Delta CEO: First Class Upgrades are Stupid

Delta has been very forthright about how they see their most frequent customers, and the perks those flyers value most.

Two years ago they made clear that they saw the end of first class upgrades coming. They were already earning revenue from sale or upsell to first class for 57% of their seats up front, and they were working to push that to 70%. They didn’t want upgraders in those seats, they wanted revenue (in any amount).

Now Delta calls their extra legroom coach product a separate cabin and “upgrades” elites into that. “Comfort+” is the new upgrade.

This past week Delta’s CEO made the point again.

“Any business where you give the majority of your best product away for free doesn’t work,” he said. “This is the best real estate on the planet, and while we appreciate the loyalty of flyers, we couldn’t continue to give it away.”

Ed Bastian appreciates the loyalty of customers (customers giving them money frequently) he doesn’t think they should get first class upgrades in return.

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. Title is a paraphrase – i did not put that in quotes. He argues it is stupid to offer your best product for free.

    I would argue that is not even close to what upgrades are. So it is revealing how he thinks about them.

  2. If Delta flyers want a first class seat they should pay for one. Good for DL for keeping the riff raff out of their FC cabins. MDGA!

  3. I seem to remember that American Airlines used to have a system of 500 mile upgrades where people had to pay for upgrades, either by flying or with cash. It is better than unlimited complimentary, because the pay feature means people that do not care about upgrades are not competing for them. It also meant that lower level elites could actually be upgraded from time to time.

    But I have to say, all those that post how much better Delta is than American or United, are ignoring the fact that Delta is way worse than Delta was 5 years ago, or 10 years ago. And by the way, Delta breakfasts in Delta One are so bad, that by comparison a McDonald’s breakfast is a 10.

  4. I tend to agree with Bastain, but here’s the thing. The airlines started giving it away. They can’t possible expect to take it back now, unless the strategy is to make every other seat on the aircraft miserable as f–ck so we then pay $200 more for a “first-class” seat on a flight without even a meal service. Or if they do serve a meal, the meal “costs” Delta about $7. Maybe $20 if you include a couple glasses from the $10 bottles of wine.

  5. I’m with Ed a little bit about this one. I used to be a platinum flyer on NW for a couple of years in the mid 00’s. Back then, they priced F sky high. For a domestic flight, F simply was not worth multiples of discounted Y. I would think, “if they gave me something worth paying for, I’d pay for it. But at these prices? Free upgrades it is.”

    I get Gary’s point, but the optimal F product is something worth paying for, both in terms of product quality/offering and price. As someone who doesn’t fly enough anymore to maintain status, I’m happy with the ala carte model — pay for what you want when you want. Back in the day, I couldn’t even prebook the exit row unless I was on full fare Y. That time has changed for the better.

  6. It’s hard to get upset about it. Either frequent flyers don’t care about getting upgrades, or else they do and they’ll vote with their feet. Personally, I stopped flying Delta a year ago for reasons similar to this.

    BTW I looked up MGDA and it seems to be “Miniature Dairy Goats Association”. I’ll have to check them out I guess, this sounds like an important hint.

  7. As a weekly Delta flyier, can’t say I am happy with this. As a rational human being and seemingly competent businessman, I get it. Want first, buy first. It sucks as weekly people like me wont pay 2x per week out of our own pocket to upgrade (and no chance company pays), even at the competitive rates, but it is what it is.

    My only hope then is that comfort gets bigger and better – start to see meals, better seats, even more legroom, etc. Make it differentiating more than slightly better snacks and the legroom we all had a few years ago. Give more regional upgrade certs to placate the base, while watching people like me start to prioritize schedule over loyalty if loyalty doesn’t give many benefits beyond some extra redeemable miles.

  8. Vote with your feet? Where you gonna go? They are all terrible, points are so devalued and award seats so limited, none of them are worth anything. I was an AA EXP for many yrs in ’00s and switched to SWA about 4yrs ago when AA dropped its short haul routes in CA. Name one great US airline, I’ll gladly give them my business.

  9. I wonder how this will play out. I suspect that as upgrades become tougher while coach becomes tighter, companies will have a harder time finding high level employees ready to be road warriors, and may have to loosen booking policies to allow for paid first. This will be easier to justify in light of the relatively low cost of paid first tickets.

  10. Free upgrades are what kept me chasing highest status on Delta. If I must pay for first, then I will no longer fly Delta exclusively, but will simply fly whoever has best schedule, as I am either going to be uncomfortable in coach or paying for first, no matter which airline I use. So the point of the freebie upgrade was to keep people paying the base fare to the airline. I think Delta will see an overall drop in business from the very group of people who fly the most.

  11. Well Ed say good bye to the years of growth driven by loyal customers.
    CEO trying to put his mark on the company at the expense of its customers a very bad move. There is a point where value out weighs perks I suggest he pays attention to that.
    I fly delta driven by perks.

  12. Delta has it right, and is offering a domestic business class worth flying in. I learned the hard way never to pay again for business class on American — on a very long flight from LAX to PHL they had no individual screens at all, and the food was awful.

  13. So is there a reason anyone should be so excited about Delta first class that they are willing to pay the premium other than economy esp. on international flights is so crappy on US airlines? I admit to limited experience with Delta since I am Chicago based, but cannot imagine paying for first on UA or AA across the Pacific when you can take ANA, EVA, or with connection Singapore, not to mention ME3.

  14. @Peter. I think I might have seen Miniature Dairy Goat on a plane. It had a vest on it saying Emotional Support Animal. If I was not allergic to goats, I would have offered it my Delta One breakfast. Hmm, not sure if the goat would have eaten it.

  15. For me it’s simple if you want a guaranteed first seat you pay for a first seat. But as a heavy flyer 150k miles a year I want that small thank you that comes a few minutes before the doors close. I think it is simple, the US3 first product is a joke compared to the rest of the world and at least with last minute upgrades (seats which would otherwise be empty) I would keep my loyalty there. If those perks leave then why would I care and I should find the best product or the best timeing and obviously that means taking my business elsewhere. First delta destroyed their miles program then the perks, I really think anyone not living in Atlanta who is a sky pesos loyalist is crazy these days.

  16. They aren’t giving anything away for free. Never have and never will. They’re upgrading you so they can’t fill your seat in the back of the plane with another paying customer. Leave those seats upfront empty you can’t fit as many people on the plane. Might not be what you were selling the F seat for but it’s still $$$.

  17. Poor Delta Loyalists……aw, Atlanta really doesn’t give Two shits about YOu after all, lol. Now Let’s Pout and Swear You are Jumping Off The Delta Bandwagon. pathetic

  18. But it’s the “best real estate on the planet”, right? A comment like that destroys his credibility for anything else he might say.

  19. I have been a loyal Delta Diamond for years. Flying weekly and selecting Delta – which often means connecting flights vs. directs on SWA – because i could get upgraded. Not for the free drinks, not for the meals, but for the larger seats and ability to work on the flight and be productive. It has become apparent that upgrades are less and less frequent and Comfort + is a joke as far as the seat comfort goes, particularly when they “upgrade” you from an aisle to center seat. So I will not be inclined to go the connection route on Delta when a direct flight is available in the future. A direct flight in an uncomfortable seat vs. connecting flights in an uncomfortable seat is a no-brainer.

  20. The way things are going at Delta, they are going to get rid of non-rev travel too. Think about all that valuable real estate they could be selling!

  21. It’s a balance I’m not sure the airlines have fully thought about. On the one hand, the whole point of frequent flier programs is to get people to pay a premium (either in time or money) to fly one airline. There must be benefits that make this expense or inconvenience worth it. On the other hand, it always seemed an expensive business decision that airlines charged such absurd prices for domestic first that the cabin would be empty without the upgraded economy class passengers. I think a better system is to ration elites a certain number of confirmable upgrades that will clear if discounted F space is available. That way there is plenty of seat inventory to sell, while elites get meaningful bonuses for their loyalty with a built-in method to ensure value to lower-level elites.

  22. I would argue airlines were stupid in past decades with an inability to sell that commodity. The fact that they gave it away in the first place is bad business and none of us should be critical of the fact that they’re finally figuring out how to sell the product…

  23. DaveS — Bastian’s actual quote was “the best real estate on the plane,” not “the planet.” The author of the article mistranscribed the quote.

  24. Two observations:
    1. The race to the bottom continues unfettered by past promises or attention to loyal customers.
    2. Ed Bastian most likely never flies coach, never sits in the middle being squished by people much larger than him, never has to run to catch a connection, never has to try to balance airline loyalty with company policies, and in general, does not have a clue of the life of the traveling worker.

    But it’s his airline and he’ll do what he wants to.

  25. There is a problem with giving away all of the unsold first class seats. A paid first class passenger who is late arriving on his connecting flight then has no way of getting a first class seat on a later flight, even though he has a paid first class ticket, because they have all been given away free. This has happened to me, and I was stuck in the back, with my paid first class ticket burning a hole in my pocket, while up front there were numerous passengers who didn’t pay for first class. What an absurd way to operate a business. Paying for a first class ticket should mean more to an airline than being rewarded for buying a whole bunch of coach tickets. If anything, let the frequent coach flier be rewarded with a free coach ticket, not give him superiority over paid first class ticket holders. It boggles the mind.

  26. I fly United, often using frequent flyer points to pay for the travel. I have an Economy Plus subscription so I sit there. Sometimes when I check in online the day before I’m offered a first class upgrade. If the upgrade charge is reasonable ($200 or so) I’ll often take it. Otherwise, I’ll stay where I am. It’s possible that the upgrade charge would be more if I were in regular economy as the airline figures I’ve already paid something to be in Economy Plus.

  27. And when Delta lowers the bar, United finds a way to crawl right under it.

    To the commenter that asserted that they can’t give something for years and then take it back… this has been the MO for the airlines for many years now esp for their elites.

    Also as a note, this only seems to apply to Domestic travel, since upgrades must be purchased with $ or miles on International. Domestic First Class is really just a bigger seat and prestige. I’m pretty sure water will find its level on how much economy passengers are willing to spend for it. The additional PQM is really the only tangible benefit in my opinion.

  28. Back when there 6 to 8 legacy carriers, Delta’s FC cabin prices were sky high, and the cabin was always empty. Continental began giving free upgrades to the best elites, but DL resisted – in fact scoffing at the idea (I know a lot of people who work at DL). As word spread of CO’s new strategy, more and more people in Atlanta started flying CO just to get the upgrades — especially on the NY (EWR) run where CO had almost hourly flights, and DL was losing market share. Guess what, after about two years DL reluctantly began doing the same thing as CO. Now we are down to 3 main carriers, so there really is no competition. DL is very happy to back to the old ways (although the revenue price of FC has fallen from the absurd), and the customer has no where to go. If everyone starts choosing which airline they are going to fly on a flight by flight basis, instead of the ff program, maybe, just maybe that will bring back some competition — and people will choose on pricing service, in flight amenities, etc. just like the old days when the airlines were fully regulated. So maybe something good can come of this.

  29. I fly 225K miles a year. If Ed’s not going to offer complimentary FC upgrades, what’s he going to do to keep my business? The seats in the sardine cabin are a joke. If things continue Delta will soon be cutting off PAX’s heads so they don’t kiss each other in the can.
    And as for the frequent flyers who would like to see fewer elites – most of them aren’t flying on their own dime. I pay for all of my tickets myself.

  30. Ed Bastian ain’t that smart… he’s not understanding why any of us bother to do the loyalty thing in the first place. No point in giving them my loyalty if I can just buy discounted upgrades anywhere. And we all know that what one of these guys does, the others will follow.

    Further, what is much dumber than giving away a free first class seat, is a plane taking off with an empty first class seat while a Diamond Medallion is sitting in the row that backs up to a toilet in a middle seat.

  31. Delta needs to stop with the inbred corporate BS. First, FC upgrades aren’t free. Second, no matter how many times delta says it, a coach seat with 3 more inches of pitch is NOT an upgrade. Third, delta should stop claiming it offers “unlimited” complimentary FC upgrades. Clearly, the number of FC upgrades is limited, and delta plans to limit them more and more. Fourth, qualification for medallion status is not based on the amount customers spend on delta. It is based on the amount of revenue delta receives from that spending. The list goes on.

    When delta introduced C+ it was obvious what its intentions were.

  32. Why doesn’t DL just eliminate its FF program all together? And save the expense of running it and of giving away free seats for rewards. Is that where they are headed?

    Then when they have empty F seats – they can just give them to non-rev’ers, like the used to. UA has so many non-rev’ers in its premium seas you wonder whether anyone pays for it.

    DL should be the leader and eliminate the programs and cancel their arrangement with AmEx.

  33. I fly DL about 200,000 miles a year. almost a 2 Million Miler and Diamond. I am loyal to DL and the Skyteam but see this move as a slap in the face to those of us that live on a DL aircraft. We all have options and I have to say that AA offers the DL Challenge, where they match your status. I will most likely be moving my business to AA. I live in S Florida and avoided AA as I liked DL customer service. But I can put up with a rude flight attendant or gate agent to ensure I get an upgrade. Loyalty works both ways. The need to be a leader in the industry is listening to your valued customers. Changing the Diamond Status to having to spend $250,000 USD a year on DL is crazy. Who spends this type of money ? If those who could spend this type of money each year, would most likely charter. It pains me to say that I will be moving to AA. Reluctantly. I would encourage those who travel to do the same. LOYALTY Works both ways – Will say it again. You were forming a world class airline and now, you are dismantling it turning your backs on loyal customers who live on your aircraft. Ed Bastian does not understand customer loyalty. He does not understand customers who fly the airline day in / day out – week in /out. It’s all about additional revenue. Unlimited Upgrades cost them nothing. This will cost DL more than they know. Love to know who was at that table making this crazy scheme. Ed ?? Any insight ??

  34. I do like Delta service, but this is what keeps me with AA. When I fly for vacation I might pick Delta over AA because I buy business, but the company wont do that for domestic flights. Upgrades are really the only reason I care about status, and the loss would push me to becoming a free agent.

    Also, for those on here bashing the US3, while I don’t think they are great TPAC, I would take any of them, and their direct aisle access over any European carrier in J right now for. Unless I can grab a freedom route, the newer planes from US based carriers are about the best way to get to Europe.

  35. Bryan t

    Non Rev travel is STANDBY travel. Those seats that aren’t filled at departure time. You must not realize that.

  36. I’m 6’3″ and just don’t really fit in coach, but have more than paid my dues in the back. I reached Platinum one year and the upgrade certs were nice, but only got upgraded a handful of times. At this point I just try and reach Gold, pay for everything under the sun including rent and mortgage with the AMEX Reserve card, and use points and dollars to upgrade, cuz it’s never going to happen otherwise. It’s also nice to know months ahead of time I have a FC ticket, and don’t have to stress out looking at the seating chart slowly filling up.

    I remember Diamonds used to be this elusive status I hoped one day to attain, and was about to embark on many miserable hours in coach to get there. But now I just spend the extra dollars + points to get the FC ticket. I also fly a lot less, so I think if there are others like me Delta will eventually figure out it was a bad move. I would be really pissed if I was a Diamond Two Million miler and Delta was selling out my hard-earned FC upgrade from under me for a hundred more bucks. They’ve really devalued loyalty and for what? Record low fuel prices, record profits. It’s never enough.

  37. As a marketing man for 40+ years, I know about taking care of your heavy user segment. Send Ed, the Delta CEO, back to take an undergraduate course in Marketing. His statements are not only uninformed, they are actually insulting. Ed, don’t you understand that a heavy user / frequent flyer *earns* his or her upgrades through making decisions each time he or she flies. You want to encourage your best customers to make those decisions in favor of Delta. There is much more I could say on this topic, but a CEO who makes such idiotic, flippant, and insulting comments is probably beyond learning anything. My only hope is that a Board member reads these comments and “educates” him (or fires him).

    I agree with Bernie Sapienza, Ben O and others. Is there a way of getting this feedback to Ed or better still, the Board?

  38. How do we get this point across to Ed Bastian ? I will be forced to go to AA .. They will match your Diamond Status. I choose who I fly on for business and fly about 200k miles plus a year. Loyalty works both ways.

    Is there a specific place to send a letter about this decision for 2019 ?

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