Has Delta SkyMiles Finally Devalued to the Point That It Will Hurt the Airline?

Delta’s astonishing arrogance is covered in a piece by Benét Wilson for Airways News that basically asks whether Delta CEO Richard Anderson is an evil genius.. or just evil?

It walks through the success of Delta, taking the Northwest Airlines merger and making it successful and becoming the model of both a financially and operationally successful airline — and walking through the extreme moves it’s made, many not necessary towards that goal, that treat its partners and customers with disdain… Like basically severing ties with Korean Air, despite joint membership in the Skyteam alliance, over the Seoul-based airline’s unwillingness to enter into a joint venture (at least on Delta’s terms), while limiting corporate customers’ options in Asia in the process.

The airline ruffles feathers by jawboning the price of widebody aircraft (while Boeing’s stock was affected by Delta claiming to be able to buy 777s for $10 million, the actual price of the aircraft won’t be influenced by such talk — and their acquisition of a plane for less than that was really for parts.. not an operational aircraft).

It’s left the industry lobbying group and gone to all out war with Alaska Airlines (though Alaska has grown substantially and is both more reliable and more profitable than ever).

Anderson pushes the envelope to absurdity, like blaming the big Gulf airlines for 9/11 (when he partners with Saudia, whose government was at least complicit in the attacks). The 9/11 comment though will go on his tombstone, like the late Marion Barry’s line about the woman with whom he was videotaped smoking crack.

While frequent flyer programs may have been overly generous, especially coming out of the Great Recession, and no longer need to be as rewarding to fill incremental seats on planes — and Delta could extract surreal amounts of cash from American Express after their co-brand issuer lost its deal with Costco — they may have wrung out way too much value from the SkyMiles program and could be on the verge of hurting themselves by it.

Anderson also approved SkyMiles’ evolution from a pure mileage- and frequency-based program into one that recognized what really matters to an airline — revenue, said [Henry] Harteveldt. “The execution hasn’t been entirely perfect, however. Delta now focuses on revenue at the expense of customer loyalty, and this is about to bite them on the behind,” he said. “Proprietary research we do for a financial services client shows that Delta has lost an alarming amount of customer loyalty, especially among its top-tier 360, Diamond and Platinum members, [while] Gold and Silver members already feel ignored.”

The program doesn’t reward high spenders. Upgrades from mid-priced economy fares are now more miles than award tickets. Earlier this month they made unannoucned changes to their secret award chart. Perhaps most importantly they’ve created a fundamental trust deficit.

Loyalty used to matter to Delta. What they’ve come to now, though, is a character issue as much as a business or rewards decision.

You know there’s a problem when the airline won’t claim to be honest and its partners won’t claim the points are retaining their value.

To the extent that the best SkyMiles advice may be from the conclusion of the Matthew Broderick film War Games, and echoed by Henry Harteveldt’s research, Delta may have pushed things too far — to the point it really costs them the loyalty of the very customers they say are actually the most valuable.

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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Comments

  1. What’s all this talk of Skymiles becoming worthless? They are still useful to line the bottom of a bird cage and for toilet training puppies.

  2. He is pure evil and lunatic. All he cares is about his bonus and once he retired he will leave the baggage to his sucessor. They are destroying the market at MSP where it is hard to find a ticket to anywhere for less than $800. Several corporations are asking employees to fly AA or United adding 1 connection to save lots of money. On the other hand Delta planes are always packed. Every time I hear his voice and see his face during safety video on a Delta plane I grab the sickness bag on the seat pocket.

  3. I don’t know. I see allegations and inferences, along with the typical complaining, yet see no actual proof/data that Delta is, in fact, being hurt by its actions. Maybe it is; maybe it isn’t.

    Personally, I have no problem flying coach and I now see more saver award availability with Delta on the routes I fly with the added flexibility of now having the ability to book one-way awards.

  4. Wonder how that refinery is doing with sub-$30 oil? Seems DL is banking on improving the qualify of its inflight product (and key lounges) for the small proportion of its high revenue generating business accounts, while leaving the rest of the plane to be filled by occasional travellers, keeping capacity tight to ensure high load factors and low operating costs. Its private jet division wasn’t mentioned, but clearly they’re going for the 1% crowed, and the corporate hierarchy who fill the next tier below that. the rest of the 94% fill the back from time to time, and there are enough of them as long as capacity is kept in check…and planes can be bought and refurbished cheaply enough to reduce DL’s capital costs, and not tie it to lease operating expenses.

  5. I wish someone would back up their Delta-bashing with actual data. People have been predicting that declining loyalty will hurt Delta for years now, which makes intuitive sense to me. Meanwhile planes remain full, operational and financial performance is excellent and industry leaders ape them. Personally, I’m 12/12 on upgrades in 2016 and every flight has been on time. While my 2 Alaska legs have likewise been perfect, 1 of my 5 flights on American was cancelled and 1 significantly delayed for mechanicals, and my 1 United (mis)connection left me delayed in Denver for 4 hours. Add to that, as a regional captive I averaged 3.11 cpm in domestic SkyMiles redemptions last year. That’s purely anecdotal, but I’d really like to actually see some objective data that justifies my pessimism.

  6. Didn’t Chris Elliott reach the “War Games” conclusion a few years ago? Does that mean HE is the Thought Leader in Travel? 😉

  7. Delta is super evil, and I never fly them. Their miles are great on partners (for now). I’d never collect them though – Alaska is a much better store of value.

  8. The same noise about Delta. As I have Delta and American miles I think I have better experiences getting the best value awards such as these in the past few yrs. As I look at the changes at AA and the lack of low level space to many places yr round. As Delta Diamond I get many upgrades. Not happy about a recent Global upgrade experience however such is life.

    ATL-JNB 160K Business Class Round Trip
    LAX-SYD 160K Business Class Virgin Blue (New Seats etc)
    Many tickets Virgin Upper Class to LHR- NO OUTRAGEOUS Fuel Surcharges that you will get with American/British Airways. Dont worry American will gladly route you through CLT or some crappy routing otherwise
    PIckup up MIA-FCO last week First/Business Alitalia

  9. If I’m flying someone into town for work, I pretty much always choose Delta because what matters to me is them arriving on time… I don’t really care to what extent they were rewarded for travel I paid for.

    When I travel for myself, I still generally choose Delta depending on the routing. Being CHO-based, they are the only carrier offering mainline service and I can’t stand RJs. So I’ll pay $100-150 extra, even, to fly CHO-ATL-XXX vs CHO-CLT-XXX on a DH3/CJ2.

  10. I have been a Diamond for several years and have moved my $25,000 a year of ticket purchases to American. I also cancelled my Delta Reserve Card. I do feel that Delta offers a superior product to American but not sufficiently better to retain my business following such callous treatment of its frequent flyers. I am not naive enough to believe that Delta cares about my loss of business.

  11. “Proprietary” research (the nature of which we will not reveal) done for a client the identity of which we will not reveal indicates that the plainly visible financial results do not reflect Delta’s real business situation.

    Translation: Who are you going to believe? Us? Or your lying eyes?

    It could be true. But we heard the same thing last quarter, and last year, and the year before that. And it wasn’t true those times.

    What is probably true is that Delta would not be well positioned in an industry downturn where loads go down and they have to actively compete for a slice of a smaller pie. But at that point they’ll probably just ramp up their loyalty program again to become competitive.

  12. As a LPLT on AA, I have recently divorced AA due to their inconsistent product (no Y+ on LUS), incredibly downgraded F quality (food, service, service wares) and the apparent contempt that Doug & Co. have for premium fliers.

    I now spend cash to buy Y+ on DL and could not be happier. Employees are friendly. Seats are comfy. I get free TV when it’s available and I even get free drinks and the same snacks as AA serves in F.

    I’m done chasing status. I’ll simply use my money to land in a seat that is comfortable enough and no longer worry about getting a prized F/C seat that is slightly bigger with really bad product.

  13. AA is no better than Delta. They both are terrible. Try finding a decent international saver award on AA metal. It’s a complete joke.

  14. The big crescendo occurs when FC monetization shuts out top tier elites AND one (1) upgrade instrument will only get you to Premium Economy…..don’t cross that curtain!

  15. @ Gary – Well, that may be a money quote for you, but I’m not seeing any shared data to support that statement.

    Trust but verify…

  16. It’s great that you expose Delta’s lousy frequent flyer program and related deficiencies, Gary. Keep it up. But the bottom line is that the domestic airline industry is basically an oligopoly. Without sufficient competition, Delta (and American, and United) can and will get away with lots of things that a more robust market would punish them for.

  17. I left them about 2 years ago and am now Concierge Key with American. If I can’t get where I want on American non-stop I take the airline with the best hard/soft product non-stop. NYC-HKG (Cathay), NYC-Vienna (Austrian), etc. On ultra long haul where I must connect I fly a Middle Eastern carrier.

    I actively avoid Delta. Even domestically I’ll take Jet Blue over Delta as their economy product is as good or better.

    They’re generally better on hard/soft product as compared to AA (except for AA’s 77W, 787 and updated 777s) and UA, but if they think they’re going to win me over when compared to Etihad, Cathay or Singapore, they’ve lost their mind. I think Delta has overplayed their hand. But who knows. We’ll see what the future has in store.

  18. I say “Amen!” with Delta’s SKyMiles. I have no incentive – none whatsoever – to go out of my way to earn SkyMiles. And that includes flying Delta. My little stash will be spent on magazine subscriptions and whatnot. And when it comes to earning miles from flying, I will do my best to fly on United or American – airlines that still view their flyers as their customers, not as sheep to be fleeced.

  19. I still dream on the day a ME airline will acquire a US airline. That would send this clown boss from Delta to the psychiatrist.

  20. As a 2.4 Million Miler, I have moved my allegiance and business away from Delta – I am sure that they do not care now BUT – let’s see what happens during the next business slowdown – only then will they pay for their gutting of the SkyMiles program and Driving Every Loyal Traveler Away.

  21. The Delta Alaska feud has been great for some of us as it opened routes I can now fly Alaska vs stupid Delta. I will never fly delta again and can’t wait to unload my 500K points.

  22. @Gary – I am with @Dov on this, I think that if you want to call yourself the thought leader in travel you should invest $3 or even $4 to purchase a stock photo of a Delta aircraft that without a large building column running vertically through the center of the picture…or take a new picture of a Delta aircraft next time you pass through the airport.

  23. …Yet we still have no one providing actual fact-based conclusions that Delta is, or will do irreparable harm to itself by gutting the SkyPesos program. I can tell you first hand that Delta’s planes are fuller than ever, and its employees are getting massive profit-sharing checks next month. So that leaves…where’s the beef?

  24. No status chasing for me anymore. I get miles for less than 1/2 cent (namely, free) , and I pay for business or first otherwise.
    If you don’t want to pay for first, don’t expect to be there for much longer as no airline is going to give away something it can sell

  25. I may be an American but the last thing I will ever do as long as I live is fly Anderson’s “garbage” product.

    Am waiting on the edge of my seat for Emirates announcement of non-stop ATL to DXB service. Oh Happy Day!

  26. Folks. Delta, US and AA no longer care about our loyalty. With just the three of them left, the math says that they will lose and gain customers at the same rate and so called loyality programs will remain unchanged. Best bet for me is to pick the best partner carriers and, also, to just pay for what I want and to forget about chasing status.

  27. Passengers quit being important to Delta once they merged with NW & brought in Anderson.

    That said, expect the similar treatment from AA & United soon as they will follow Delta’s lead since profits matter more than frequent flyers

  28. I avoid Delta (and Hilton) like the plague – only fly when forced by company policy or there is no other reasonable option. I feel sorry for all the hub captives who are stuck with skypesos.

    At least UA is moving in the right direction now. At some point the industry will turn (as it always does) from printing money to filling seats in a recession and DL will miss all those once-loyal customers who will have discovered other options.

    Also kind of hard to turn your program on a dime when you don’t disclose your award levels. For example, how do you have an award sale or announce additional award inventory when you don’t have published charts? The only thing DL will be able to do is offer more skypesos, which is not an incentive to most of us.

  29. @AtlantAnne – the headline is a QUESTION, and one consulting firm with a financial institution client says the answer is that the answer is yes

  30. Diamond Medallion here… until February 1st. Had 201k MQMs on December 31, but spent less than $3k on DL revenue tickets last year, so no rollover and no status. I have moved to the New American, which values my business more and treats me better.

  31. I dunno. As a customer with choice (NYC based), for pure operations and schedule, more of then than not I’m choosing Delta over United, America, Southwest, etc.

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