dinanm3atl

This will happen more in Q4 but also in all others. This is part of what DL wants. How many people are in the 10-14K MQD ballpark. Spreading out a few thousand dollars on FC seats through the year.. IE 5K over 12 months is just over 400 a month. DL wants to SELL the seats. They do not want to give upgrades. This definitely will sell seats. I plan to do it for 2019 qualifying and see how things pan out.

gigglypug

Or, if they're in the 12k-14k range they might chose to give that money to another carrier and get their top tier without spending more out of pocket 😄

jrl767

that's pretty much exactly how I managed my (90% self-funded) travel to make PM the past five or so years; wound up doing a couple of mid-Dec MRs the first year that MQDs came into play, but have basically been a WFBF traveler since

RobertS975

Any business that thinks it is okay that any of its customers walk is nuts!

RobertS975

I have seen the term " bad customers" used to describe DMs that used the waiver. What are you smoking? So it will take a dozen kettles to make the replacement.
and those replacements will be on Allegiant next year.

Psyduck1

All I've done in the past year is shed unprofitable customers and worthless employees. Sales are down but OI is up and I don't think I'm nuts...If you're not profitable in the long run I don't want your business.

gooselee

+1...I have had to "fire" customers many, many times. You can have all the revenue in the world, but your business will still fail if it's not profitable and sustainable.

bergamini

Yes, in my line of work (software and implementation) we have good revenue and bad. Not along the same lines, but if we have a customer that we know is going to fail with an implementation, we don't want that blemish on our scorecard. Likewise, if a services project is going to alienate valuable staff and increase turnover, we will quickly pull resources. So yes it's revenue but it's not the type we want. And that's partially maybe what DL is doing here.

I always hope there is some BIS element to it because it makes it a bit more fun and allows for some ethical games, but it wouldn't surprise me if at some point that goes away.

355F1

I was approached by an AMEX rep hawking DL AMEX Cards @ LAX T3 This week and asked him about the MQD waiver for DM Status and he had no clue they they raised it to $250,000.

I told him to make sure he was honest with people about that.

PWMTrav

That's not true at all. Not all customers are profitable, and in the case of Delta, they likely want to ensure that their most profitable customers don't have their experience eaten into by some of their lower value customers.

I don't even work in this industry, but I can tell you in all likelihood that a DM qualifying on MQD is far more valuable to Delta than someone flying the same miles but using the Amex MQD waiver.

Let's make some assumptions -

$25K Amex Spend (waiver) = $250 to Delta, pure profit. The assumption being that Delta gets 1% of the transaction. I don't know if that's low or high, but Amex is generally getting a bit under 3% and they have expenses too, so I'm estimating the co-brand takes a third.

Now let's assume profit on MQDs to be 10%. Last quarter profit margin was 11%, but whatever, I want easy math!

More back of the napkin math, $15k MQD and $0 Amex Spend = $1.5K on that customer.

$7.5K MQD + $25k Amex Spend = $1K on that customer.

Obviously $250k on Amex at 1% is going to be more than either scenario above, but it's clear that Delta is trying to discourage the waiver for the top tier. Or my assumption of 1% is too high, but the point wouldn't change if we reduced it. Maybe they thought raising it to 250k was more PR-friendly than eliminating it (so they could still compare favorably to AA/UA, who don't offer one?)

The real question is who puts 250k on a Delta card without 15k of it being on Delta directly? Those individuals are not spending on the right card!

TheMadBrewer

Not directly to the point but it is interesting in the past year I have put very little Delta spend on my Delta Amex -- my Plat Amex Charge Card offers 5x points when spent with airlines compared to 2x for the Delta Amex. And the Amex MR points can be transferred 1:1 to Delta (though may be more valuable elsewhere)

BenA

To be fair, in your industry you probably don’t have massive quantities of inventory that spoils every single day if it isn’t sold. Even fresh produce lasts longer than airline seats; the only other industry I think is remotely comparable to airlines/transportation is live event ticketing. Appointment based businesses (doctors, lawyers, plumbers) have much lower capacities and being selective about clients is much more important to them to ensure their time is spent on the most profitable clients.

But for a stadium or an airline, getting as many of those seats full as you can is a real priority, as long as you always have seats for the profitable clients and don’t accidentally nudge them into lower revenue products instead.

TheSQLGuru

But Delta's customers BUY tickets. If you can't be profitable selling a seat at $NNN - taking into account ALL that that sale entails - then DON'T SELL IT FOR THAT PRICE. I work in technology, and I can tell you that there are rocket-science-level algorithms and AI crunching MASSIVE amounts of data to optimize routes, capacity and PROFIT for airlines. If they can't come up with a way to make a profit then they need better number crunching. Oh, wait, they are making BILLIONS IN PROFIT!!

And that statement brings me to the real point: the public is getting the shaft due to HORRIBLY BAD decisions over MANY years by our Department of Justice Antitrust Division that allowed competition to go from MANY choices down to basically 3 (and maybe a half). Anyone who has watched pricing, FEES, schedules, CUSTOMER LOYALTY BENEFITS, etc. over the last numerous years and doesn't think there is implicit (if not actually overt) collusion going on is not facing reality very well.

davetravels

I've said it before.....

The airlines are now, EXACTLY where they want to be!

bergamini

I think we can all agree that more carriers with a full route system would be great. Or some smaller carriers doing an alliance to provide closer to a full route system to make a 4th. Although WN is really the 4th already and if you are willing to forego Int'l awards and first class, quite a viable competitor.