StayingHomeIsBetter

^^^

FirstInFlight

Delta cares about money.

And that is not a bad thing or a good thing - it us a reality and it is the same for every business that wants to exist in the future. Businesses exist to generate a profit. So every decision that Delta makes is geared toward generating profits. They apologize and offer miles when they think there is a goodwill reason to do so. They negotiate partner deals when it makes financial sense to do so. They buy new planes and open new routes, and abandon both, when it makes financial sense to do so.

Why the AmEx deal - because it makes financial sense to do so. Why the MQD waiver, why the elite tiers, why the perqs offered at each level, why the private jet options..... because it makes financial sense to do so.

If you want to know if Delta will or will not do something next year - follow the money. Stop using flyer logic and start looking at the question from the perspective of a corporation trying to increase profits. The answers will always follow the money.

Ber2dca

Indeed, but then one also can't be surprised if airlines make elite status less meaningful in the process. Their financial incentives make them eager to generate loyal frequent flyers but also similarly reluctant to give them perks that cost the business.

Zorak

^ I'm amused by the cognitive dissonance required to cheerlead for Delta in FCM/WFBF and gush that they know what they're doing, while simultaneously thinking they don't know what they're doing if it means other people get benefits in a way he doesn't approve of.

Here's another way to think of it. MQDs measure how much money Delta collects from a person over the calendar year, right? Well, people with the AMEX waiver pay more MQDs than their progress bar shows on DL.com, just that the extra MQDs are paid by AMEX. Why should Delta care about that any more than they care whether someone with $15K MQDs and no waiver paid for $15k out of their own pocket or $15K of OPM?

DLATL777

Im amused that when we talk about how much we hate the MQD rollover some of you start throwing shareholder/earnings into the conversation. I dont think ANYONE said the AMEX waiver wasnt profitable, some of us just say we despise it and want it gone. Do you understand that hating the AMEX rollover because it dilutes the Elite levels has absolutely nothing personally to do with the dollar of Delta's stock price? Because I am having a hard time grasping why thats so difficult to understand.

Customers care about the experience. I dont think any of us were saying Delta's precious AMEX waiver isnt part of a large profitable venture/sole selling with AMEX. We ALL KNOW that AMEX's partnership with Delta is all about $$$$. I for one know its wishful thinking and in reality that Waiver isnt, sadly, going anywhere.

Zorak

It's not. Can you quote anyone actually disputing that eliminating the AMEX waiver would result in fewer elites?

Obviously if there are fewer elites, the same amount of benefits could be concentrated in a smaller number of people, and just as obviously, that's good for those people who conveniently still qualify. But why is that scenario objectively better than giving more diluted benefits to a larger group of people?

yohanson

Or 4) People like me that mostly fly domestic on close in expensive fares and take a couple of international vacations each year on very cheap fares.

bubbashow

I'm just saying that AA and UA have no waiver for their branded credit card. I am sure that Delta can keep Amex happy if they got rid of it.

Someday it will happen and we MAY have a true elite program with only people in it that are earning it.

The year end number post on FT is truly telling.

bubbashow

and YOU are the true elite!

KDCAflyer

Actually UA does have a PQD waiver, it just doesn't apply to 1Ks.

AA doesn't have a formal waiver, but does allow you to earn chucks of EQDs with spend.

Dieuwer

Obviously, MQD from AMEX spend are MORE valuable to Delta than MQD from BIS. Why? Because in the first case it doesn't cost Delta a thing (or very little in the form of depreciating Skypeso) while in the second case it does cost Delta plenty in the form of actually providing transportation by plane.

KDCAflyer

Ding ding ding, instant winner.

SeaHawg

^This

There are plenty of six-seven figure AMEX spend numbers that aren't properly noted in an FT thread. As a business owner, I'm sure both AMEX and Delta enjoy the spend that I (along with every employee I book) sends their way. When the people in #2 and #3categories have as much influence over large group spend/amounts of spend, they will see the full picture.

kthomas

How many people with the analytics and stat training of Nate Silver does Delta have on this problem, who come up with a different answer?

The plural of anecdote is not data, and that stats thread is plural anecdote. Delta has data. Delta can pull (for example) the value of my past addresses (which it purchased from NW) and build a model of how much revenue people who fit certain aggregate profiles, bring to it.

The additional *profit* I bring to Delta via my personal spending is probably much less than the *profit* I bring to Delta by bring a few last minute, full fare SIN-MEX trips to Delta per year. In that, I suspect I'm not an outlier: the net aggregate of such effects, and how they add to the bottom line, is what Delta should be shooting for.

In that regard, I doubt DL is nearly as sophisticated as they could be, but to suggest that they are widely off in the wrong direction, is surely wrong. They can build basic models of what they're getting for their benefits packages from the data they have, and those models are far, far better than some guys who can't conjugate, browsing over anecdotal posts drawing conclusions from what their imaginations render from the light spilling on the back wall of the cave.

I'm all for thinning the ranks a bit more, but Delta's goal is to maximize the area under the (profit) curve. Raise the bar too high, and Delta fails to incentivize additional purchases by distributing goods that have a low marginal cost to Delta -- lowering profit.

DL no doubt has some lossiness insomuch as it does distribute those marginal-cost goods a bit to much to the bottom of the elites (advance upgrades when I can't get the same on short-advance purchases come to mind), but there's no reason to suspect Delta is not reasonably good at calculating the what it gets in return for the net price structure it's Medallion benefits programs create.

xliioper

You are ignoring the fact that only a small portion of your AMEX spend actually filters down as revenue to Delta (and technically, you are not "earning" MQD's from it). Most of it goes to the vendor and AMEX with Delta getting a small cut for the miles. Meanwhile, the vast majority of your Delta spend actually goes to Delta itself. So $25K of AMEX spend represents far less revenue to DL than spending $15K with Delta itself.