There has been much talk of ‘revenue-based programs’ — rewarding greater mileage earning for higher spending, pricing awards based on the cost of a paid ticket on the redemption side.
Some programs have considered the former, others the latter, and still others both.
The program that has been expected the pull the trigger first is Delta. They’ve dropped many hints along the way.
Today Delta briefly published on their website new revenue-based elite qualifying rules but quickly pulled back the information. The text was quickly archived here.
Earning Medallion Qualification Miles (MQMs)
Beginning March 1, 2013, the MQMs SkyMiles members earn on select fare classes will change:
For Delta-marketed flights, the MQM bonus for First/Business F and J fare classes will double from 50% to 100%, and Economy M fare class will no longer earn a 50% MQM bonus. This change will apply to tickets purchased on or after March 1, 2013.
The above changes also will apply to F-, J- and M-equivalent fare-class tickets on Aeromexico-, Air France-KLM-, Alaska-, Alitalia-, and Virgin Australia-marketed flights. This change will apply to travel flown on or after March 1, 2013.
The MQMs you earn on certain other partner-marketed flights will adjust for travel flown on or after March 1, 2013. Visit delta.com/partnerairlines for details by carrier.
Please note that the way you currently earn redeemable miles is not changing.
Learn more about earning MQMs on Delta- and partner-marketed flights.
Medallion Qualification Dollars (MQDs) – Coming Next Year
Beginning January 1, 2014, SkyMiles members residing in the United States (excluding Guam, Puerto Rico and the U.S. Virgin Islands) will qualify for Medallion status based on an additional threshold – the member’s annual spending with Delta, which will be measured by Medallion Qualification Dollars (MQDs). Members must also meet the existing Medallion Qualification Miles (MQMs) or Medallion Qualification Segments (MQSs) qualification criteria.
The threshold ranges from $2,500-$12,500 MQDs depending on Medallion level.Alternatively, Delta SkyMiles Credit Cardmembers can be waived from the new Medallion Qualification Dollars (MQDs) requirement if they make at least $25,000 in Eligible Purchases within the calendar year.
In sum,
- Bigger elite qualifying bonuses (50% -> 100%) on paid premium class tickets, and no more qualifying bonus for ‘M’ fares, the nearly full fare coach that Delta requires in order to be able to upgrade internationally.
- Minimum spending levels on top of minimum mileage flown in order to earn elite status, which members can also meet through $25,000 in annual spending on a Delta co-branded credit card. This apparently wouldn’t start until 2014, and would only apply to U.S. residents (time to change your account address to Canada?)
United considered minimum spend requirements for elite qualification starting with the 2012 program year but ultimately rejected the idea.
And I don’t see this as an especially big deal, they haven’t chucked the mileage concept entirely.
And they aren’t even saying you have to spend $12,500 with Delta in order to achieve top tier Diamond status. They’re calling it ‘Medallion Qualifying Dollars’ which gives them room to offer ‘double Medallion Qualifying Dollar’ promotions, to offer less than 100% qualifying dollars on some partners, etc.
Really they’re replacing one ‘funny money’ concept (miles) with another (DisneyDelta Dollars). Only the new one will be tied more closely to spend than the old one.
I like that they provide alternate means of determining profitability, that there’s minimum spend or engagement with their co-branded credit card. Ultimately that recognizes the important role that partner mileage sales has to the program, and it does it in a way which reinforces rather than undermines the existing business model of selling miles to the banks.
It may just be a temporary measure, they can always up the minimum credit card spend requirement or get rid of it entirely. But it’s a smart way to do it.
Of course, none of this is ‘official’ and it may have been pulled because this was a ‘draft’ of what they have planned rather than the final version. But it’s no longer just speculation that they’re moving towards an emphasis on revenue.
What we don’t yet know is what changes will come to redeemable mileage earning (as opposed to status) or to mileage redemption.
So definitely under the category of developing, but developing along the timeline I’ve been predicting which is that we know what’s up come June or July 2013 for the 2014 program year.
Any hints of changes to redemptions? I’m planning on booking my next big trip with Delta by the end of February, and I’m a bit concerned they’ll devalue my SkyPesos. (Serves me right for accumulating SkyPesos).
@Travel Bug – any changes to redemptions won’t go into effect right away, if there are going to be some wholesale changes I do expect advance notice
This change has me really hoping for the US/AA merger to give me a legacy choice without too long a flight to connect, otherwise, I’d become a WN captive (Curse of living in ATL).
You’ve calmed me down. 🙂
As much as this will end the mileage running only people from spending $1000 for mid level status (not sure in this day that’s still possible) but with the way prices are rising for places I want to go vs mileage running, 12.5k isn’t too much of a stretch.
Love to see how MQDs are calculated – base fare, base fare + YQ, or total fare ?
On the surface they’re trying to maintain minimum 10cpm before qualifying for elite and discouraging mileage runs at 4cpm (which I get).
On the other hand, they could really screw customers over by only counting base fare, then doing the LCC/European model in which fuel surcharge is greater than the fare itself.
I still think the earn and burn concept should be followed. I have Delta Sky pesos that I have to start spending before crazy stuff happens. Gary is on the ball as always. I consider this the Premier blog for all this stuff. Getting the email alerts on the blog stories is great.
What is an “Eligible Purchase”? Only airfare? Or any purchase using a Delta-branded AmEx card?
That is the big issue. It will affect whether obtaining MQMs from high spend continues to be possible.
This seems much milder than I anticipated. I already meet the spend requirement for my Diamond status. I suspect I may buy some more F and J class fares when they are reasonably priced in the future.
Here is my problem w/ this, what about those that have spouses that occasionally travel to visit their significant other on the road, maybe they flew 75K a year and got Platinum, now they may fly 75K and have Silver… My significant other would tell me to F Off and switch to an airline where she can have status on times she’s not flying w/ me. So I’d take my high spend to another airline.
Sounds like good news for DL Reserve cardholders and those of us with the old AS companion tickets eligible for first class fares. Going to Mexico in April on one, sweet.
Just who buys F class fares? And of these people, how many are angling for better status, versus being quite happy that being able to purchase F class fares puts them in a good spot already?
I dunno I’m still very skeptical I just don’t trust them to be honest. It’s all take and no give. They could at least meet us half way with easier award bookings (one way) or better Intl upgrade options. Honestly I’m saving my UA status match in case this gets a little ugly. I really prefer SA carriers generally speaking and I have just as many lifetime miles there. Wouldn’t take much to swing me away.
I’m liking this, since I already spend $25k on my DL Plat AX card each year and since I already average 9-10 cpMQM on DL flights. If anything, this will incentivize me to buy more paid J/F on certain routes.
I hope they still credit those old AS BOGO$99s at 200% for MQMs, at least until mine expire. 🙂
@jfhscott — There are some DL F/J fares out there for about 13-15 cpm. If the MQMs are doubled on these fares, that works out to 6.5-7.5 cpMQM, which really isn’t bad, especially with a guaranteed seat up front.
Gene, there are ways to indefinitely extend the AS expirations. Only catch is you can’t change the pax.
I guess its not as bad as it could be. It leaves them an out on the “S” class fares in business being 1.5x MQM. It does devalue the M class use of SWU’s which is disappointing. Time to grab a grandfathered M class before the party is over.
Speaking as a DL Platinum who earns his status with mostly personal (not business) spend, the biggest problems with Skymiles is too many elites competing for scarce upgrades and the difficulty in redeeming low-level awards.
The gaming of airline programs is so ubiquitous that I now see the loopholes as devaluing my status, not enhancing it. From what I’m reading, I see these changes as a benefit to getting the most from my loyalty. Obviously the redemption component is key, and that is TK.
“I hope they still credit those old AS BOGO$99s at 200% for MQMs, at least until mine expire.”
This statement is a bit misleading. DL currently credits 150% MQMs for paid AS first class tickets, including those purchased with the (old, no longer available) BofA BOGO$99 vouchers. Hopefully, that will rise to 200% under this new system, but I doubt it.
@HikerT — I know. 🙂
It’s a terrible idea plain and simple – and the fact that “it isn’t as bad as we thought it would be” speaks more to our overreaction than it does to DL’s “better than expected” changes.
Moves like this make the program look and feel like the pyramid scheme it has always been (all programs, not just this one). Give away “benefits” to those who don’t need them and stick it to the “average” 25000-100000 mile per year traveler who has to sLUT it around the USA.
AFKL gutted just the miles bit in a similar fashion a few years ago and, without even adding “spend” requirements, it went over as well as Hollande’s tax plan.
When is the last time a FF program really improved itself for OUR benefit? Been awhile…
Gimme a break airline programs can’t be gamed anymore than they want us to. Plus I don’t get the need to end the mileage running game. I’m not a mileage runner but this is discretionary extra spend, plus your going to loose some related spend since the customer will no longer be as engaged. Wait and see…
@Nick
No doubt, whatever gaming exists is at DL’s behest. But look at DL’s routing rules and you’ll see they’ve already taken a stab at this. And MR is discretionary spend, you’re right. But when a PM runs a 50% upgrade rate, what that tells me is there are too many elites. So why shouldn’t I deserve better treatment spending double or triple the cpm as a mileage runner?
As a current gold medallion, I think I can live with these changes. I was afraid it was going to be much worse. Adding a spending component but giving us an out with a credit card spend is ok by me.
Basically, none of these changes, radically devalue DL elite status except for except for folks who fly on a lot of M fares and mileage runners who live on the coasts, where DL fares seem lowest by cpm. But if you were a heavy-duty MR, wouldn’t you already have switched to UA or AA due to their more generous routing rules and all the EQM bonusing they’ve done?
The other shoe, the award redemption piece, could still make Skymiles a pariah for savvy points collectors, but if this is all that changes to status earn, I bet for many it’s a plus.
This a superb news.
^is^
Rolls back the clock a decade to when MQMs first came out…giving 2x on F travel. Good to see. 🙂
I’d love to see an “or straight revenue” option.
Spending 15 – 20 cpm on business travel makes me wonder why I get Silver and someone who MRs can get Plat for $1000 and 4 cpm. Never made sense to me….
I don’t think they will ever go “straight revenue”. The truth is they have already have revenue based programs. United calls it Global Services, the others have similar programs. But they don’t want to give away top tier status after just 2 flights, since there is then no incentive to stay loyal. Besides which it doesn’t take that much BIS miles now with basically double qualifying miles for business and first and all the credit card qualifying miles.
@Segments: Reading FT/MP too much might give an indication that most elites are achieving their status rather cheaply. Yes, some do; many do not.
will there be more to come on revenue based awards redemption or is this not in the picture?
Strengthens the Delta AMEX Platinum card: $25,000 spend gets 10,000 MQMs, MQD waiver, and 25,000 regular miles makes the card solid for all elite qualifiers.
Not to leave out the additional card benefits likes free companion pass ,free bag (stackable with silver medallion allowance) up to 8 people, and boarding zone. Not bad for $150 per year annual fee.
Card definately gives the MileagePlus Explorer card a run for the money.
Gary, what is the advantage for DL to retain a mileage requirement for elite status under such a system? Since flight miles have little correlation to revenue, why not award and redeem miles for travel, but base status on spend, which is the only true determinant of our value to the airline? In some ways the dual qualification is more complex and onerous and seems rather pointless.
If the MQM requirement is still there, then does it mean the revenue-based redemption will come earlier than revenue-based accrual?
Gary – this isn’t the first time Delta has leaked these changes on its website and then pulled them very quickly. But, obviously, the company knows that someone out there will capture the screen and post it all over the internet. Why do they keep leaking this stuff?
I just got the email this morning, revenue targets. Bummer.