Another silly little Delta cut

Discussion in 'Delta Air Lines | SkyMiles' started by bigx0, Mar 17, 2014.  |  Print Topic

  1. bigx0

    bigx0 Gold Member

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    Binghamton Airport (BGM) is a smallish regional airport with a rewards program. The program awards little trinkets sort of based upon the number of trips you take from BGM. One of the rewards was DL SkyMiles. I just received this note from the airport rewards manager:..

    "As a result of a change to their corporate policies, Delta Air Lines will no longer be supplying their SkyMiles to our Business Travelers Rewards Program as of March 31st. We are not alone - Delta's involvement in many like programs are being discontinued in similar fashion..."
     
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  2. gleff
    Original Member

    gleff Co-founder

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  3. Gargoyle
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    Gargoyle Milepoint Guide

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    Makes sense. All the recent enhancements have made Skymiles so valuable that they can't just give them away anymore.
     
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  4. Wandering Aramean
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    Wandering Aramean Gold Member

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    Delta is cutting off a number of 3rd party groups who use SkyMiles as a reward currency. BGM isn't the only to suffer this fate.
     
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  5. gregm

    gregm Gold Member

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    Sorry for those who lose out, but if it make makes SkyMiles more valuable….:)
     
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  6. chitownflyer
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    chitownflyer Silver Member

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    Delta: Driving Every Loyalty Traveler Away!
     
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  7. gregm

    gregm Gold Member

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    Not this one!
     
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  8. NYCUA1K

    NYCUA1K Gold Member

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    Why not? Inquiring minds wanna know!:)
     
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  9. WilliamQ

    WilliamQ Gold Member

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    Well, when there are large and various supplies of SkyMiles getting into the market from all over, the value of each SkyMile will get depreciated (Basically redemption rate has to increase to lower liabilities). By restricting the ways to earn SkyMiles, the existing pool will inevitably start to shrink and SkyMiles will once again be valuable?

    Cut at partner airlines, cut on 3rd party sales (except Credit Card spent) and in fact also cut on Delta Metal (except for HVC).

    See, another problem "solved". SkyMiles will no longer be SkyPesos.
     
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  10. gregm

    gregm Gold Member

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    Well, many reasons, but Delta as a whole has always been good to me, and even more so in the past 5 years. I've had one overnight in a hotel (paid by Delta) due to IRROPS my entire lifetime. The changes in the SM program are hard to understand, but I won't judge until I see if whats promised holds true: a better experience for the highest level SM members. I've had no issues over the years in earning and redeeming miles. The Sky Club is a free benefit and, quite frankly, is better than sitting in the gate areas. My spending and travel patters, if unchanged, ensure I will achieve DM each year, so that's acceptable as well. I'm not fond of the complex earning matrix, but since I use both a Delta Amex and SunTrust Delta MC, I earn more miles anyway. I view all of these perks as freebees, so I won't look a gift horse in the mouth. Add to that 100% upgrades on international travel the past 2 years and there's even more reason to be loyal. (When I see "HVC" hand-written on my upgraded international BPs, it makes me feel that they really do care, even if it's just to free up a seat in Y to sell.) I see the same FAs, gate agents and some Captains/FOs week after week, and they always express gratitude for my loyalty. A couple of years ago, I expressed my thanks by putting together a short YouTube "thank you Delta" video and Richard Anderson sent me a hand-written thank you note to my house. I absolutely do not just feel like I'm a number to them. I could add more, but I think that's enough to answer your question!!
     
    Last edited: Mar 17, 2014
  11. NYCUA1K

    NYCUA1K Gold Member

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    In line with the loyalty business model's take on the determinants of a loyalty relationship (emphasis added):
    What this means is that for a non-SM loyalist like me, DL's proposed revenue-based FF model is heresy that should cause everyone to dump them. But for SM loyalists (term seems almost appropriate to some of us :D), the "zone of tolerance" is much wider. This means, nothing short of evidence showing the DL CEO with horns, a tail and a trident would lead most SM loyalists to terminate their relationship with SM, which the model predicts would happen if:
    The proposed revenue-based FF system would fall under item (6), but at this point, most SM loyalists are simply on a holding pattern: let's wait and see. What they see will be whether the change of costs due to the new model remains (a) unexplained or (b) is explained but too much to bear or (c) is explained and it is not so bad after all. DL is betting that most will say (c)...
     
    Last edited: Mar 17, 2014
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  12. LarryInNYC

    LarryInNYC Gold Member

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    Delta is the most profitable US major, and has the highest customer satisfaction ratings.

    If that's "driving travelers away", I'd advise the other airlines to start beating their customers with sticks -- except for United, which has already adopted that policy.
     
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  13. gregm

    gregm Gold Member

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    To me, it's simple...up until now, and even more so in the last few years, the loyalty has gone both ways. I take that, plus the fact that I wouldn't even earn perks if I worked in my home town, makes it easy to stay loyal. I have it good. Why look elsewhere?
     
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  14. gregm

    gregm Gold Member

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    Couldn't agree more. It wasn't well know in its early stages, but a few years ago, Disney actually consulted Delta to help with their own customer service. (I flew with a SAFA who was with the group sent to them.)
     
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  15. NYCUA1K

    NYCUA1K Gold Member

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    I think that there is near a complete disconnect here. Without any doubt, there is great uncertainty about what will happen next year and beyond after DL adopts their revenue-based system. Some have speculated that this will drive away loyal travelers. This is where the disconnect starts. True SM loyalists are referring to the performance of DL of today and projecting it as the performance of DL of tomorrow. However, that inferential logic is flawed because today cannot reliably predict tomorrow precisely because of the large uncertainty introduced by the change of the FF model. On the other hand, there are concerned SM loyalists and members of other FF programs who are worried that their programs would follow suit. These folks are using the FF model of today, crunching the numbers based on what DL has revealed of their FF program of tomorrow, and concluding that the concept of FF would be so disfigured under DL's model that horrified SM members would flee in droves.

    What is the correct prediction? I think that the number crunchers' prediction that Delta would Drive Every Loyalty Traveler Away would be the most likely outcome, but only if UA and AA keep their current FF programs because those programs would then suddenly look like a highly suitable alternative to the revenue-based monstrosity. A loyalty relationship can be terminated if there are satisfactory alternatives. MileagePlus and the dAArk side would offer disgruntled SM loyalists that satisfactory alternative...
     
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  16. Wandering Aramean
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    Wandering Aramean Gold Member

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    But this "most likely outcome" only applies if the most valuable customers are adversely affected by the changes. And that seems to be far from likely.

    Yes, some "over entitled" may see this as an opportunity to jump ship to another option but they're not the true HVCs Delta (and all the others) are actively seeking as the core passenger base.

    Low fare seekers are going to buy the lowest fare either way. The changes made by DL don't really matter to them. HVCs will benefit from DL's changes with more miles earnt for the same spend they had previously. There is a middle group there who will be adversely affected and may care enough to change their travel patterns because of it but I doubt that group will be significant enough to hose Delta. Most of that group is still going to fly based on schedule convenience or negotiated corporate contracts, the same things which pushed them to Delta in the first place.
     
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  17. chitownflyer
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    chitownflyer Silver Member

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    It remains to be seen whether Delta loyalists will stay with the airline or jump ship to AA or UA. I gather AA's Parker sees a real opportunity to bring over DL elites.

    DL's spin here is to claim so called high valued customers will earn more miles based on the number of dollars spent. This is partially true if purchasing expensive short haul tickets. What Delta is really doing is reducing the amount of miles earned from flying by 50 percent or more even for their elites. A DL Platinum would earn 5000 miles round trip and 5000 bonus miles on a NYC -SFO ticket this year costing $500. Next year, the same ticket would earn $500 x 9 = 4500 miles. A non elite goes from 5000 miles to 2500 miles. And there is a maximum of 75,000 miles that can be earned from any ticket. This appears to be a poor way to show DL elites the company values their business by radically reducing their benefits. To keep the current Platinum elite benefits in a revenue based system, DL would have to award 20 miles per dollar spent.

    If DL wishes to attract HVCs, instead it could award those flying on more expensive tickets like high level coach fares, domestic F fares and international Business class fares, then they could award a mileage bonus or dollar bonus doubling or even tripling the miles awarded for these types of fares. Lufthansa does this for their premium class international tickets in the Y, C, & F cabins. http://www.miles-and-more.com/online/portal/mam/us/earn/flight/offer?nodeid=2507840&l=en&cid=1000390

    At the same time Delta is still keeping its AMEX partnership and awarding a minimum of 1 mile per dollar spent. Why create an incentive to earn more miles on the ground rather than up in the air? In the end, reducing benefits and the rewards for loyalty create a situation that no longer creates an incentive for loyalty. Why bother with a frequent flyer or frequent guest program when the benefits or returns are not worth it. At this point it makes sense to just find the best valued product for the price.
     
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  18. eponymous_coward
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    eponymous_coward Gold Member

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    Are you suggesting that people might not be motivated to fly SEA-SFO-LAX-DFW-MIA-ORD-JFK instead of SEA-JFK just because if they fly the first itinerary they get a significant chunk of miles towards a first class redemption, complete with caviar, Dom AND Krug?

    :eek::eek::eek::eek::eek:

    How completely shocking and unheard of! I thought most travelers obsessively check boards like this one in order to maximize their ability to redeem F class awards to Asia, and completely discount things like schedule and convenience in order to maximize their mileage earnings!
     
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  19. Flyer1976
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    Flyer1976 Gold Member

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    DL might be making changes to SkyMiles but they are actually introducing customer friendly policies with changes like allowing SDCs on Premium Cabin Travel that didn't require the same fare class to be available. :D
     
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  20. LarryInNYC

    LarryInNYC Gold Member

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    These statements are only true if you believe that revenue-based earning represents a substantial devaluing of an otherwise desirable program. But for years people have been saying that Delta has already driven away all loyalty-based fliers. For years Delta has been running an increasingly "non-competitive" frequent flier program, and the net result on their business seems to be very positive.

    Delta seems to have figured out that one of two things is true:
    1. The frequent flier program is not a motivator for most customers.
    2. It's possible to run a frequent flier program that is attractive to most customers but very unattractive to mileage junkies.
    The only other alternative is that everyone who predicted Delta's demise based on their previous negative changes to SkyMiles was somehow wrong then but correct now -- that the new changes are uniquely bad and substantially worse than previous problems with the program. Given history, however, I think the logical approach is presume that Delta knows what it's doing.
     
    Last edited: Mar 18, 2014
  21. NYCUA1K

    NYCUA1K Gold Member

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    First, the Big Caveat: None of what is being discussed here applies to travelers who do not know or care about FF or earning miles; conversion to a revenue-based system implies FF-participants only, so it applies to estimated 90 million DL SM loyalists -- a big number by any measure.

    The main effect of the DL revenue-based system will be to drastically reduce the number of redeemable miles earned by everyone but F/C travelers, who would become the only group that the term HVC would be applicable to. Current business frequent travelers ("road warriors"), whose companies are too cheap to fly in F/C, would no longer feel like HVCs because they would earn far fewer miles than they are earning under the current system. The low fare seekers who currently get miles based on the distance traveled would get an even bigger hit in miles earned, when miles are awarded per $ spent. Elite qualification requirements will not change while the ability to earn miles will change dramatically with hardly any change in redemption rates. What this means is that all but folks who can afford to travel in F/C would be unhappy under the revenue-based system because their ability to redeem for free trips, which is one of the main reasons for playing the FF game, would be greatly curtailed. DL might wind up even worse off than now because the HCVs they are seeking to attract would likely already be in the pool of their current customers. Without attracting new loyal travelers while driving away many old ones, DL would lose money very fast and backtrack...unless UA and AA throw them the lifeline by jumping in. That is why the smart money says UA and AA should wait this one out because they might benefit greatly by offering disgruntled SM loyalists a more than satisfactory alternative to jump ship to: the status quo ante $$!
     
    Last edited: Mar 18, 2014
  22. Wandering Aramean
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    Wandering Aramean Gold Member

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    I'm willing to bet LARGE amounts of money that only a tiny, tiny sliver of the 90mm members care at all about the program changes. Most don't even fly the carrier on an annual basis, I'd bet.

    While I do not believe that there will be drastic reductions across the board I'll accept that FC customers are generally HVCs. And they will benefit from these changes.

    Here's where we're going to have to disagree. Over the years I've been a "road warrior" customer a lot. I would commute from home in NYC to a variety of domestic locations during the week, returning home for the weekend. The new Delta program would result in more SkyMiles earnt in nearly every single case. And I wasn't always buying full-fare tickets. I definitely wasn't buying first class fares. I know that fares and markets change so I cannot say definitively that the same would hold for future bookings to the same places, but the numbers would definitely work in my favor with my old travel habits.

    How so? :confused: They're going to have more of the same currency and the redemption options are not being cut.
     
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  23. NYCUA1K

    NYCUA1K Gold Member

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    Crunch the numbers based on realistic scenarios and compare...
    Simple: If one earns fewer miles and the redemption rates do not go down, then the RDMs do not go as far as before; there may be enough to redeem for 2 rather than 3 or 4, e.g.
     
    Last edited: Mar 18, 2014
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  24. Wandering Aramean
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    Wandering Aramean Gold Member

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    I have based on my prior travel patterns. I'd likely been neutral to better with this version of the program. A mid-week NYC-DC commuter on the Shuttle makes out like a bandit with these changes. Ditto for LGA-ORD (though not quite as spectacularly), the most frequently traveled market in the USA last I checked. Lots of business travelers are going to do very well.
    Which FC fares typically come in below 17cpm (which I believe is roughly the cutoff for a Diamond Medallion)?? I rarely see such.
     
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  25. NYCUA1K

    NYCUA1K Gold Member

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    I did the math about a week ago using my own scenarios and decided that everyone but very few would be bloodied. This means that none of us can claim to have the answers since much of this will be an abstraction that can be manipulated to one's end until after implementation in 2015. With our positions clear, we now just need to wait and see. I am just hoping that "wait and see" will also be UA's and AA's position on whether or not to implement the revenue-based system...
     
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