Basic economy tickets aren’t a ‘new way to offer cheaper fares’. They are new restrictions on the cheapest fares, a way of making the product worse so that some passengers will pay more.
Now that United, Delta, and American all offer Basic Economy fares (no advance seat assignment, no cancel/changes, no upgrades or extra legroom seats, and in United’s case no full-sized carry on bag) it’s only been a matter of time before one of the carriers tried booking award tickets into Basic Economy.
I admit to being surprised that it’s happened so quickly, since it’s not in the best interests of the airline – it’s a bad business decision – but I’m not surprised that it appears to be Delta going first.
- Delta was the first carrier to introduce basic economy fares
- Delta is the airline that comes closest to viewing miles as just another currency or way of paying for whatever ticket is available
- Delta is the most innovative US airline these days, both for better and for worse – they’re the one United and American are usually copying
- They don’t publish an award chart anymore anyway — their award prices are whatever they say they are for a given flight
By the way this isn’t even limited to ‘saver’ awards. A traditional saver award was 12,500 miles each way domestically. Here they’re asking members to spend 35,000 miles for a flight and still not have a seat assignment. American Express has to be furious with this since it strikes at the heart of the value of their biggest co-brand portfolio.
Based on limited sampling so far this applies only on a limited number of routes and the ‘buy up’ to avoid basic economy seems to be an extra 2500 points each way.
Delta’s CEO thinks of miles as just another currency to use to pay for stuff. He views their miles as worth a penny apiece. You spend miles or money to buy up for better travel experiences.
You’d think then that since Basic Economy fares are the cheapest, the cheapest mileage redemptions would be for basic economy. If you want better travel experiences, spend more miles. This is a way to get customers to burn more miles for their travel.
Still, this actually doesn’t make sense for an airline to pursue. Award travel is the reward for loyalty. After members redeem miles on average their rate of accumulation rises. Airlines make big margins selling and redeeming miles. Give members a bad basic economy experience they are less likely to value the redemption. Accumulation slows and the airline loses mileage sales and profits.
What’s more an airline does not need to make the cheapest redemptions book as basic economy tickets. If they want to make their miles worth less, and get customers to ‘buy up’ or spend more miles for travel, they have other levers to use. These are proprietary currencies. They manage availability and set the price and consumers can’t take their miles and go elsewhere.
Airlines don’t want to sell Basic Economy tickets they want customers to buy up from basic economy. Basic economy is a form of price increase (on those with the greatest willingness to pay). But airlines raise the price of awards all the time, indeed Delta shows they have no problem devaluing their miles every few months and thus don’t need basic economy to implement a price increase.
I’ve reached out to Delta for comment and will update with additional information as I have it.
Update: Delta has provided the following statement about this change-without-notice:
Our customers have told us they want the flexibility to use their SkyMiles on more types of Delta products, and we are always looking at new ways to expand those options, while making that process simple and intuitive for them. As a part of this effort, we are testing the ability for customers to use miles for Basic Economy tickets on select flights.
(HT: One Mile at a Time)
Elites need to let Delta and AmEx know that this is unacceptable. Be loud on email and Twitter and perhaps they will relent.
It would seem that a freebie ticket should be for a bottom of the bucket seat, unless you buy up. Rather than saying this is negative for consumers I’d prefer to think that airlines, to this point, have just been much too generous. While I’m not pleased about the change I cannot fault the airline at all for doing this.
Gary, I flew a biz class award ticket the other day from FMO>MUC>EWR on LH, with a final flight on UA to MCO. The MCO segment was in Basic Economy. I had no option for an advance seat request at any point in time, and even at the arrival airport (EWR) I had an unassigned seat until at the gate. I ended up in a middle seat row 29. I had never been squished into one of those teeny tiny seats and it was horrible, I can’t imagine how large people do it.
THIS is our thanks for loyalty?
Once again – a direct contributing factor to this type of devaluation is the inflation of miles caused by the credit card relationships that Gary and other bloggers are constantly pushing.
If you want easy miles by credit card – you need to realize & accept that this comes along with it.
If the only way to earn miles was by flying, then the total pool of miles liability that the airlines carry would be lower, and devaluation would occur at a slower pace.
As for the assertion that “award travel is the reward for loyalty.” lol. Sure, if you consider signing up for a credit card, and using that credit card, as “loyalty” to an airline.
,,,And we are giving our valued award customers added value by letting them partake in the thrill of a random seat assignment!
@KimmieA I just had a conversation with UA on this topic yesterday. They told me all I had to do was call and get a seat assignment. Ultimately, I decided not to bother with the UA redemption and booked away (largely due to my recent experiences with UA in general). I don’t understand why airlines want to punish their best customers with BE , especially higher level elites since BE fares are NOT cheaper – the real Economy tickets are just more expensive.
I cancelled my Delta Skymiles Amex last month, I could not justify the annual fee. Flying out of ORD I seldom fly Delta and I put all my credit card spend on my CSR.
@Bob, actually yes spending on X Airline’s credit card, is a form of loyalty, because they (i.e. American) made something like 1/3 of their revenue off of selling rewards miles to the banks, for them to give customers… I’ll just stop flying delta / accumulating Delta points / spending on delta credit card, and stick to others if their miles are worthless.
For Delta evangelists they are already redeeming 375 to 500,000 miles one way in Business Class to Sydney.
I can go First Class for 70k one way on Qantas with a superior lounges
and better hard product /dining
So if blind customers continue to be screwed by Delta so be it .Thats their choice
Oh yes but Delta is always on time and thanks me for my loyalty
so that’s worth overpaying by 300%
.On the other hand in a monkey see monkey do business world its a terrible precedent and would clear the runway for me to go to 100% cash back and cut up whats left of my airline credit cards if others carriers follow through
I would continue redeeming Int partner awards in International programs though
And just buy coach and first from just about anyone but DELTA as necessary
I flew delta earlier this year to colombia on an economy award booking. I was stuffed into unconfortable window seats and on two of those flights my seat didnt even have a window at all!
Why would anyone still redeem skypesos on DL? Much better value options on partners.
That being said the vast majority of customers (like my brother) continue to redeem miles for domestic/international economy awards so this is simply another price hike. And one that does not really matter as DL doesn’t have official charts. Honestly there is no reason to give Delta any more bytes on the costs of awards until it provides legit redemption charts – either $$ based (like WN, B6) or point based. Everything else is just static, guesswork and not tied to anything concrete.
Don’t you people read? We are all getting exactly what we asked for.
According to Delta (and AA and UA).
Everyone reading VftW, whether we redeem for domestic coach or international first class, is not the target for this. I think a side goal is tied to the “currency” aspect of Delta (And AA, and UA) SkyMiles. By tying miles to basic economy it further pulls them away from “aspirational” redemptions which cost the airline more and reduce revenue opportunities, and place them more into the replace-what-you’re-already-getting mindset. It’s already known that domestic coach flights are the majority of redemptions by US loyalty members; making a “better” redemption regular economy (and an upgrade Comfort+/MCE/etc or maybe PE) instead of business is good business but terrible for those of us who care about a better experience.
As for pushing CCs, it’s important to remember that the airlines created and expanded that market. Using CCs to gain miles is the only practical and logical option for non-corporate flyers to ever see any rewards. Right now a atypical 40K round trip miles ticket takes $8,000 in airline spending on the big 3; my wife and I travel multiple times a year and it would still take us until 2024 to earn enough miles to send one of us to Omaha for a weekend. So while the inflation is an issue, staying ahead of it with smart CC spend is the only answer for anybody willing to put in the effort.
I’d love to meet the customers who’ve told Delta that they want this…
but all the complaining won’t work – once people start cancelling their AmEx DL credit cards and tell AmEx the reason, AmEx might demand to pay less for DL SkyPesos going forward and Delta might change – until then, expect the beatings to continue…
As long as redemption prices track cash prices at $.01 to the mile, this is no big deal, maybe even a good thing. (If you want to argue that BE is bad, I’m with you, but that’s a different thread.)
As noted above, redeemable miles are not a reward for loyalty. they are just a discount of 5% – 11% depending on status, and issued in an odd currency that is not worth anything until you have a certain amount of it.
Elite status is the real reward for loyalty. I’d happily forgo redeemable miles for a better shot at status.