Delta Q&A Meeting with Execs - NOTES
 

With atldlff's blessing,

I present to you my VERY ROUGH NOTES from the event. Others can correct/fill in the blanks:

Delta Question and Answer Session Notes – June 25, 2009

Josh Weiss, Managing Director – delta.com, self-service, and CRM

Progress – delta.com:

Now DL’s #1 distribution channel based on ticket share

Closed 43% of our qualitative gap vs. CO while improving from 5th to 3rd in JD Power rankings

Moved from 4th from last to best of 16 companies across industries in ‘08 Forrester reports

Migrated 9 points of SkyMiles award booking share from rez to .com

Launched personalization

Linked delta.com and nwa.com for account viewing, mileage transfer, booking, check-in, and FAQs

Implemented 462 site upgrades and fixes based on customer input and needs

79% speed improvement from April 08 to April 09 – now #1

Chose nwa.com and NWA kiosks, but when they sat down DL could not retain the NWA tools due to cost, timeline, and capability. Early Feb 2010 will be the cutover to delta.com.

Jeff Robertson – Loyalty Programs

Phase I – Preparation and Key Decision Making

Program integration planning prior to official merger approval

CEO and Senior Leader Review of Program benefits, line by line

Direction from CEOs to pursue “Best of Best” Program which would have resulted in $200M in dis-synergies

Recommended “Best in Class,” while trying to offset some of the $200M in dis-synergies

1. Fee – Huge revenue impact ($160M swing) in whether we take DL or NW fee structure:
- Not a top 10 customer benefit or primary purchase
Make the difficult decision to increase the NW fee structure rather than find “financial benefit” in other “more valuable” benefits (e.g. upgrades) DL will not abolish the unlimited complementary upgrade benefit – customer benefit outweighs the financial benefit.

Award Ticket differences:
NW – immediate ticketing, 24-hour cancellation
DL – 48-hour hold
Still needs to be integrated to one standard, but will not be ready by October 1.

2. Elite Bonus Miles – Aligned with the industry

3. Reissue and Redeposit Fee
- Miles from 40k award tickets were redeposited AFTER the flight departed

4. Aligned DL and NW segment qualification, PMU issuance, three-tiered award structure and award access, mileage upgrades, partner affiliations, etc.
- 40% of customers were using 50k SkyChoice, now 90% of those customers redeem at 40K
- Almost no one books the 350K BE redemptions – almost all at 100K or 100K (many at 150K)

5. Platinum Medallion Upgrades – BROKEN (Day of departure issue basically outrageous; customers want HQK fares included); will not be resolved by the target integration date

6. SkyMiles Credit Card and American Express – Months of intense negotiation resulting in a “industry leading” agreement for Delta and the customers; Debit card an add-on

Every decision had to balance:
- Customer benefit and experiences
- Financial commitment to the company
- Technology readiness

Phase II - Aligning the Two Programs

Some Internal (and External) Disappointments:
- Need to issue 10-digit SkyMiles numbers to everyone
- Strong negative reaction to reissue and redeposit fee change and as a result, did NOT eliminate Y, B, and M bonus and companion upgrade program
- PerkChoice Program Technology Hurdle – want to add back in 2010

Key Areas of Focus:
- FIX the Platinum Medallion Systemwide Upgrades
- Evaluate every potential negative customer impact decision CAREFULLY
- Design the 2010 Medallion Program in parallel to aligning the two programs: there will be four tiers – planned announcement in July 2009 with some “cool, extra features.”
- Don’t follow the competition – lead and implement what is right for DL!

Phase III - Integration, Clean–up, and Launch the 2010 Medallion Program

- Integration target date is October 1, 2009 and 13 million new members will be moved over to the new database.
- On track to integrate WorldPerks Program into the SkyMiles Program in October
- First Business Unite to integrate ONE LOYALTY PROGRAM, TWO AIRLINES
- There will be customer experience gaps:

- Elite Baggage waiter policy difference

- PerkChoice Pay With Miles

- Complimentary Upgrade on coach awards for Platinum and Gold elites – DL will match NW, will clear after Silvers, will not be ready by October

- Policy difference on Direct Ticketing Fees for Gold and Platinum Elites

- OA partner award fee

- Automate systemwide and mileage upgrades

- NW RES availability to DL award seats

Communication – Keeping Everyone Informed

*Communication is a key focus throughout the integration process – for both our customers and our employees

- Integration timeline on delta.com – updated monthly

- WorldPerks transition communication

- Phase 1: Direct mail and email end of May
- programs integrated 4Q 2009
- unlinked WP accounts will receive SM number in 4Q

- Phase 2: Direct mail and email to customers in 4Q
- Exact transition date
- New SM numbers assigned to WP members

- 2010 Medallion Program announcement in July 2009
- Comprehensive marketing plan including
- Direct mail with brochures

Thank you for this. A few questions from someone that wasn't able to attend.

-What was the tone and attitude of the execs and FTers in the room?
-It seems that much of what was discussed has already been revealed on FT or through other sources. Was there anything really new? Was there a reason given for missing those target dates for certain iniatives?

The mood and interaction was very positive.

The primary reasons for missing target dates on some of the items is DL's technological capability, the communication between DL/NW systems, and that the two airlines will be still operating under separate certificates when the integration takes place October 1. Some items cannot be addressed until they are under one operating certificate and the Feb 2010 cutover to all delta.com.

First, thank you for taking notes and posting them here, me4yankees!

From your notes, I would like to dig a bit deeper into the comments regarding PMUs. Perhaps you and/or some of the other attendees can add some detail to your notes.

Is the "BROKEN" comment yours, another FTer's, or that of Jeff Robertson? If not Jeff's, did he acknowledge that it is broken?

I'm also curious about the comment, "day of departure issue basically outrageous". Again, is this your comment or did it come from Jeff Robertson? If yours, did Jeff agree that this is outrageous?

Was there any discussion about how the PMUs will be 'fixed'?

These issues touch on some of my biggest and most long standing gripes with the PMU system - especially the day of departure issue - so, I'm hoping that there is good news on the horizon...even if it won't be implemented until 2010.

I understand that some issues can't be resolved until technical barriers are worked through, but my question would be why this issue "will not" be resolved by the target integration date? It doesn't seem to involve a technical issue at all.

Did they elaborate on why they can't come to terms with a decision on this part of the program? I'm glad to see the word "broken" used in reference to it.

Very nice job from what my feeble memory can recall. ^ ^ ^

I do believe that Jeff said 90% of the customers who formerly used SkyChoice were now redeeming at the Medium level. (You have 9%)

Thank you for taking the notes!

David

Thank you for taking notes of the Question and Answer Session this past Thursday, me4yankees. I greatly appreciate it.The word BROKEN, in all capital letters, was on one of the slides presented by Jeff Robertson regarding Platinum Medallion Upgrades.

Those were Jeff's words on his slides, and the actual comments that he made. He even went as far as to apologize to the Delta employees in the room when he said, "there is no reason that a BE seat should go out empty or go to a non-rev, when an elite customer has been on the waitlist for weeks."

This has been one of my personal issues too. It was extremely good news, and he committed to getting this addressed. I can tell you that he was absolutely sincere and straightforward in his approach to address this issue. I am firmly convinced it will get fixed, just be patient.

You are welcome and I will try to keep up with this thread and make corrections! :)

And most of my notes are from the slides that were presented, with Josh's or Jeff's commentary inserted. I used their words, not my interpretation.

Let's not hold our breath about the PMUs... it has been BROKEN for many, many years... maybe the merger will somehow give them the "cover" to fix it.

The thing I still can't understand is why this would be an unsolvable issue at this point. Unless the CEO doesn't feel like it is "broken" then it seems to me that this is one thing that could be fixed tomorrow.

I mean, 90% of the battle is reaching the understanding that it is broken. It would appear that has now been achieved, so why the corrective decision can't just flow from that baffles me. It seems like one of the bigger bones to throw toward PMs as well as one of the easiest things to do.

The only thing I can think is that perhaps Jeff is in a distinct minority at Delta with his belief, but if he was I don't think he would put that on the slide.

Thank you me4Yankees for your terrific notes updating us on the Q&A session. I'm also glad to hear the mood was positive. Quite honestly, I was a little concerned that it might have turned into a public bashing of Delta. ;)

Not only was it not a public bashing of Delta Air Lines, but the session was quite civil and could have easily lasted longer longer than scheduled.

I believe that everybody who attended enjoyed being there.

The session started out in a very light and funny way. Josh presented slides of very harsh and critical FlyerTalk quotes about delta.com, then he presented a slide with a photo of his kids saying even they aren't happy with the website. It was a great icebreaker and I think his sense of humor really set the tone for an open and positive exchange, IMO.

That's good to hear. If communication with the customer had been fuller and more straightforward with (negative) changes announced further ahead of time DL/NW I'm sure this flyer and others would have been willing to put up with more of the devaluation.