DL Medallion Program Revisions
 

Supposed to be high level intra-DL conference call today announcing major changes to medallion program. Status moves to a revenue-based model and segment-earning will not be permitted any longer. Changes officially announced this coming Thursday.

Source for this????

What could Delta possibly gain from such a stupid move? It might enhance revenue, but it would drive many Skymiles members away, and end up hurting themselves in the long run. Only the business travelers who get their travel paid for, which certainly does not represent the vast majority of Skymiles Medallion members, would have a legitimate chance at Gold or Platinum. A large number of loyal Skymiles members are folks who travel on discounted fares, maybe 3-4 times a month, and expect the perks of Skymiles in exchange for their brand loyalty and continued business. A change like this is almost as ridiculous as USAir's quickly withdrawn "only high fares get elite credit" fiasco. If this type of business change is integrated into most other airlines' programs, it would be the end of elite status for many of us, and thus I would forecast a large migration of business away from the majors (or what remains of them) and towards smaller specialty carriers like JetBlue.

What could these new levels possibly be? $10,000 per year for silver? $50,000 for Platinum?? How many Delta customers actually book that kind of revenue each year?

I think this post should also go into the Delta area to get more reaction from people "in the know". This type of info needs to be confirmed before inflaming the emotions of too many people.

[This message has been edited by bocastephen (edited 12-10-2002).]

I think Delta has a legitimate right to try to separate real brand-loyalty behavior from low-price-chasing behavior which happens to result in revenue to DL.

The hard question that needs to be asked is whether it helps Delta to reward frequent leisure travelers who seek out the lowest fares, then happen to compile enough DL miles for status, for their "loyalty." If those individuals represent only marginal revenue (and a year's worth of their business wouldn't buy a one-way transatlantic BE ticket, in most cases), or if they're really price-driven rather than brand-driven and Medallion status is an indirect consequence of their behavior, then DL needs to look at refocusing on the customers who can actually restore the carrier to profitability.

They also want to get away from rewarding people who plot very-low-cost mileage runs, gain Medallion status, and then occupy F seats while a late-booking businessman on a full Y ticket has to sit in coach. Clearly Delta derives more benefit from rewarding the second guy.

As for the comment above about how leisure travelers will all move to WN and JetBlue if DL doesn't watch out... I think this is probably the unavoidable and natural trend anyway. DL, AA, and UA are going to be business airlines first and foremost. Leisure flyers who always chase the lowest ticket price regardless of brand aren't exactly unwelcome -- but they're not the focus, or the key to profits (see the BA model), and they shouldn't necessarily get loyalty rewards.

The industrywide problem now is all about low yield. Too little revenue per seat mile. First class seats are an incentive in very finite supply... and if DL can leverage them differently to improve yield, I think they should. Otherwise eventually there won't be an airline to fly on, in any class.

Just to clarify a point on this statement:
"Leisure flyers who always chase the lowest ticket price regardless of brand aren't exactly unwelcome -- but they're not the focus, or the key to profits (see the BA model), and they shouldn't necessarily get loyalty rewards."

I would never suggest that passengers who only chase the lowest fare without any brand loyalty should get the goodies like Medallion status...but, the passenger who pays lower fares (remember that only K Class or higher can upgrade to First anyway) AND who gives the vast majority of their business to one carrier (such as Delta) irregardless of how Delta's fares match against other airlines, SHOULD be rewarded for their brand loyalty to that carrier...even if the fares they paid were lower than the next guy whose company paid high last minute fares. The lower fares are still restricted, bought and paid for well in advance, and still result in revenue for Delta, even if the yield is lower. It shouldn't make them any less of a customer.

Delta's incentive goal (any airlines' goal) should be to encourage brand loyalty, expand and maintain their customer base, and reward those regular customers who book 90%+ of their travel on Delta with these basic perks such as enhanced check-in and boarding, mileage bonuses, and space available upgrades. Regular customers translates into constant revenue. Alienating or forcing the lower yield customers away, will result in a much smaller customer base, and I dont think that the remaining pool of high yield business travelers will be big enough to support their operations, let alone the operations of three remaining "business airlines". The end result could be the entire airline business in this country shrinking and segmenting into two distinct brand types: 1) the business airlines who offer premium service to only high yield passengers and who choose not to service low fare passengers. 2) the leisure airlines who offer no-frills cheap transportation to the masses and count on sheer volume to generate net income from lower yields. I think that shift would be a mistake, and end up causing a miserable travel experience for those of us who were the loyal, but lower yield, frequent flyers in the middle.

Bottom line is that the airlines made their bed (by creating these incentive based marketing perks in the first place), so they should be forced to sleep in it. They can cut costs in other ways, without alienating those of us who have long term relationships with their brand. I had a longer post in the Continental group to discuss what could be trimmed from operations without alienating their broad customer base, while maintaing the most basic perks that we all enjoy, such as the first class upgrades, separate check-in, boarding, etc. There should be more creative thinking "outside the box" in airline management, and less "punish the customer" thinking. It is understood that the airlines are losing money, and that costs must be cut to stay in business...but it should be done carefully and selectively...not by swinging a machete at anyone who doesnt pay full Y.

I know it's a small nitpick but there is no such word as "irregardless". It's either regardless or irrespective.

There is something going on. The agents were talking about something like this in the B25 ATL CRC last nite, but wouldn't give me any details

Over capacity with to many seats chasing to few passengers that are not flying enough may make them rethink the strategy real quick.Add to that many pax tired of insane high prices, shabby rundown poorly maintained planes, combined with sevice that acts like it is doing you a favor to have you wait in line.
This has helped Jet Blue rise from nothing into a small strong force.
They must laugh every time another bad idea comes out of Atlantas exec headquarters.
US Air learned awful quick that it just won't work.......Next idea( Sigh )
Wake me up when all the brains equal one good thought about capturing true loyalty
I'll be asleep at the gate waiting again for them to fix the hydrolic fluid leaking from the plane.And then tell me no more flights tommorow.
Happy holidays all

If they adopted the same Q points or miles rules that AA has it would make sense. You can earn status flying on full fare tickets but discount tickets still have a chance. The reason US airways attempt failed is they tried to change it to either pay full fare or no status.

Yeah, but for someone who flies a lot on cheap fares, giving them Medallion is not cutting into your Y seats or F seats. MBY seats get preferred seating like Medallion regardless of status, and you have to buy K+ to upgrade. So for someone who travels a lot for leisure like me they're not losing a whole lot because, I don't really get the opportunity to upgrade, because I'd rather pay the inexpensive fare. If they go to that system, I can easily make status on someone else, and I reckon I'm not the only person whos in the same boat, so by going to a fare based system I think they'd be shooting themselves in the foot

My source for this was from a DL employee reading to me from an in-house memo Tuesday morning. Major in-house conference call Tuesday for sales reps with Thursday (tentatively) to be the day of the public announcement.

if there's any validity to this, it's likely to be a trial balloon, which will float or flop depending on reaction within the industry and among pax. be sure to speak up loudly!

Some things to be noted :

a) Front line employees never hear about things like this before public announcement, so anything you hear from CRC agents or telephone agents are simply their interpretations of the same rumor.

b) My understanding from other higher placed sources within Delta is that this would be a supplementary revenue recognition initiative to complement the existing Medallion program, rather than as a replacement. That is consistent with Delta's overall loyalty marketing fundamentals.

We'll have to rename mileage runs to dollar runs.

Anyone know how I can spend $50,000 to make plat with the least number of miles?

In all seriousness who is this frequent traveller that Delta is after? I don't really have any freedom to pick my carrier for work - I've always had to take the lowest (sometimes unrestricted) fare in the market. The only time this wasn't the case was when we had negotiated rates with our preferred carrier. In neither case did I have any personal influence on carrier selection.

I do have a lot of influence on my personal travel - always at low to medium yield fares. The question now is: how much influence do carriers want over this discretionary spending?

http://biz.yahoo.com/rc/021211/airli..._report_1.html

See this for more speculation.

Management employees do hear about these things ahead of public announcements when they are invited to participate in the company wide conference call like the one held Tuesday that my contact was in on.

Is there anyone who thinks that this is not a good idea, from a business point of view?

If you have the choice, non-stops are often more expensive than connections, seldom the other way around. Connections must be more costly for the carrier - complexity of processing, higher risk of costly mis-connects, bumps etc. There's often a slight extra yield enhancement from the shorter distance flown on a non-stop.

I always failed to see a rational case for giving status as a reward for pure sector count, when that can be driven up so easily by booking ridiculous connections with no direct benefit to the airline.

Delta has long discriminated against its CVG and ATL based FF members with segments. Even still I have maintained PM status for years. If they start to play more games with this program, then Airtran will be the biggest winner, American second and Delta losing the most from a long time business traveler.

This is no different then NW flyers who live in MSP/DTW or AA flyers who live in ORD/DFW or HP flyers who live in PHX or US flyers who live in PHL/PIT or. . . . . .

No one denied that. I was simply saying that frontline employees don't hear about it. I've got my own sources at Delta who have fed me their own version of the gossip, but I'm sitting back to see the details rather than jumping the gun and posting about it.

The official changes may now be read and discussed at:

http://www.flyertalk.com/forum/Forum21/HTML/008362.html

WOW!
Lots of changes! It is going to take me some time to work these new changes into the matrix. Only thing I don't like for sure, is mileage based on fare paid. This was the main reason I left EI back in 96 for City Jet who had a Virgin FF agreement and could then move miles over to DL.

Dear

As a Delta SkyMiles Platinum Medallion™ member, you are one of our most valued customers. Therefore, we want you to be among the first to learn about upcoming Medallion program changes that primarily relate to earning elite status and the domestic upgrade process.

With these changes, many Delta customers will have one of the fastest paths to elite status of all major U.S. carriers. We are reshaping the Medallion qualification system to better align loyalty benefits and rewards with the fares customers choose to pay. Effective January 1, 2003, Medallion qualification will be based on a combination of miles flown and fares purchased, instead of base miles, segments or transoceanic segments flown. Please note that these changes will not affect your status earned in 2002 for the 2003 membership year; rather, they affect the way in which you may earn elite status starting on January 1, 2003.

We also are modifying the Medallion domestic upgrade process over the next 13 months. The changes are designed to simplify the upgrade process and enhance the value of upgrades by better controlling the number distributed. We also will be increasing the opportunities to use upgrade benefits by expanding domestic upgrade privileges to L, U and T fares, for day of departure, beginning May 1, 2003.

All Platinum Medallion upgrade benefits and guidelines — including unlimited domestic upgrades that members may confirm at time of booking, subject to availability; as well as six complimentary Platinum Medallion upgrades for use on most Delta flights worldwide — remain unchanged for 2003.

You also will note that we have increased the SkyMiles bonus for Delta BusinessElite™ and Business Class customers from 25 percent to 50 percent. This benefit is available to all SkyMiles members.

The ability to earn and accumulate SkyMiles for Award Travel through eligible flights or partnership activity has not changed.

You will receive a more detailed explanation of these changes and other enhancements to our SkyMiles program via U.S. mail in early January. Until then, please visit delta.com/skymileschanges for a more complete overview.

As we move forward with these changes, we hope that you will notice an improvement in our ability to recognize and reward you for your business. We are dedicated to becoming a better airline and to developing a partnership that provides our customers with the best travel experience possible.

Sincerely,

Patrice G. Miles
Vice President, Consumer Marketing
Delta Air Lines

Bye, Bye Platinum Medallion......

http://e-mailprograms.delta.com/AC/C...-PNAIKpXGnL3Rd

As someone who commutes between NYC and San Diego on a weekly basis, let me be one of the first to say that these changes will definitely influence whether I fly Delta. I am a graduate student at NYU, but I continue to work in San Diego. I commute back to CA from NY every week. As a student, I qualify for student fares (normally in L class). Based on the modifications to the program, I will now only earn 50% of the miles flown. Why should I fly on an airline which has basically just told me that they think my weekly travel is less worthy of elite status because I qualify for a cheaper fare!! I have my fingers crossed that this is not the start of an awful trend among frequent flier programs.

We have been "enjoying" this in Canada on domestic flights with Air Canada for some time. It happens on other airlines in other parts of the world too.

Welcome to the club http://www.flyertalk.com/forum/frown.gif

I fly DL enough to earn status when UA's prices are outragous in the MCO market. It looks like DL will push me to US when I can't find reasonable fares on UA. It might be a blessing for me since US flights will now get me status miles on UA...if UA continues to exist.

As a FF with 1 Mil mile on AA and 1.2 Mil mile on Delta, the proposed changes will surley result in my not making PM for the first time in 5 yrs. Maybe it's time to stat sending my relatives on free FC trips.

Having had two DL flights today, I did not hear this in BOS, SLC, or TUS airports, but maybe I just wasn't listening. I liken this to airfare increases...one airline raises fares and others follow. Now, let's see who follows this one.

Hopefully no one.

I'd say that AA was the leader and that DL followed -- at least as far as the 50% status mileage on discounted fares.

For many years I've been a loyal Delta flyer but the time appears near to pull the plug. I am a Gold with some 630,000 miles in the bank (a workaholic doesn't spend much time flying for leisure)and I've earned this the hard way - segments and high fares. TYS receives no privledges from Delta, has seen the flight schedule slimed down and fares are top dollar. My business travel usually results in paying top dollar. How Delta can see this move as an enhancement is beyond me. I received Patric Miles email today and if anyone needs a copy, I'll be happy to mail it. I'll take my Gold, find another carrier that will provide a comp. and start over.

Yes I know, it's time to start spending some time and free milage before this is taken away as well!

Pretty sucky.

I understand the Award travel restriction, but are these RONE fares that get zippo towards status all freebies, or are some of these weekly E-Fares or web sale fares?

Whenever I've booked the e-fares, they are booked in L class. Who knows if it will change come Jan. 1

R, O, N and E fares are exclusively award and consolidator buckets as of right now.

Thanks.

I find it odd that this new arragement comes so late in the year. NW already has propose changes to their plan and they are quite minor compare to DL. For NW to introduce such dramatic changes would be surprising. I think that DL is doing it alone and too late in the year.

I may be wrong...Would not be the first time...

What I find interesting is that no one has mentioned the Amex Platinum yearly 10000 bonus "base" miles that count towards status qualification. I wonder if they're doing away with that?

Also, with the elimination of the North American Upgrades, we now have no way to confirm an upgrade on a discount fare at booking time, unless DL is planning to allow mileage upgrades from discount fares. With my company travel policy I can't spend $1400 on an M-class fare to be able to upgrade with miles. AA lets me confirm with miles on a discount ticket, has more room and power adapters in coach for those long-haul flights. Why would anyone bother to fly DL after this?

Its a train wreck or more like a plane crash
Its also great for Delta if it works.
I think its a very clever well thought out but none the less highly confusing scheme.
Superb for Delta
Its going to be facinating to see if everyone/majority stays along for the ride with little or no payback in elite status.
Also if other carriers follow its lead.
My condolences to all those members who have put up with Delta through its poor upgrade policies,old planes,cranky flight attendants,poor customer service and now this.
Sure glad I don't live in one of their hub cities.You all deserve elite status for buying tickets of any kind and putting up with the crowded terminals and long cattle lines I see when I travel with them.
I will go back to connecting in other cities and avoid them completely now just in principal.
Being I always put my miles to another program anyway I nver had to deal with their program rules.
Good luck to all at Delta I hope you can deal with this or find a better
more appreciative carrier that appreciates your business.
Happy Holidays all and much luck in the new year.
I'll be watching your reactions and if you continue to support them or move elsewhere with your business.

------------------
AA & Starwood,Marriott Platinum
Hyatt, Hilton Diamond
Swissotel Club Gold
U/A 1k

[This message has been edited by 777 global mile hound (edited 12-12-2002).]

Well, my email to Delta said that for all personal travel and cheap fares I will just go with Southwest. Yep they have cattle car billing, but they seem to welcome my revenue more than Delta. The only reason I attempted to stay Gold this year was the milage bonus and they took that away and even reduced the mileage I am accumulating.