Delta Execs Share their Views of and Plans for the Skymiles Programs

Yesterday I posted links to notes on presentations by Delta Executives to members of Flyertalk. Since I’m not really much of a Delta flyer, the specifics weren’t hugely engaging for me, but I passed them along for those of you out there hub-captive to Delta for whom the nitty gritty of the Delta experience matters a great deal.

Flyertalk member ND76 has posted notes of a couple more presentations, and these are much more up my alley.

Bob Kupbens is Vice President of e-commerce and offered significant feedback on the airline’s IT priorities. I was most interested in the following comment:

16. When award calendar showed up on the screen, the house almost came down. There will be a new look to the award calendar by end of first quarter 2011, with emphasis on accuracy of what inventory is available; close to implementation of world wide SkyMiles Award Chart; new cleaner look to coordinate with site wide redesign

It’s nice to see Delta at least acknowledge that their award booking website is broken. Six months ago I posted a step-by-step on what it actually takes to find the award seats that are really available using the Delta website.

Frequently it’ll misprice awards that are out there, quoting higher mileage prices than are required for a given seat. And it’ll mislead members, showing dates available at the ‘low’ level when no flights actually are.

The best way to search using the Delta site is to always search one-way at a time, even though Delta doesn’t allow one-way redemptions for fewer miles than roundtrip. That way return flight availability doesn’t confuse the pricing issue for a given flight.

And it’s even worthwhile searching one-way coach availability, and sorting by mileage required, and business seats will usually come up when available at the ‘low’ level. If that doesn’t work, search one-way business class.

And always search segment-by-segment (transoceanic first, not from your departure city, as the flights fom the departure city to the international gateway can screw up display of available low level seats).

Meanwhile, what’s to me an equally important — maybe more important — issue is that Delta does not publish an award chart for flights originating outside of North America.

It’s a bigger deal than the online award search because I can search Delta’s partners in other ways. Their website only shows Air France, KLM, and Alaska anyway.

But the airline won’t even tell customers how many miles they want if the award doesn’t fly from or to North America. So when I was asked a week ago how many miles it would cost from Australia to Vietnam (I found availability on Vietnam Airlines) I honestly didn’t know until I called Delta. And I had no idea whether or not I was being quoted the correct mileage amount.

I was also recently asked how many miles for intra-Asia business class. It used to be 30,000. I guessed that Delta would charge 40,000 now. But that’s just a guess. Because it’s nowhere to be found on the Delta website. But now they say they’re ‘close’ to implementing a worldwide award chart, which is something that every other airline I can think of offers. And how hard is it to implement? You just upload a .pdf and call it good. Which is why I’ve long suspected it’s been something Delta would rather not share.

Still, it’s good for execs to acknowledge the deficiencies. Improving the website would help find seats that actually are available — a huge boon for members, and something that merger partner Northwest used to accomplish with ease — and publishing a full award price list is frankly only fair to set member expectations, and reveal if and when the airline raises award pricing.

Meanwhile, the most interesting presentation (to me, at least) was naturally Jeff Robertson’s… he Delta’s Vice President of Loyalty Programs.

I hadn’t known, for instance, that Delta’s international upgrade certificates are now valid on Air France. Delta has the toughest and least consumer friendly international upgrade benefit of any US carrier, requiring the purchase of a nearly full fare ticket and not offering any lower fare upgrade options even to their top tier elites. (American provides their 100,000-mile flyers with upgrade certificates valid on any fare, most carriers at least offer cash buy-ups in addition to miles to upgrade lowest fares.) Delta believes this policy is worth hundreds of millions of dollars to them, so it’s unlikely to change. Fair enough, but if you care about international upgradess when traveling out of pocket then Skymiles probably isn’t the program for you.

Robertson also added that mileage upgrades are coming on Air France:

Mileage upgrades for DL people on AF happening next year, making it “metal neutral”.

I guess I haven’t kept up with the Delta program, since I assumed this was already possible, I know I’ve redeemed Delta miles for Air France confirmed upgrades in the past albeit several years ago.

They’re working to better integrate with Alaska Airlines, in terms of upgrades and baggage and lounge access rules. I sure hope that doesn’t presage the end of other agreements that Alaska has in place with oneworld carriers. I love my Alaska miles because I redeem on Cathay and British Airways, and because they’re useful for creditng both Delta and American flights to. Losing that flexibility would be a real downer for the Mileage Plan program.

Delta does block more coach seats than any other airline in my experience, a benefit for Delta elites no doubt and often makes it difficult for non-elites to get advance seat assignments. Of course those reserveed seats aren’t necessarily really better in the way that United’s economy plus seats offer extra legroom. And I do value the legroom, though in fairness to the Delta inflight product they offer better entertainment and widespread wireless internet.

Several more fascinating and insightful comments.

24. JR admitted that they were too darn tight on saver rewards. He claimed that DL always wanted to get rid of the redemption fee. Miles redeemed are considered as revenue; DL gets credit (presumably from their accountants) immediately for 1.5 cents per mile as revenue; the other 1 cent goes on the balance sheet as a liability. JR thinks that more miles will be redeemed than earned. When a 25000 mile reward is cashed, DL can book $250 as revenue.

This is important to understand. I don’t blame Skymiles at all for terrible award availability. Skymiles does want their members to redeem, which is when they recognize outstanding miles as revenue rather than liability. The problem is that Delta’s revenue management doesn’t offer up the premium cabin international seats for low level redemption. And Delta’s partners tend to be among the stingiest as well (though Vietnam Airlines and V Australia would be excepted from this claim, and at times of the year Air France transatlantic can be more than reasonable including on the A380 from New York to Paris).

The effect for the member is the same, Skymiles just aren’t as useful for premium cabin international redemptions as miles from other programs. The the locus of the program is in inventory managmeent, not a cabal on the part of the management of the Skymiles program!

25. Present mileage levels for international BE is not giving them enough revenue to book.

Uh oh. Expect award chart inflation.

Delta’s award chart is already expensive. Business class to Australia is 150,000 miles. Compare to 115,000 with US Airways. And yet Delta feels their awards are too cheap to justify making seats available, presumably because Delta’s revenue folks want more money for those seats.

Ultimately if Delta’s revenue and inventory folks are inflexible, we’ll see higher mileage pricing, but that simply makes Delta even more uncompetitive. Still, I’d probably settle for that as ‘better’ than the status quo, an improvement for Skymiles even if it underscores how much more other currencies are worth.

26. Redemption seats open over time. DM and PM according to JR get better award availability than others, but not as big internationally as domestically.

True enough, and an important point. I’ve often seen and heard that Delta makes award seats available closer to departure, whereas other programs are likely to make award seats available earlier. This is presumably because Delta is more cautious — they wait until they’re sure a seat will go unsold before letting members claim the seat with miles. They must expect that earlier release of seats will likely mean more mistakes, more seats given as awards that they might have sold and thus revenue foregone.

27. JR can give out better availability, but it will come at a price—hinted at ending bonus miles for elites or 50% bonus for YBM. DL is only airline giving out bonus at YBM. JR indicated that he is struggling with this issue.

These sorta seem like separate issues to me — overall availability of awards for Skymiles members as a whole and the cost of the elite program. Surely elite bonus miles aren’t the driver of ‘too many miles chasing too few seats’ when there are more miles being ‘printed’ by American Express than by elite flight bonuses.

Still, this gets at the fundamental problem. Delta miles are easier to earn than at most airlines, though not monumentally easier than American or especially US Airways miles. And so of course awards either need to cost more or will suffer from scarcity.

So if you collect Skymiles when they’re uber-cheap, such as 10,000 miles from a one-day weekend car rental, the economics of the program work out for the consumer. But if you think that a SKymile is worth as much as a similar unit of another currency you wind up disappointed. Easier to earn and takes more to redeem and the value proposition of the program works out a bit better. To make more seats available, you’d have to tighten up on the earning side somehow. It seems odd to focus on elite bonuses when those are something other programs do as well, but it gets reasonably close to understanding the problem.

30. The percentages of domestic upgrade success according to JR:
85% DM , 75% PM, 55% GM, 40%.

I just share the above as interesting information. It wouldn’t work out for my home market of Washington DC where there’s usch a preponderance of government fares, those fares are treated as full fare, and full fare trumps status at Delta.

I’m also surprised that their 125,000-mile flyers ‘only’ clear 85% of the time. And that Silvers clear 40% of the time. Still, fascinating data points.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. I am a charter Diamond Medallion and had 100% success with automatic upgrades until the last 4 weeks, when I was denied not once, but twice! CVG->SFO and CVG->JFK. Funny thing is, I sat next to a fellow denied-DM in the exit row both times. We compared stats and were both miffed and amazed that we didn’t get upgraded. These two trips had been booked about 4 weeks in advance compared to my normal 1-2. Fare price apparently has an extremely heavy weight in the upgrade decision-making process. DL didn’t seem to care that I was connecting to higher fare transpacific/transatlantic flights and just slumming in coach for the domestic portion (blame the hyperaggressive pricing tactics/policies of the corporate travel agent).

    Another kicker – I contacted the Diamond Medallion line during the trip to see if I could switch to a flight that would get me home a few hours earlier. That answer was no (not a big deal), but when I casually mentioned my “not upgraded” experience in a nice, non-complaining way, she recommended that I sign up for the $450 annual fee Delta Reserve Amex card because it apparently bumps you even higher on the upgrade priority list (quote “many Diamonds and Platinums are getting this card for that specific reason.”) They need to spell out in detail what that means, because I’d be pissed if some guy who is flying full-fare coach with Silver status (who achieved it by only 1 flight to Singapore in biz-class – easy to do) trumps a Diamond + DL Reserve + cheapest coach fare. Given that above scenario, the Diamond has likely lined Delta’s pockets with more money and is thus deserving of the upgrade.

  2. @Brian A. You can see the upgrade list with this little tool:

    http://cwsi.net/mupc.aspx

    If you have a AMEX Reserve card, you will always be first of the group in your group. IE you will be top of the heap in the DM group but me with my PM and AMEX will still be lower than any DM even one without the AMEX. But will will be top of the bucket of PM’s due to my AMEX!

  3. Sorry missed one obvious point, the bucket is also due to fare class. Thus for example a “L” class over a “U” class does come into play as well.

  4. Don’t be jealous of all those blocked seats. Bulkhead is reserved for people with handicaps. So, with kids under 14, which voids use of exit rows, my “privledge” as a Gold is a regular coach row nearer the front of the plane.

    I was actually “kicked out” of bulkhead seats my wife and I had booked on-line before the change of policy to block all bulkheads.

    Called the Gold line. Agent called me a liar.

    I really don’t like Delta. I would encourage all hub captives flying for pleasure to fly United, as they offer Economy Plus seats and you will benefit when fare wars occur.

  5. Thanks deltaGOLDflyer, that link brings a little more clarity to the pecking order.

    On the bulkheads – FWIW, we’re new parents and have taken several domestic and international award flights with our 2 daughters (one is now 2.5yr and the other is 5 mos.) We’ve been unsuccessful reserving the bulkhead seats, but each time the agent put in the request. It was only granted about 25% of the time (and, honestly, I’m not sure it is really all that great for kids unless you are able to score the bassinet option. Problem traveling with babies is all the gear you have to lug – if you’re sitting in bulkhead, you’ve gotta find a place for all that stuff before takeoff.) One kudo to Delta, though – I have noticed that lately they have been emphasizing that pre-boarding is available for the handicapped, special needs, and parents traveling with a stroller/car seat/young children. Air France did that too and even gave our little one an AF teddy bear for a short intra-France flight.

  6. the truth is delta is trying to become the new walmart of the sky. there are just pretending to offer some sort of elite products but only if you agree to keep paying more for less…
    spend more live worst…

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