Delta CEO Ed Bastian admitted that his carrier went too far, too fast with its recently announced changes to the SkyMiles program and Sky Club lounge access, but stopped far short of saying that these changes were unreasonable or
Delta CEO: Modifications Coming To SkyMiles Program – “I think we moved too fast”
Appearing at the Rotary Club in Atlanta, Bastian was asked about the recent SkyMiles changes and provided a surprisingly straightforward answer:
- “We’re listening to the feedback. We’re reading the feedback…The feedback matters.”
- “We’re still assessing what we do, but there will be modifications that we will make and you’ll hear about it sometime over the next few weeks.”
- “We need to make certain that we can serve our higher tiers with a level of premium experience that you deserve. And it’s got to the point, honestly, where we have so much demand for our premium products and services that are far in excess of our ability to serve it effectively.”
- “In terms of our assets, whether it’s Delta One, whether it’s the Sky Clubs, whether it’s the upgrade certificate, whatever it is, we have grown that population. COVID almost doubled the amount of Diamonds.”
- “No question, we probably went too far in doing that. Our team wanted to kind of rip the band-aid off, and didn’t want to have to go through this every year. I think we moved too fast. We’re looking at it now.”
(video on this matter starts at 29:10)
There are several takeaways from his conversation.
First, Bastian suggests that the problem was not the changes themselves, but how quickly and draconian they were implemented. I think he gets this wrong, but hold that thought.
Second, he suggests that the number of Delta Diamonds has doubled since 2019. I strongly question that. The days of status extensions are over and I do not think 2021 numbers accurately convey the field today.
Third, Bastian states that Delta has so much demand for its premium products (lounges and premium cabin seating) that it cannot serve that demand adequately. But this has nothing to do with too many elites! Rather, it is linked to Delta’s pricing modifications that effectively sell out the vast majority of premium cabin seats and its relationship with American Express which have inflated the ranks of those who have lounge access.
Finally, it is not clear what “modifications” will be made over the “next few weeks” but I think such changes will be made in concert with American Express in an attempt to stop more cardmembers from canceling or downgrading their Delta co-branded credit cards. I’ve heard from so many of you who have let American Express, Delta’s best customer, know loud and clear that the changes are unacceptable.
Biggest Problem Remains: SkyMiles Program Is Not Valuable
Whatever Delta may roll back, there remains a fundamental problem: the program is simply not valuable and Bastian seems oblivious to this. If earning top-tier elite status requires flying in premium cabins, then most benefits of elite status are already accrued on the flying side without needing elite status. On the loyalty side, particularly as it pertains to redemptions, Delta continues to show a hostile disregard for giving members any value as evidenced by its decision yesterday to devalue awards from Mexico.
And while Delta may slightly edge out Alaska, American, and United in terms of operational performance, all are within striking distance and the notion that Delta’s superior operational performance greatly reduces the need to offer a compelling loyalty program is foolishness…especially when we are talking about encouraging people to place at least $75,000 worth of annual spending on a Delta credit card.
Bastian says, “We need to make certain that we can serve our higher tiers with a level of premium experience that you deserve,” but Diamonds are not getting upgrades because Delta is selling those seats…upgrades are nonexistent on many routes and Delta’s algorithmic monetization of Delta One and domestic first class will not change.
Was This The Plan Along?
Some have suggested that this was the plan all along…rip the bandage off, but then put a smaller one back on, thereby showing Delta listens to customers and is empathetic.
While I would put nothing past Delta, I do not think that is the case. Instead, I think Delta unexpectedly lost a great deal of trust among not only its loyal flyers, but its valuable flyers. Furthermore, I think Delta heard loud and clear from American Express that cardmembers were downgrading their cards or closing their accounts.
The program changes as they stand now is the program Delta wants. It may take a bit longer to get there due to consumer backlash and competitive pressures, but we see the ultimate goal, which is to create the sort of loyalty program we see in countries without much competition, like Qantas in Australia. I’m not sure that will work in the United States…
CONCLUSION
The Delta CEO has promised to “modify” some changes to the SkyMiles program that went “too far” but stopped well short of saying Delta has had a change of heart concerning its long-term goals for SkyMiles. In the coming weeks, we can expect some changes to be rolled back, but it is not clear what those will be. In the long term, Delta sees these cutbacks as necessary to create a “premium experience” for those who hold top-tier elite status, at least according to Bastian.
image: Delta
Passengers are (sometimes) customers , and Always a source of revenue .
I can see it now. 11 SkyClub passes for Reserve instead of 10.
Btw didn’t Bastian’s comments read something like “sorry we didn’t use lube”?
LOL. Pretty much.
This was expected and Delta’s new marketing playbook. They tried it out just last year when they attempted to change the rules for when and how long you could access the SkyClub. They purposely went overboard, everyone got super mad, and then they rolled back some of the changes to where they originally targeted them. Its a ploy to get positive play in the media for “listening to their customers”. It isn’t hard to search and find all the ridiculous articles posted about how great Delta is when it comes to the Voice of the Customer and responding to negative feedback. It’s a joke. In the end they still get exactly what they were looking for and customers will still mostly be screwed by the new changes. But Delta somehow comes out looking like a rose.
The US DOT just issued its August Air Travel Consumer Report which contains a number of data items through the month of June 2023.
Those who argued that I was off base for saying that Delta was in the best position in the largest corporate travel markets. Here are just a few items that highlight how strong Delta is relative to its competitors:
1. Delta is 20% larger than United in the NYC market based on the number of flights operated by mainline and their regional partners. Given that United attempted to operate a schedule that reduced its on-time percentage at Newark to less than 60% – more than 10% less than Delta recorded for its hubs at LGA and JFK combined – United has had to cut its capacity in New York even further.
2. Delta’s system on-time percentage on a system basis is still the best in the country on a year to date basis. Delta’s on-time percentage in its hubs was 10 points OR MORE better than most other large airlines in their hubs.
3. Denver was one of the most surprisingly poor performers at less than 60% on-time even as United and Southwest are committed to growing even further. Delta’s SLC hub a few hundred miles away had an on-time percentage 15 points higher. All of the talk from UA about building its network to connect more passengers is meaningless when UA comes in last place among the big 4.
4. In major city after major city, Delta’s on-time was better than every other carrier. DL outperformed Alaska in AS’ hometown hub of SEA.
5. Delta operated more flights in Boston than JetBlue, perhaps for the first time since B6 built its hub there.
In baggage handling, cancelled flights and involuntary denied boarding, Delta performed at the top of its largest peers and often the entire industry.
As much as some people want to argue otherwise, Delta is in the best position ever not just from a product standpoint – which most certainly highlights why they were able to aggressively increase requirements for elite status. Premium passengers pay for high quality service and Delta delivers it.
Delta’s network and product quality is bringing new premium revenue onto Delta’s network.
As much as some people think that they can take their business to other airlines, they will pay a price for doing so.
There will be further cuts by other airlines but premium travel still flies Delta more than on any other airline.
Do you write this out yourself and then paste it on every travel blog you can, or does Delta write it for you and you just paste it on every travel blog you can?
@Chi … spot on .
My understanding of the surge in elites is that so many rollover MQM’s that folks were basically guaranteed Platinum or Diamond status for the next couple of years as long as they hit their waiver requirements. I am guessing that killing the rollover program was a huge part of their strategy and is not one they will back track on at all. They may give a better ratio on the conversion, but that would be it.
There are a few anecdotes of folks on FT who claims to have 500k MQMs rolling over or more. That’s 25k +MQD rollover. If there are actually more of these type of folks, then ironically you would have more DMs qualifying for 2025. Likewise, folks with 300k MQM rolled over will also clear Plat with just some extra flying/spending.
And with 0 F availability on many flights, these DMs and PMs still get no upgrades lol.
It just might get worse before it theoretically gets better.
“Third, Bastian states that Delta has so much demand for its premium products (lounges and premium cabin seating) that it cannot serve that demand adequately.”
A Japanese CEO would get paid 1/5th as much and simply build more product to serve the demand. Although Toyota lately hasn’t lived up to that model…
@PolishKinght – An excellent point. But it’s far easier to blame and penalize the customers for the lack of supply.
I think enough people spoke with their wallets that Amex strong armed Ed and said slow the boiling pot for the frogs, sir…
The changes WILL come but more slowly so people will continue to keep the DL Reserve, pay the AF (and possibly with a higher AF in 2024 or 2025) and then the changes that have individuals so angry over the past two weeks will arrive again and there will be less outrage and second verse, same as the first…Delta wants what Delta wants-high value customers, fewer elites, more revenue for Amex. They showed their hand-don’t trust the “oops” moment that was strategically planned at the Rotary Club…I don’t, anyway…
I’m with @PolishKnight. If Delta’s premium product is so ridiculously successful that they can’t keep up and premium products by definition sell for a premium then Delta should be absolutely tripping over themselves to get more premium product in front of customers.
Delta’s hard and soft product are average at this point and their lounges are not as good as what business class people can find with United or First class with AA. And they charge so much more for it. The marginal on time performance improvement doesn’t matter much if what you are paying is so much more for average or below on many other fronts. I can understand the anger if I was a paid business class flyer and couldn’t get in a lounge or the lounge was over crowded- isn’t the answer build more lounges or make ones like Polaris lounges, just for long-haul business class? Or in any way distinguish yourself as a leader and NOT by limiting your other FF from accessing lounges? I don’t fly Delta because they don’t stand out to me, they cost more, and they don’t fly some of the international destinations not to mention my friends who are highest tier Delta complain about lack of redemptions and valueless miles all the time. It is a mystery to me why anyone flies them unless their company makes them. And I fly paid international business class so I am not talking from a “wishing I could get upgrades” etc position.
You ate exactly right. And their Delta One hard product on their 767s and A330s is outdated and subpar – with no announced plan to replace these planes or upgrade them even announced.
And….Here’s Timmy!!!!!!!!!!!!!!!!!!!!!!