If you want to use your Delta SkyMiles to book a premium cabin award, you can generally expect to pay a lot more than on most other airlines for a comparable flight. Hardly an oversight on Delta’s part, that is the plan and Delta believes it can continue to get away with it thanks to continued strong demand for its loyalty program and credit card.
Delta SkyMiles Chief Explains Why Flight Awards Cost So Much Compared To Other Airlines
Last month, Skift’s Biran Sumers sat down with Prashant Sharma, Delta’s Vice President of Loyalty.
Sumers zeroed in on the relative lack of value in using SkyMiles to secure premium cabin flights versus other airline programs and asked, “Why does Delta charge so many more miles for the best awards than other airlines?” Sharma, who has overseen a number of redemption devaluations during his tenure, argued that as long as consumers keep signing up for Delta credit cards and engaging with the SkyMiles program, there is no need to make changes:
“We take very seriously that the customers see value in the program, and the value is very holistic. A large portion of that, for sure, is using your miles to fly, which is the promise of joining the program. And we feel confident that as we look at where customers are flying and their ability to use the miles, we are actually seeing that actually approach 2019 in terms of how customers are using their miles to fly so demand remains high. It’s also validated by the fact that customers are not only joining the program at record levels but also taking up co-brand at record levels which is further faith that this is a currency they want to earn.
“So we looked at the value holistically. We feel very good that what we’re offering to customers. We continue to solicit feedback and satisfaction with the ability to redeem miles and the value of redeeming miles.”
This is hardly an unexpected answer. It’s also not so illogical, because as long as passengers keeping signing up for credit cards or crediting flights to SkyMiles, Sharma can really say with a straight face that Delta can charge 2-3X more for a premium cabin ticket than its competition.
Sharma recognizes that passengers appreciate reasonably-priced redemption options and uses two examples of economy class redemptions to argue that Delta still offers great value to its premium cabin customers:
“We had offers for customers living in New York where they could do a roundtrip to Europe for 34,000 miles in Main Cabin or they could go to Miami for 15,000 miles roundtrip in Main Cabin. So we continue to have a portion of these for customers depending on when they want to go and where they want to go.”
But Sumers pushes back. Noting the innovation of the Air Canada Aeroplan program, which offers outsized value (still presumably well below actual costs to Air Canada) and captures discretionary passengers at the margins, why would Delta not do the same thing? Why is Delta effectively ceding this market segment by charging disproportionate prices for premium cabin seats, even on its own flights compared to some partners? Sharma falls back on Delta’s operational reliability and generally above-average in-flight experience.
“Our focus here is to provide consistent and sustainable value…so we are not necessarily trying to play the game with customers or with bloggers. We listen to what customers want and we try to offer that on a compelling value across the board and that’s been our focus and we look at value more holistically as well. Mileage redemption is a big portion of it, but also just everything else that Delta can provide in terms of experience and making them come back to us.”
Before the pandemic, Delta’s operational reliability was impeccable and a major selling points. These days, Delta has shown vulnerability and its stellar operational performance is not a given. Sharma uses the “holistic” term twice but really fails to explain what he means. Yes, passengers will generally have a great experience on Delta. But does that mean they will be willing to pay 300K for a one-way award from New York to Amsterdam on Delta using SkyMiles versus 55K for a one-way award on the same route in KLM business class using Flying Blue miles? As more passengers learn there are actually attractive alternatives to Delta, SkyMiles will lose customers.
You can listen to the full interview here.
It all boils down to this: Delta Air Lines believes it can charge higher prices for premium cabins awards than other airlines because it can get away with it.
That’s a hubristic position which may work for now, but could greatly backfire as consumers discover more valuable alternatives. That’s what many are doing already. Yet carriers like America and United are also catching on that they can charge a lot more miles for their premium product than they are now, which could diminish the delta, if you’ll pardon the pun, between Delta and its competitors.
(image: Delta // H/T: View From The Wing)