A key takeaway for me from Delta’s investor day was that they expect to sell buy ups for 70% of their first class cabins, for all intents and purposes eliminating elite upgrades. Whether the policy changes, or the supply or unmonetized first class seats simply approaches zero, if they’re successful that will transform US airline elite programs.
But there was a lot more in the presentation — like Delta’s plan to expand basic economy fares to long haul markets, a continuation of a strategy they’ve been working on for the past year. More markets with stripped down fares offering few services, and more opportunity for upselling.
Reavealingly, when Delta talks about customer experience they don’t even mention the SkyMiles program.
In fact, the entire 56 slide presentation mentions SkyMiles only twice — both times in explanatory footnotes related to revenue (e.g. “SkyMiles used pursuant to advance purchase under AMEX agreement and other” under “Non-GAAP Reconciliations”).
In fact, at investor day Delta Chief Revenue Officer Glen Hauenstein made clear in his remarks he wants you to stop thinking about award tickets and start using your miles as (very low value) currency.
“We want our customers to have a lot of miles and use them like currency. Right now, they save them for the one big trip in retirement.” He referenced being able to celebrate (using SkyMiles) by buying a bottle of Dom Pérignon in a SkyClub, or a business traveler who has had a rough week and wanted to upgrade (presumably using SkyMiles).
The program started this week at Delta’s new San Francisco International Sky Club, which opened a few months ago in Terminal 1, and the carrier plans to expand it to all 34 Sky Clubs that accept payment for drinks by the end of March.
The payment rate for premium drinks is 100 miles per dollar, so premium beers like Stella Artois or Blue Moon can be had for 300 miles, while top-shelf wines, spirits and cocktails will cost 600 to 800 miles.
…“Customers who opt to pay with miles will be prompted by the bartender to scan their SkyMiles membership card or boarding pass and enter their SkyMiles account password at checkout on a payment device,” a Delta spokesman said.
Leaving aside that I hardly consider Stella Artois to be a premium beverage, they’re valuing SkyMiles at a penny apiece. Why would you ever want to earn 1 mile per dollar with the Delta co-brand American Express card?
More redemption options are good, and if you’re an infrequent Delta traveler with a few miles in your account but happen to have a Platinum Card by American Express that gets you into the lounge or an overpriced SkyClub pass it may be booze or magazines. But since SkyMiles don’t expire, save them up for a future free trip — and just hope that the program doesn’t peg your miles as worth only a penny (until some future devaluation) going forward… which is roughly what they had been planning when they moved to a revenue-based program in the first place.