete by offering noticeable positive differences/discriminators in products and services, rather than by blindly retooling those products and services to more closely resemble the commodity aspects of travel on other airlines

Zeeb

Delta seems to want to be an LLC with a couple nicer seats up front on flagship routes. They basically want to become an overpriced Jet Blue.