“‘We want people to be able to use those miles not to fly for free but to control your experience,’ says Glen Hauenstein, Delta’s incoming president and architect of the airline’s revenue plans. To do this, Delta plans to adjust the pricing of seats at the front of the plane so more are sold. While Delta currently sells just 57 percent of its first- and business-class cabins, the company said in December that it will boost the figure to 70 percent by 2018.”
The paragraph quoted above is from this article written by Justin Bachman of Bloomberg Business pertaining to the indication that Delta Air Lines — which is currently the second-largest carrier in the world — wants to end the mindset of using its SkyMiles for free flights and free upgrades; and get people to treat those SkyMiles as a form of currency.
Cash is currency. Miles and points are arguably not a form of currency because their use is limited in scope — typically within the parameters of the frequent travel loyalty programs which issued them — and usually cannot be converted into a different “currency”.
The use of SkyMiles to “control your experience” is already happening. Consider the redemption of SkyMiles for the purchase of certain alcoholic beverages in Sky Club airport lounges, for example, where 100 SkyMiles is worth one dollar — or one penny per SkyMile.
“But this is the beginning of the end for the era of the free ride.” Actually, Justin Bachman — the free ride ended years ago when fees and taxes were added to the “cost” of award tickets. The introduction of fuel surcharges — correction: carrier-imposed fees where the cost of an award itinerary originating from a country can often rival that of a revenue ticket with the added bonus of wasting away your SkyMiles if that itinerary were possible due to limited availability — years ago further spelled the end of the “era of the free ride.”
No More Free Travel Using SkyMiles From Delta Air Lines in the Future?
You probably already saw the possibility of this day coming.
First, there was the news that the amount of SkyMiles you earned would be based on the amount of money you spent and not on how many miles you flew as a passenger on qualifying flights — and as much as many frequent travelers vehemently did not like or want that change, it was a sensible business decision. It still remains to be seen as to whether or not the model of the frequent flier loyalty program based on revenue has yet proven itself to be a successful one; but the advent of airlines reporting consecutive quarters of record revenues and profits certainly has not hurt in the least.
Next, there was the mysterious disappearance of the official award charts — followed by the implementation of dynamic pricing for SkyMiles award tickets, which are designed to keep you guessing while the revenue increases for Delta Air Lines.
Then no fewer than two employees of Delta Air Lines — think high-ranking representatives — prior to the start of the 2015 Freddie Awards ceremony at the Delta Flight Museum in Atlanta almost a year ago stated that if Delta Air Lines did win an award, then they were not doing their job correctly.
The SkyMiles frequent flier loyalty program of Delta Air Lines did not win a single Freddie Award in 2015 — it was never even mentioned as a runner-up in any category — and employees were just fine with that. What really matters are such financial “awards” as revenue, cash flow and profit — and you can take that to the bank, which Delta Air Lines is literally doing almost nine years after the airline formally emerged from bankruptcy protection.
In the midst of all of that were what seemed to be a countless number of perceived devaluations to the SkyMiles frequent flier loyalty program.
What Was Old is New Again?
Over time, the goal for Delta Air Lines is to narrow the gap between the price of tickets for seats in the premium class and economy class cabins to be just enticing enough to convince more travelers to spend their money for an upgraded experience — and Delta Air Lines has been experimenting with doing just that with a practice known as first-class monetization, as the first class cabin on domestic flights was historically a “loss leader” because most of its seats on domestic flights within the United States were assigned at the gate as free upgrades to frequent fliers instead of being sold with no real compensation to Delta Air Lines.
Then again, there was a point where a seat in the first class cabin on a domestic flight was not much of an upgrade over a seat in the economy class cabin, with few amenities to justify the significant extra cost. It is also important to note that the use of the term historically refers to the years since the Airline Deregulation Act of 1978 was voted to become a law by members of the 95th Congress of the United States. Those advertisements of airlines displaying photographs of chateaubriand freshly carved by your seat by a member of the flight crew — a stewardess, as she was known back then — and served to you gave a glimpse of what premium travel was like prior to 1978.
The traditional airline upgrade system amounts to “winning a prize” and leaves many customers displeased, Hauenstein reportedly said in the aforementioned article. “We were really making nobody happy except the person who won the lottery at the gate.” He also said that “the changes have improved customer satisfaction scores among the top tiers of elite SkyMiles members.”
This is really not a new concept, as Delta Air Lines had a similar — albeit more generous — policy years ago.
One person who used to be a frequent flier of Delta Air Lines — in the days when the top tier of elite level status was called Royal Medallion prior to the change in name of the frequent flier loyalty program to SkyMiles — recalled the days where she would pay to upgrade to the premium class cabin. “It cost a minimum of $15.00 on most domestic flights and $30.00 on some flights to fly first class — regardless of the cost of the flight itself,” she said. “It was great. I upgraded every time.”
A return to upgrading to the premium class cabin on domestic flights within the United States for only $15.00 would be delusional at best; but the concept itself is not new.
“Free” Flights Versus Monetization
While frequent fliers are not exactly happy and jumping up and down for joy, this news may not be all bad: people have been conditioned for years about earning frequent flier loyalty program miles to save up for “free” flights. There was indeed once upon a time where you did not have to pay a single penny for an award ticket — not even for taxes and fees. Unless you were earning miles on flights on which you would have already been a passenger anyway — which was the intended design of the original model of the frequent flier loyalty program — that did not mean that the flight was free. There were often opportunity costs involved — in the form of mileage runs and other activities in which people would otherwise not have engaged in order to earn enough miles for award flights and elite level status. That consumed time, effort — and, of course, money — and there were critics who mocked and ridiculed those people who embarked on those activities simply to earn enough miles and points for travel; as well as to retain elite level status for the next year.
Yes, there are times where it was all well worth it; but the concept of simply paying a nominal amount for a flight or upgrade versus going through all the trouble of earning enough miles for that “free” flight is analogous to taking connecting flights all over the world instead of just taking a nonstop flight to your final destination. There are many people who define that as opportunity cost.
One frequent flier for many years said that he enjoys the service and operations offered by Delta Air Lines so much that he really did not care what was done to the SkyMiles frequent flier loyalty program. These days, he is primarily a leisure traveler; and he is more than happy and willing to pay extra for flights operated by Delta Air Lines.
There is one potential downside; and that is the advent of a premium economy class, which could act as a barrier of sorts between the traditional economy class cabin and the bonafide premium class cabin. As a result, airlines are returning to what may eventually be airplanes with three classes of seats — although those classes of service may seem diluted in some ways as compared to their ancestors of yore when there was a first class cabin; a business class cabin; and an economy class cabin.
Ideally, one goal to be achieved by Delta Air Lines by the year 2018 is to increase the sale of its Comfort Plus seats from currently 36 percent to approximately 50 percent — which will most likely mean fewer complimentary upgrades to that section of the aircraft while simultaneously offering a new option for passengers to upgrade should they not be able to upgrade into the first class cabin or business class cabin.
Time will reveal as to whether or not the day arrives where you will eventually no longer be able to redeem SkyMiles for the misnomer of “free” travel in the future; but being able to do so will almost certainly continue to be increasingly difficult.
Nothing is ever absolutely 100 percent beneficial or adverse; but there may actually be a potential benefit to being able to spend a reasonable — or, perhaps, at times a minimal — amount of money to be able to enjoy upgraded travel while airlines simultaneously attempt to earn profits on a consistent basis; and if that is indeed the case, this could potentially be a win-win solution for Delta Air Lines and its customers.
Don’t hold your breath, though…
Photograph ©2013 by Brian Cohen.