The [New] Delta Workbook

The [New] Delta Workbook

Mergers, and the FFP changes that follow are, as one FlyerTalk member mentioned, “a mystery inside a riddle wrapped in an enigma surrounded by a conundrum.” This merger is the largest since TWA and American in 2001 and will result in the world’s largest airline. But have no fear, InsideFlyer is here to guide you through it.

We start by reminding everyone that Delta is taking over Northwest. Yes, it’s a merger, but there is definitely one airline that is the merger–Delta–and another airline that is the “mergee” if you will–Northwest.

This does not mean that every aspect of the SkyMiles program will be adopted over that of the WorldPerks program, but chances are that more aspects of SkyMiles will remain than not. And this is something that many WorldPerks members have been lamenting since the news of the merger first broke.

However, it’s not all going to be bad news. Many travelers will find the combined mileage between the two programs will add up to a very nice pile of miles. Especially those members who aren’t currently very frequent flyers in either program–their newfound mileage wealth will certainly be good news. For elite members, however, the benefits aren’t quite as obvious. They are the ones who have the most to lose and the thought that they will now be competing against even more elite members is something they are not relishing.

Since 2003, these two airlines have shared not only a domestic partnership between their two programs, but an international alliance as well in SkyTeam. Philosophically, SkyMiles has changed more over the years than WorldPerks, with WorldPerks having long been seen as lenient on upgrades and offering other imaginative promotional efforts.

Merger Checklist

You don’t have to just let the Delta/NWA tide roll over you–there are steps that WorldPerks and SkyMiles members can take to make the most of the merger. We’ve put together a checklist to guide you through the process, along with some educated guesses as to what members can expect from the new program.

But first, a note from Bob Soukop, managing director WorldPerks, as posted on FlyerTalk last October:

“Integration with SkyMiles. The system integration with SkyMiles will take some time and we are determined to get it right. Please don’t expect any merging of loyalty programs in the first half of 2009. There is no need to get a SkyMiles account as programs will be completely reciprocal.”

Although it will take time to merge these two mega frequent flyer programs, the process has already begun. In a recent press release from Delta, the airline announced elite and award changes to both the Delta SkyMiles and Northwest WorldPerks programs to “better align member benefits.”

Beginning in 2009, the popular Northwest segment qualification benefit, which allows WorldPerks members to reach elite status by flying a designated number of flight segments, will now also be available to Delta SkyMiles members. We predicted (InsideFlyer, April 2008) that this would be the case because Delta offered the ability to qualify for elite with segments in the past.

Another announcement shows that the new program in one aspect is taking the high road by continuing to offer all members a minimum of 500 base and elite qualifying miles per flight–the only major airline to maintain this minimum for all members. An additional option that is opening up in early 2009 is the ability for members of SkyMiles and WorldPerks to transfer miles between their respective accounts. While the actual details were still being worked on at press time, we believe that there will be no charge for the transfer of these miles and that it will operate similar to the way that American AAdvantage and US Airways Dividend Miles (Frequent Traveler back then) operated some years ago. The two airlines allowed miles to be transferred between programs only when miles were needed to complete an award redemption.

One of the first offers from the soon to be combined programs was the ability for SkyMiles and WorldPerks elite members to receive complimentary upgrades on both airlines. This option has been in place since October 2008.

Another bit of news that was released recently was Delta’s decision to introduce their relatively new three-tiered award schedule to Northwest WorldPerks members. We all saw this coming, and some are definitely not in love with the three-tiered schedule, but there are others who see the benefits of the system, especially for those with lots of miles to burn. You can expect this change early this year as well.

Without further ado, the checklist.

* Voice your opinion

Frequent flyer programs have been known to listen to their members. While the decisions are being made on the combined program, you can let your voice be heard. One place to voice your opinion is on FlyerTalk.com. There are several discussions that have been started relating to the merger, including threads started by WorldPerks’ Managing Director, Bob Soukop, and Delta’s Vice President Loyalty Progams, Jeff Roberston. You can also email or mail your program with suggestions or post on Delta’s blog, Under the Wing. There’s no guarantee that you will get what you want, but it doesn’t hurt to voice your opinions about the direction you would like the combined program to take.

* Review your co-branded credit card

Much speculation has been thrown about regarding which credit card will continue with the new program. American Express has long been the exclusive credit card partner for Delta and the airline owes its very survival to American Express–AMEX ponied up hundreds of millions of dollars in purchases of advance miles to get Delta through bankruptcy.

US Bank did the same over time with Northwest, but does not have the history and favor that American Express has. Looking closely at the WorldPerks credit card from US Bank, you’ll discover several unique and rewarding benefits for members, such as award discounts on up to two award tickets per year for cardmembers. US Bank also offers an ATM/Check Card that earns miles (American Express does not) and the US Bank credit card for non-elites has restrictions on earning miles. For purchases less than or equal to $10,000, you’ll earn one mile for every $1 spent and for purchases over $10,000, you’ll earn one mile for every $2 spent. And there is a yearly award limit. If during the calendar year, your purchases exceed $50,000 (WorldPerks Visa Card), $60,000 (Platinum Card) or $80,000 (Signature Card), all miles for the rest of the year are earned at the rate of one mile for every $2 spent. These limits are waived for WorldPerks elite members.

In contrast, the Delta American Express card does not have these types of restrictions on earnings and members carrying a Delta credit card can enjoy the flexibility of the Pay with Miles program and use a combination of cash and miles to purchase airline tickets. American Express, however, recently eliminated the popular every day double miles feature, which awarded cardmembers with double miles for gas, pharmacy and supermarket purchases.

In the high stakes game that plastic is for these carriers, know that there’s only room enough for one credit card issuer and that will be American Express. Given the tightening of the credit markets, this plum portfolio which always outperforms all other credit cards, is just too good for American Express to allow the US Bank Visa card or other bank to sit at the same table.

However, don’t cancel your credit card quite yet. We think there is room for US Bank to stay in the limelight with this program because American Express does not issue debit cards–a very important part of the plastic mix–so maybe American Express won’t be the only plastic brand going for the new combined airline program.

Continental Airlines OnePass program has a credit card partnership with Chase and a different bank, KeyBank, is Continental’s partner for debit cards.

The key will be the new regional presence of American Express in the Midwest where Northwest and US Bank are key. In the meantime, the Northwest US Bank Visa card continues to earn miles that will eventually become SkyMiles and it remains unclear as to how long that particular benefit will remain in place.

Any good news? Since Northwest is not a partner with the American Express Membership Rewards program, we can see Membership Rewards becoming stronger with the addition of Northwest into Delta. And for all those WorldPerks members who wanted that relationship, you could soon have it.

* Prepare yourself for the new award chart

It’s official–the new program will feature Delta’s three-tier award chart. So pleadings such as this went unheeded: “Please, do whatever is possible to preserve NWA’s redemption levels,” begged FlyerTalk member bostonbali in response to a FlyerTalk post by Bob Soukop. “As others have written, Delta’s three-tier system is a joke, and a spit in the face for loyal travelers. NWA’s redemption levels are fair–not too low, not obscenely high either.”

Last year, Delta introduced its three-tier award chart which came with, among other things, a 60,000-mile award between North America and Europe at the lowest level. Northwest, in contrast, still has the industry norm of 50,000 miles for a roundtrip coach ticket to Europe. Other areas where the cost is 10,000 more miles is for roundtrip coach award flights to South America. Hawaii coach flights on Delta are 5,000 more miles.

When it comes to premium seats, WorldPerks asks 5,000 more miles for business class in the Continental U.S., Alaska and Canada. SkyMiles offers flights to Africa and the Middle East in coach for 10,000 fewer miles roundtrip and flights to northern South America are 20,000 miles less or 10,000 miles less to southern South America. All of these numbers are comparing the lowest tier of Delta to Northwest’s lowest level awards and all the other award flight amounts match up. SkyMiles members can mix and match among the award levels to save miles.

We at InsideFlyer didn’t have any doubt that the Delta award schedule would win out, partly because of statements from Delta’s Jeff Robertson such as this in a FlyerTalk thread, “The three-tiered award structure was launched in September, and in the first 30 days, the number of award seats sold is up compared to the 30 days prior, and the average price of an award ticket is down slightly. In fact, over 65 percent of customers who previously chose the last-seat ‘Choice’ option are buying down to the lower mid-tier level. Thus, for those who believed it was our way of reducing the number of award seats or raising prices, the initial data does not suggest that. We’ll provide more facts around the new award structure over the next few months as we gather more data, however this is a win for both customers and the airline.”

While the programs are in the process of combining, SkyMiles’ Pay with Miles and WorldPerks’ PerkChoice (mixed one-way) awards will continue to be offered.

Also from Jeff: “We’ve seen many people comment on the belief that it will be hard to upgrade, and for most of you, it will not be a material or noticeable impact. This is true primarily because NW customers and DL customers travel patterns really don’t overlap that much. Where you will see the most impact, is in hub to hub flying … In fact, we will likely be upgrading aircraft in these markets anyway, which should provide more seat availability.” Only time will tell if upgrades play out this way.

As for award redemption, both programs have above-average reputations for redemption. In 2006 (last year of available statistics prior to bankruptcy), Northwest flew 9.3 percent of their passengers on awards while Delta flew approximately 9.1 percent of their passengers on awards. The industry average is 7.2 percent of passengers flying on awards.

* Learn to live with expiring miles

We believe that the combined program will include the language that governs the SkyMiles program–accounts with no activity for 12 consecutive months after enrollment will be deleted and after that period, miles will expire after 24 months unless there is some activity in the account. This will take some adjustment for WorldPerks members who are used to the more old-fashioned and vague, “Miles don’t expire but if there is no activity in the account within three consecutive years, the account can be closed.” Keep in mind that the melding of WorldPerks miles into a SkyMiles account will count as activity so everyone is guaranteed at least two years before the mileage police come knocking at your door.

* Take a look at what you can expect from the elite program

Over the years, SkyMiles and WorldPerks elite programs have evolved in similar ways and their benefits and rules overlap about 90 percent of the time. As we reported earlier in this article, SkyMiles members will now be able to gain elite status through segment qualification, just as WorldPerks members have been doing. Now members of both programs, and soon the combined program, can earn Silver when flying 30 segments, Gold with 60 and Platinum with 100 segments within a calendar year. To earn Silver by qualifying miles, you’ll need 25,000, for Gold you’ll need 50,000 and for Platinum you’ll need 75,000 miles, standard for the industry.

Currently, WorldPerks has an extra award benefit for elites called ExtraPerks and much to members’ delight, for the time being this program is staying in place. Registration is required and only Gold and Platinum elite members can qualify for this perk. Once members reach 60,000 Elite Qualifying Miles (EQMs) they have a bonus choice of 1) 2,500 bonus EQMs; 2) two WorldClubs day passes; 3) $50 Marriott Bonus Bucks coupon; 4) $100 NWA WorldVacations discount certificate or, 5) a $50 FTD.com gift certificate. Additional bonus awards are available at 90,000, 120,000, 160,000, 200,000, 240,000, 280,000 and 320,000 EQMs. What is outstanding about this is that as members reach each EQM threshold, they are eligible to select an ExtraPerks award.

Delta has announced that SkyMiles members will qualify for Medallion Threshold Rewards when they surpass Platinum Medallion status. As members reach designated thresholds, they will earn additional bonus miles or other exclusive benefits or gifts. More information about this program will be released early this year.

Delta also has a Million Miler program. Silver Medallion status is given to members reaching one million MQMs, Gold status for reaching two million MQMs and Platinum status to those reaching four million MQMs.

Northwest does not have a formal million miler program and we’re predicting that ExtraPerks will eventually be discontinued and the SkyMiles Medallion Threshold Rewards/Million Miler program will be adopted. Furthermore, SkyMiles offers an exclusive benefit called the Medallion Marketplace, which allows elite members to redeem miles for merchandise and other assorted non-flight awards (TVs, DVD players, hotel stays, golf outings, gift cards and more).

A significant difference between the two programs is the flight mileage bonuses for elites. SkyMiles elite-level members earn mileage bonuses of 25 percent (Silver) and 100 percent (Gold and Platinum). WorldPerks elite-level members earn a generous 50 percent (Silver), 100 percent (Gold) and 125 percent (Platinum). The advantage goes to WorldPerks, but we think the current SkyMiles policy will prevail because it is similar to both American and United’s elite mileage bonuses and Continental is reducing its elite bonuses to match.

WorldPerks members earn a 50 percent elite qualification bonus (not award miles) when flying Y or B class on Northwest, while SkyMiles members earn the same 50 percent bonus when flying Y, B or M fares. The difference here is that the WorldPerks bonus is for elite qualification, while the SkyMiles bonus is for redeemable award miles.

Other subtle differences are that Gold and Platinum elite members of WorldPerks enjoy unlimited, confirmable (one day prior) upgrades on both PerkSaver and PerkPass award tickets (a wonderful benefit) while SkyMiles Silver members enjoy unlimited companion upgrades on select fares, something that only Northwest Gold and Platinum members currently enjoy. We expect WorldPerks award ticket upgrade benefit to disappear and SkyMiles companion upgrade benefit to remain.

* Get ready for the New Delta customer support

We’ve heard from Northwest WorldPerks members, especially those with Platinum Elite support, that they are afraid that the stellar customer support they currently enjoy will be a thing of the past when the two programs combine. But Delta has mentioned that Northwest’s Elite phone agents in the Chisholm, Minn. facility will stay in place.

* Prepare for a world of fees

In a perfect FFP world, we wouldn’t have to discuss fees, but fees are a reality and award redemption is not a free ride. If you wish to redeposit your awards, you can currently do so for $50 if a WorldPerks member and for $100 if a SkyMiles member, although Platinum members of both programs escape this fee. Delta SkyMiles imposes a $25 partner airline handling charge. And SkyMiles nicks members in this day and age of “e-tickets” by charging $75 per ticket for award redemption 20 days or less from departure; $100 for 4-7 days before and a whopping $150 for three days or less prior to departure. Again, Platinum Medallions are exempt from these fees.

Roughly all other fees are similar including government- and airport-imposed fees such as the Federal Excise Tax, PFCs, September 11th Security Fee and International Air Transportation Taxes.

Our best guess when it comes to fees? Show them the money. This means sticker shock for WorldPerks members. At least Delta made good on its word to revisit the fuel surcharges they imposed when fuel prices were through the roof and those surcharges have been eliminated. But if the price of fuel goes up again? Yes, the surcharges could very well be revisited again.

* Get used to Coke over Pepsi

This might seem insignificant, but to frequent flyers, even the smallest details can become festering sores. Northwest currently offers Pepsi. But Coke is served on Delta flights, and because Coke is an Atlanta-based company, there’s small chance that Pepsi will win out.

* If you have a lifetime lounge membership, can you kiss it goodbye?

This is a good question and one that has a high value interest. Here’s some history in a similar situation and then we’ll give our best guess and advice.

When American Airlines acquired TWA back in 2001, there were a number of TWA passengers that had lifetime membership in the TWA Ambassador’s Club airport lounge program. At that time, American did not honor the lifetime memberships, instead, the airline gave complimentary Admiral’s Club memberships for about 20 months and thereafter gave those members a preferred annual renewal rate. If the future follows history, then this is likely to be bad news.

Now, having said that, our research tells us that WorldClubs do not have that many lifetime members, whereas TWA had a large number of lifetime members. If our research is correct, then we would hazard a guess that Delta will elect to add in a manual process of renewing annually the former WorldClub memberships into the Crown Room program.

We say this because again, there are not that many members and Delta may view this as not worth the potential bad PR and legal issues that can come out of this type of situation–or at least that would be our advice to them.

With the Internet being an even more valuable soapbox to such issues than it was in 2001 when the American/TWA transaction was taking place, we think a lot of this will play out online.

* Get ready to get a little, lose a little and be patient with the Web site amalgamation

Neither Northwest nor Delta have ever won a Freddie Award for best Web site, although both programs frequently appear in the top 10 list. Delta Air Lines was one of the first airlines to add an award calendar in March of 2007 and has continued to add partner inventory to the booking tool. Members can search at delta.com for flights on Delta, Delta Connection, Continental, Northwest, Hawaiian, Alaska and Air France. When the two airlines combine, we expect Delta’s award booking engine to remain, but members will need to call the service center for most awards that include partner airlines. On the bright side, Delta has reduced the phone ticketing fee for award tickets from $25 to $20, but elite members aren’t exempt from this fee.

We expect the innovative and informative WorldPerks University pages to be discontinued. For those unfamiliar with the program, members can take five online “courses” about the WorldPerks program and earn bonus miles for completing a quiz at the end of each lesson. Northwest received an Industry Impact Freddie Award last year in recognition of the program’s outstanding efforts to educate its members through WorldPerks University. If you haven’t already, be sure to complete all the courses before they disappear for an easy 500 miles.

Delta recently upgraded the SkyMiles Shopping online mall with a new look and expanded features, such as a product search tool and comparison shopping. The revamped SkyMiles Shopping mall will most likely replace the WorldPerks Mall. SkyMiles shopping has over 500 online merchants compared to WorldPerks Mall 200 plus retailers and WorldPerks members will be able to earn miles with more than twice as many merchants after the transition to SkyMiles is complete. Both malls offer periodic bonus offers and promotions and many retailers are identical, although some shops that are offered through the WorldPerks Mall are not available through SkyMiles Shopping, such as Big Dogs, Charlotte Russe and Symantec, among others.

Both Delta and Northwest use Sabre’s global distribution system so the transition to a combined reservations system shouldn’t be as problematic as the numerous glitches US Airways encountered when they migrated to Shares from Sabre when merging with America West.

* Remember, an airline by any other name is still Delta

Or, keep your sense of humor. The thought of all these airline pairings has not gone unnoticed. “I just got off the Elite line and thought the agents sign-off was a bit comical,” noted FlyerTalk member, Canndlewic. “It’s getting to be a bit of a mouthful: ‘Thanks for calling Northwest-KLM-Delta.'” And while you’re at it, don’t forget Air France: “Thanks for calling Northwest-Air France-KLM-Delta.”

But just as saying goodbye to TWA was a bit sad, so will be saying goodbye to Northwest Airlines which has been around since 1926 and has developed a faithful following over the years. The original manifestation of WorldPerks started in 1981 and was called the Northwest Orient Airlines Free Flight Plan. But from the end of this year, get used to only Delta SkyMiles.

In conclusion, a merger between two mammoth airlines will not be easy. This note from a FlyerTalk member, BearX220, and to the managing director of WorldPerks sums up what many WorldPerk members are feeling, “To Bob Soukup: I’ve been a big critic of Northwest Airlines and a big pro-NW evangelist–depending on the era. Right now I’m hanging fire. I’m saddened but resigned to the takeover. I’ve let my WorldPerks elite status lapse for the moment, I’ve burned all my WorldPerks miles expecting the program to be gutted, and I hold out little hope for the future. I hope you’ll confound my expectations.”

But as everyone knows, mergers happen. And as far as mergers go, this pairing is not so bad. When we polled travelers in February 2008, asking their opinion of the merger they like best, Northwest and Delta came in first with nearly 33 percent of the vote. The next most popular pairing was Continental and United with almost 25 percent of the vote.

For an ongoing dialogue and Q&A, visit http://www.insideflyer.com/link/?1272 , where InsideFlyer’s Randy Petersen can answer your questions through his Help Desk at USA Today’s Today in the Sky.

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