Opening Remarks – November, 30 2004

Opening Remarks – November, 30 2004

Our December issue is usually full of joy and best wishes to our readers. This year is no different. To you all, my personal best for the entire holiday season (and there are certainly many different holidays among our numerous readers).

This particular time of year has an early surprise for many of you. The up-and-down emotional rollercoaster that is the future of Delta Air Lines now seems to be in better shape, though it will be many years before we know if the airline is headed in the right direction. For reasons I can’t quite figure out, Delta’s financial peril was more worrisome than that of others. I easily received more email, letters and calls from concerned members of SkyMiles than from members of Air Canada Aeroplan, United Mileage Plus and US Airways Dividend Miles combined.

As you know, I never moved from my position that Delta would be fine, and I continued to urge members to earn more miles. What is very, very satisfying to me is how Delta went from the brink of bankruptcy to instituting a real change in order to regain its former position among the majors. There had been 15 months of very public wrangling with the pilots, with no real success. It seemed they were all waiting for something to happen — something to signal that they’d better get their restructuring done. And it all came down to the SkyMiles program.

Well, before Delta started to negotiate with labor and cut costs with suppliers, it made a singular move with a group that it failed to properly negotiate with — the members of SkyMiles. Without notice — without the communication due to its most loyal Medallion members — SkyMiles changed how members would earn elite status. Arrogantly, SkyMiles didn’t seem to care that for 21 years previously, they had told members that “he who flies the most is our best customer.” Of course, I’m referring to basing Medallion re-qualification on revenue. As I’ve mentioned before, change is sometimes good (apparently it worked for Delta, though no other program followed in their exact footsteps), but let’s be very careful about how we communicate change to our loyalists. SkyMiles deserved to be spanked.

But that superior attitude waned over time as Delta spiraled to depths even below that of now-defunct TWA and Eastern. They are now starting to communicate, and that’s good for everyone. Why does SkyMiles suddenly feel good about itself? Well, for starters, it has saved the airline. After pushing loyal members of Medallion out onto the tarmac, it started to make subtle changes to welcome them back. And that is starting to work.

As for actually saving the airline, consider this: When it was announced that American Express would advance Delta $500 million against the next three years’ worth of miles earned by users of the Amex/Delta card, the corporate stock rose 22 percent in a day. The following week, when a pilot labor deal was finally completed, there was only a 16-percent gain. It looks like the market used the SkyMiles money grab as the leading indicator that Delta would be able to stave off bankruptcy. Since that announcement, almost everything else has fallen into place for Delta. Yes, SkyMiles did save the airline.

Now, on to our regularly scheduled Dividend Miles watch. First of all, there has been enough — though not much — progress on the labor end to stave off any immediate need for members to cash in their miles. The future stills looks pretty murky, but of course we’re hoping to celebrate this program’s 20th birthday next year. Progress, even in small steps, really helps.

The one thing I keep watching is the price of oil. If US Airways can find breathing room at $50 and $55 a barrel, then as things improve (and oil goes back to just north of $40 a barrel), they will be OK. Frankly, I see signs of a merger, but that’s just me, since all the other guys don’t see any future for this airline at all. Recently on “NBC Nightly News” with Tom Brokaw, I reiterated my position that US Airways will survive, and members of Dividend Miles will get the value they need from that program. This month, I am staying the course.

And finally , this just in from the home office in Colorado Springs: Last month, in our hotel comparison, we wrote right and wrote wrong. In the comparison of mid-level stays, we said that Starwood won bragging rights for the major hotel chains. That we got right. What we got wrong were the numbers to back it up. Using templates can be fraught with mistakes, and that’s what happened this time. The number of points should have read 15,285. The number of free nights would have been five, based on a category-two hotel property — still the winner among the larger major chains. You read it right, we wrote it wrong. Make sense? Sorry for the confusion.

See you all next year, right here in InsideFlyer.

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