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 A change like this is almost as ridiculous as USAir's quickly withdrawn "only high fares get elite credit" fiasco.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.