If you missed the news, Delta is done giving you miles and elite status credit for flying on its cheapest tickets. Basic tickets will be excluded from SkyMiles earning.
Even if you don’t fly Delta, it could be bad news for you, since loyalty programs in the USA have perfected the game of “copy cat”, and American and United are the market leaders in saying “whatever Delta does, we’ll eventually do too”.
These airlines want people to look right on the screen, to see that standard fares offer better value, but sometimes the gulf between basic and standard airfares can be truly astronomical and virtually impossible to justify.
After a year of customer friendly moves, such as the removal of most change fees, why is Delta abandoning rewards for its most price sensitive but potentially loyal customers entirely; and why couldn’t they just offer a pathetic amount of miles, as a gesture?
Delta’s Bizarre “No SkyMiles” Move
Delta will no longer award SkyMiles, the points currency used by Delta, or Medallion Miles (MQM’s), the system used to establish elite status, for all basic economy tickets.
Fortunately, these tickets are easy to spot in the Delta booking flow, and therefore easy to avoid — if you’re willing to pay up.
Airlines including Spirit, Frontier and JetBlue have aggressively rolled out ultra-cheap basic economy fares, and Delta has been forced to compete with these prices on many markets, but this move indicates it clearly doesn’t want to.
Like other legacy airlines, Delta arguably does not want to sell these tickets, and would much rather people pay up for a higher fare, but he world doesn’t quite work like that, so they do anyway.
It could be concluded that this significant new move to no longer award miles or status credit on these “basic” fares is a new “lever” to attempt to get Delta’s SkyMiles loyalty members to avoid these fares — and give them more money for each journey.
Delta has rightfully prided itself on earning a revenue premium versus other airlines — the assumption that people will pay more for “better” — thanks to a better on-board service, reliable on time performance and other factors.
Delta’s move to create social distancing during the pandemic somewhat proved this concept. But — this may be a step too far. It also sends a message that loyalty is only loyalty when someone isn’t entirely happy.
The problem is, by doing this, Delta is creating an inferior proposition on basic tickets than low cost airlines, which have actually worked to improve points and perks, as well as on board experience.
Why Can’t Delta Offer A Pathetic Amount Of SkyMiles?
Since Delta awards miles based on how much you spend, instead of how far you fly, the cheapest tickets already earn paltry amounts of miles which would take quite a lot of flying to ever reap any benefit.
People inherently earn more when they spend more, so punishing those who spend less seems redundant.
The gesture of offering miles on basic tickets is a classy, wholistic approach to loyalty, where a customer is always valued for choosing Delta versus other airlines, rather than only valued when they “overpay” for a ticket.
If that’s gone, what is loyalty?
If someone books a $100 round trip, a general member would earn about 500 miles. Given Delta’s costs to book most flights with miles, a whole lot of flying would need to take place before those miles ever came good.
So, rather than just slapping loyal members in the face with no miles, why not just offer a pathetic amount of miles, as a token of the wholistic approach to loyalty? There are many ways Delta could do this, in less offensive ways than they now have.
Here are a few alternative ways Delta could’ve made “basic economy” less attractive, while still sending a better message than no miles or elite status credit at all.
- Set a table for miles on basic tickets: 250 SkyMiles per one way (domestic) and 500 one way (international), no matter how much you spend. All other Delta tickets earn on spend, so there’s much more to earn with other fares, in most cases.
- Remove elite bonuses for basic tickets: if Delta wants elite SkyMiles members to pay up for higher fares, why not just take away elite bonus miles on basic fares. Members still earn, but those who care about hitting status or earning points will spend more.
- Create a lower earning rate for basic tickets: If earning tables are out and removing bonuses for elite members is too, why not just say basic fares earn 3X miles per dollar, unlike 5x for all the other tickets. Again, it’s better than nothing.
In Europe, Delta’s partners Air France and KLM has also been forced to compete with low cost airlines in an even more robust low-cost market. To help tackle that, they just tweaked their formula for flights on low-cost airline partners that earn their miles, so that they’re less rewarding than any fares offered by KLM or Air France.
Profits Now, Loss Of Wallet Share Later?
Loyalty programs exist because airline wants points and accumulation of elite credit to be a driver to fly the airline versus others, ideally, even if it’s a bit more expensive.
Delta doesn’t want its program to be as rewarding when you buy basic fares, as what it will be when you purchase higher fares.
That checks too.
But, since their program already accomplished that by rewarding miles and status based on spending, what’s really being accomplished here? Just adjusting even more marginaal profit to a P&L for the quarter?
That may check for now, but if Delta fliers, particularly elite fliers, begin to become brand atheists when flying on cheap leisure tickets, and Delta loses wallet share to competitors, there will be more losses than profits over time, due to these changes.
I spent over 20k on delta in the last 4 year, flew dozens of trips on basic each year for work. Gold medallion for last few years.
No more. Delta obviously don’t think my dollar worth the same. So I will just take my business to AA, even if I had to drive 80 miles.
I got 1,692 SkyMiles for a recent ATL-DEN r/t, which cost $189 in BE. In E, it would’ve been at least $60 more. So, they want me to pay extra $60 for ~1,700 miles, valued at 1.4 c/mi, e.g. less than $24? No, thank you! The SkyMiles would have to be valued at about 3.5 c/mi for this to make any sense. And I still don’t see any reason to pay for E – same seat, same “comfort”, same schedule, same “service”…
Excellent arithmetic, @Gennady! You struck the nail squarely on the head! Delta’s logic here rivals the illogic of selling Comfort+ on the CRJ2!
So Delta is killing off the largest single differentiator between them and LCC’s and they think that this is good? I’m just not sure that telling loyal customers that they pretty much mean nothing to you because you don’t spend enough money with the airline is a prudent business move.
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