More ink has been spilled over the major Delta SkyMiles devaluation this week and just how crazy it is. Perhaps it’s not crazy at all.
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Devaluing The Least Valuable Program
Traditionally, Delta’s currency has been one of the least valuable to hold for redemptions earning it the nickname: SkyPesos.
But that’s really not fair to Mexico, especially since its currency is fairly strong at the moment and hasn’t devalued to the same degree or even close.
I shopped for flights for a client who held Diamond Medallion status via his spend on his Delta SkyMiles American Express card ($250,000/year or more.) A pair of business class tickets from Denver to Bangkok during off-peak periods would set them back 675,000 SkyMiles – each. After years of building up a balance, Delta wanted 1.35 million points to offset about $16,000 in tickets. For comparison sake, United priced the same pair of awards at 320,000 miles, American a little less.
There is always value to be found in the SkyMiles program for those who seek it, but for the average SkyMiles member, that horse has long left the barn.
This week they removed perks from its credit cards, limiting lounge access, and doubling requirements for top-tier Diamond elites. Oh, and it also eliminated flying from being a qualification for Delta’s frequent flyer program. American made a switch to financial-only qualification earlier in the year, United is suspected to do the same; Spirit did it but better than either entrant so far.
Backlash From Competitors, Customers
Hyatt Hotels and American Airlines have operated a reciprocity program for a few years now and sometimes grant challenges or status matches to the equivalent in the opposite program. They offered just reciprocity challenges with instant status for Hyatt elites on American Airlines just this week. Coincidental timing? Maybe, but probably not.
Some consumers outside of our points, miles, and status bubble (The Hobby) have taken to X to denounce the brand, display intentions to switch to another brand, and cut up their credit cards.
Inside our bubble, the slightest change in a perk is cause for a flurry of posts, pronouncements, and shunning. The truth is, most of the general public, the tens of millions (in the case of American, more than 100 million) loyalty program members don’t even notice the difference.
This is different.
Customers who put every charge on a Delta credit card might have dismissed skyrocketing redemption rates over the last couple of years because revenge travel has been crazy. Stories on the news tell of packed planes, and full hotels at all-time peak levels. They will have noticed the line to get into the lounge too, but can dismiss it for the same reasons. But when their $500+ credit card membership no longer gets them in at all after 10 visits, they will wake up.
When those same consumers no longer reach the elite tier level they used to and don’t get the early boarding or occasional upgrades – they will question all of it. What’s the point in striving to earn miles that are mostly worthless, especially if they bother to shop around?
Is Delta Crazy or Crazy Like A Fox?
Some of these changes could be Delta’s hubris that the current trend of packed flights and record quarters will continue indefinitely.
There’s a line from the 2011 movie, Margin Call, that might address some of this. It seems obvious to me, market economists, and many in the travel trade that revenge travel is slowing some – it has to. But the music is slowing.
Delta’s actions this week suggest that it doesn’t see the music stopping at all. The band will play on and on and on at the same volume it has been before.
Maybe they are right.
The truth is, Delta flyers are some of the most loyal but partially because the airline has been run well, and partly because they are hub captive in a way that industry peers haven’t been able to achieve. American and Delta both have strong presences in Boston, but American splits Chicago with United at O’Hare and Southwest at Midway (the nation’s largest domestic carrier.) United splits traffic with Southwest in Houston, American with Southwest in Dallas, United with American and Southwest across the NOVA/Washington DC/Baltimore market. Spirit, Southwest, and Frontier dominate Las Vegas, Phoenix is split between Southwest and American.
Atlanta is the busiest airport in the world by passenger volume and nobody can touch Delta there, or in Minneapolis for that matter. Maybe the inconvenience of taking a connection is still enough to keep flyers from leaving. It makes sense. SkyTeam is far and away the inferior alliance compared to Star Alliance and oneworld. Customers haven’t left over their miles becoming so uncompetitive that it’s laughable. Customers haven’t left overcrowded clubs, and limited acceptance of its American Express cards. Customers didn’t leave when Delta added a revenue requirement before other airlines, they didn’t leave when that requirement was 25% more than its nearest competitor, why would they leave now?
All of these changes have reached crazy levels. Airlines that have to compete in their primary markets can’t get away with making their mileage redemptions worthless or their elite levels absurdly high – Delta requires twice the amount United and American do. Twice.
But if the customers don’t leave – and they really might not – then Delta isn’t crazy, it’s crazy like a fox.
Conclusion
Some have said they will delete the Fly Delta app, cancel their Delta vacation packages, cut up their cards, and match to another program that appreciates them. It’s possible, that they are mad and when the rubber meets the tarmac they don’t, in fact, leave. Delta comes out with richer benefits for its most premium members, encourages some at the margin to spend even more, and doesn’t lose meaningful customers. Meanwhile, the other airlines will eventually raise their requirements too, but Delta comes out as the leader. Perhaps it’s a cynical view, but the very fact that Delta’s SkyJoke program is still making a billion dollars a year from American Express is a testament that my view, though cynical, aligns with reality, or at least recent history.
What do you think? Will customers ever punish Delta for any of the myriad gashes to its loyalty program?
Where it might make a difference is on the margins. Is someone in ATL, DTW, MSP, or SLC going to accept a connection on UA/AA/WN vs. a nonstop on DL? No, they’ll stick with DL (but maybe they decide to switch to Flying Blue instead). But how about the loyal DL flyer someplace like MCI, where you’re going to have to take a connection anyway? Yes, AA might be the world’s largest LCC, but Loyalty Points does at least offer some creative ways to accrue extra points and status. MileagePlus is rapidly headed the way of SkyPesos, but I agree with Matthew’s take that the actual on-board product is getting better. So maybe those flyers do decide to try someone else.
I moved to ATL ten years ago as a UA 1K. Their terrible service there was all 1-class old RJs for a long time. AA matched my status and I’ve never looked back. My colleagues are all DL flyers for now, and they’re always giving me crap about flying AA and usually taking connections.
Been Exec Plat on AA for some time, and hardly any of them are higher than silver or whatever the lowest tier is on DL, and that’s at risk going forward. So I’ll keep taking those connections, TYVM.
As a leisure flyer in MSP these changes are disappointing, but they don’t enrage me. They aren’t pretending to value leisure travelers in their captive markets. I appreciate the honesty. In return, I have zero interest in using Delta unless I can get a reasonably priced nonstop. They will not get any of my international travel spend.
I had three Delta Skymiles cards, partly using the bonus points to secure MQMs for status. I canceled my business Skymiles Reserve on the day these changes were announced. Absolutely no attempt by the agent to retain my business. The following day, after going online and changing any autopays on my Skymiles Platinum card, I called to cancel that card. Boy, what a difference a day makes. The agent kept pointing out the benefits (yeah, just try using the companion certificate to go anywhere you really want to visit) and then offered me 15,000 Skymiles and a $100 credit on my card. She would not take no for an answer. After about 5 “no thank you, cancel my card” comments, she got the message. I still have one Skymiles card, but that might go next year if I don’t see the value. No more taking connecting flights on Delta, when a comparably priced non-stop on a competitor is available. And, if I want First, I’ll pay for it. Buh bye, Delta loyalty, from a 10 year diamond medallion who has flown Delta and Skyteam exclusively for at least 15 years.
Have been loyal to Delta since NWA times. I live in a Delta hub and really like their product and service. But I have been going out of my way to be loyal for them. That includes me flying non stop to AMS to them connect to my final destination. No more. I will continue to fly Delta where they offer domestic non stop but they won’t see me in an international flight anymore. I will fly to a lather US airport and from there take an European airline direct to my final destination. Better product, service and price. Same goes to Asia. Last, it sucks the way airlines manage spending. I spend more than $35k per year in Delta BUT that includes me buying international business class tickets to my family of 4. But I don’t get credit for that since the tickets are in their name. No more. We will all fly other internally airlines.
To what program might you put your flight credits? And why if possible? I’m in similar circumstance. Leaning to FB but considering VS. I appreciate benefits flying AF and VS which are my favorite and most common carriers flying tatl.
Flying Blue Gold/Plat with any upgrade vouchers or other serious benefits over and above the standard Elite Plus ones (with the possible exception of advance seat assignment fees but I don’t worry about those as I don’t fly in economy when long haul flights are involved), so you could literally get any SkyTeam status if you prefer to fly AFKL. If you are feeling a bit adventurous, UX (may end up being taken over by Iberia) and KQ (new FFP, we don’t know how stable the rules will be) both offer segment based elite qualification.
That was meant to say that FB Gold/Plat DOES NOT COME with upg vouchers or other serious benefits over and above standard Elite Plus ones.
I don’t see what makes SkyTeam worse than oneworld, which in my view is by far the weakest alliance out there – e.g. you can’t really redeem miles for flights within Africa (where cash prices are very high), most intra-Europe trips involve huge detours and/or the disgrace that is LHR, and their only hubs in the Americas are within the USA and I don’t believe any of them offer airside transfers, meaning that you need to mess about with customs clearance etc and possibly even an appointment with an embassy for a visa just in order to connect there. Star alliance is obviously very big and can work well for most traveller profiles, but I find SkyTeam to be an excellent back-up option, particularly given the free extra bag with the entry level status.
As per the main point in the post, the above is mostly irrelevant for hub captive pax, but these are the types of differences which create loyalty and marginal business by those of us who can choose from broadly similar levels of convenience between providers. Of course, if flying is a secondary activity for some of those airlines and they mostly care about credit card products, it is understandable that they won’t be particularly bothered about chasing that marginal business and would prefer to focus on maximising the value of their credit card partnerships. It would be trivially easy for DL to offer a more expensive credit card with better perks in a few months’ time, and possibly even obscure real terms price reductions by giving miles away in sign-up bonuses.
What surprises me with this whole discussion is how nobody is pointing fingers at Amex. I’m not mad at Delta – airlines are gonna de-value their points, because that’s what airlines do. But I am mad at American Express. The ability to access Delta lounges is a very significant factor in my decision to hold my Amex Platinum card, and the fact that Amex has allowed this very important perk to be so significantly devalued really annoys me. While my cost of holding a primary card with two authorized users has gone from $725 annually to well over $1,000 (a 50% increase) over the past two years I am watching the value received for this card significantly decrease. And no, the $300 Equinox credit (Totally useless!) doesn’t make it all better. It does appear that the cap on lounge visits is being rolled in fairly slowly (February 2025, apparently), so I am holding out hope that Amex has something in the works which my compensate card holders for this devaluation of their card. But maybe I’m just being foolish.
I used to be a Delta Diamond holding an Amex Reserve and Plat. But I saw the writing on the wall several years ago when they deleted their award charts and started selling cheap upgrade tickets. I used to go out of my way to fly them in business to Europe and Japan. But it was not worth it anymore. I could no longer use their miles to take my wife and I on business across the pond without spending up massive amounts of points. I just became a free agent that barely flies delta.
As a cruel punishment, I even got myself into Amex Popup jail for cancelling my high spend delta cards. I had the same cards for many years and had not opened an amex card in several years. I still got the pop up denying a bonus on regular amex rewards card.
I mean, what did Amex want me to do, keep the delta cards that have the garbage skymiles?
I’ve been thinking a lot about the argument for Delta in doing this as being justified in that they “offer a superior product that people want more than a loyalty program that delivers.”
While this makes sense for certain businesses, take Four Seasons and Mandarin Oriental as two examples, which similarly offers its biggest spenders a few nice perks but overall shuns any other egalitarian program, it simply does not translate to U.S. airlines anymore. Unless you are perhaps on a level of SQ with quality, which is never going to happen here.
I still recall an interview with Isadore Sharp, the founder of FS, who called the journalist to his office window in Toronto. He pointed outside and said, “Do you see all these people walking on the street? Four Seasons was not created for them.”
Sharp is correct, but his model was created as that from the start. And it’s easier to mold a hotel chain that only goes after high yield customers and delivers to them a fantastic product that makes points or the like irrelevant. Delta though is grossly mistaken if they are taking that inspiration and thinking it conveys to an old line carrier that serves all the people. You can’t fill planes or expand on only high wealth clients who shun caring about programs. The bread and butter for airlines is in the middle and these changes go right after the heart of their ability to fill aircraft and grow worldwide.
To be honest, Ol’Herb K is probably laughing in his grave and saying, “Told you so.” That is that the old line carriers still somehow believe they offer something great to the top spenders. They don’t. They are all the same. They certainly don’t deserve a premium price, let alone a gutting of the loyalty program they built and lived on for a generation or two.
The changes Delta is implementing will stick, and the clearest sign yet, that loyalty programs at major airlines are on their way out as we know them. They’ll be spun off, owned by the credit card companies outright, and focused solely on the highest spenders full stop. Business travel as it existed in 2019 is over, likely for good.
I don’t believe that Delta’s actions will have much effect on flying on Delta. But then I think it’s only the most involved in status will take a more inconvenient flight on their preferred airline instead of a convenient flight on an acceptable airline. Ok, if it’s one or a few flights to nail down status for the next year, yes. But as a regular thing, I don’t think so. But Delta is making more money on their loyalty program than on actual flying. Now? What’s the point. I decided not to renew my Delta card years ago. I expect a lot more of that next year. The credit card benefits aren’t worth the cost. Spending on the credit cards isn’t worth it.
Delta won’t see much change this year. Why should they? The changes come into play next year for 2025 status. But I’d expect that beginning in 2024, and even more starting in 2025 when people can see the effect of the changes.
I predict that this move is bad for Delta, but since the full effects won’t start until 2025 they can claim it wasn’t their changes that caused the problems.
Status does affect flight choice in terms of both flying to qualify for it and choosing an airline that gives status benefits – but not for hub captives or those who need to go out of their way to travel with one airline versus another.
For most of my short haul trips, I can choose between the LH group (vast array of one-stop options which I can time to align perfectly with my preferences), AFKL group (reasonable amount of one-stop options at more or less convenient times) or a low-cost carrier (nonstop but only 3-4 flights a week, usually at times that mean losing a day’s work and/or waking up stupidly early in the morning). The LH group tends to be the best choice because I can leverage their huge number of flights and travel exactly when I want, but, if I had status with SkyTeam but not*A, I would probably end up choosing AFKL more often than not because I would sacrifice a bit of flexibility in order to take advantage of avoiding queues at the airport and being able to access the lounge. I might even have considered taking the occasional double connection and/or buying tier points to ensure requalification.
So your premise is that Delta loyalists are used to the abuse? That may make sense, or at least explain why their non-hub captive flyers are demented enough to stick with Delta. I know when it was me in that abusive relationship with Delta I repeatedly made excuses for them until one day I just realized how awful they had become to people who went out of their way to fly them. A couple of years ago I canceled my remaining Delta credit card and haven’t earned a single Skymile since.
I’m both sad for and understanding of the people who still fly Delta by choice. I’ve been there. Hopefully they’ll snap out of it too and stop flying an airline that literally despises them for their loyalty.
If we’re being honest, is training people to accept the abuse different than any other loyalty program? The whole point is to convince you to make irrational decisions in pursuit of status. The committed Hyattists who run this website openly justify spending $2k extra per year to chase Globalist status for free breakfast and suite upgrades. If WOH announces a significant devaluation tomorrow, do you think either Kyle or Matthew (or any of the others who swear by Hyatt) would give up their mattress runs to maintain Globalist? Or will they defend the decision on the basis that those suite upgrades and free breakfast still provide outsized value compared to other programs?
Just as I remain skeptical that the Hyattists will ever find a breaking point bad enough to leave, I’m equally skeptical that DL fanboys will find theirs, at least in numbers large enough to matter. I still say most likely, they’ll find ways to justify irrational spending on their Amex cards for whatever benefit they find valuable.
Kyle, I said in Matthew’s post the other day, many folks on FT are formulating plans to meet the $75k spending threshold for unlimited SC access. The initial outrage is pretty bad and we’ll see how it pans out in the long run, but I think DL and AMEX has the data to support that they can weather the internet outburst.
The carrier that invented MQDs is probably gonna get out of his relatively unscathed, IMHO.
Like many people I can tell a story of being disenchanted with SkyMiles many years ago, after previously thinking that Delta was the best airline around. Now many years later, one of the ways I see the impact of this is with my children. I don’t think they even know there is an airline named Delta. Yet, as I think about it there’s nothing wrong with the actual product the airline provides, but somehow for me the loyalty program created an effect opposite to its supposed intention.
The Crown Room in the late 80s and early 90s was some good stuff.
Let’s admit that those who subscribe and read travel blogs are not the clientele Delta is seeking out. I cringe when every day I will run into people who are convinced that their Disney or Carnival card is just amazing.. Delta simply is not interested in having us as customers, in its current model.
I wonder if the changes will affect the relationship between airlines, hotels and credit card issuers.
Really? I have my own small company and direct airline choices for myself and employees to the airline and alliance that I believe offers the best return. As well I tend to fly premium cabins only when not insanely priced. That’s cash. Not points. With that I read this blog religiously. While I’m not the 2%, I probably account for exactly what airlines want. And with that I would never give a penny to Delta given the atrocious approach they have to a loyalty program. I think you would be surprised at the level of those who read these blogs. We are not scrounging for free, we are weighing value.
Exactly. If you need to choose your airline based on whether or not it will let you board not in Group 7 but maybe in Group 4, or allows you 2in more legroom in economy, and eventually gives you two cans of Beer and a pretzel with cheese sauce for free in their sorry lounge… Come on, no airline cares about you. They want flyers who either dont care about money or spend someone else´s money, in which case they also dont care.
Thank you for the comment.
I am just saying in a way that Delta is putting its eggs in the basket of the “less informed” and captive audience. Time will tell.
As an aside, I wonder just how much of their bottom line comes from us.
We all are in different hamster wheels.
For one, I have found Delta’s hard product overall dated and unimpressive. Staff seem marginally less unhappy than other airlines, and, to be honest, I tend to only fly Delta when it is a good value, when it is not flying to and from its hubs.
This is going to be a classic case study of a loyalty program hitting the Trust Thermocline.
(On trust thermoclines, google breaching-the-trust-thermocline-is-the-biggest-hidden-risk-in-business)
Consumers will put up with a thousand little cuts, and then at some point, they’re gone. All these “smart like a fox” takes rely on Delta not crossing that thermocline. Maybe they haven’t crossed it. But the other question is: for whom does the current system have value? Because I’m not seeing that.
I’ve not flown delta in a long time. Last time I flew them to Japan, let’s just say their hard product left little to be desired. But the flight cost was cheapest for the date I needed so I went with them. Thank god I’m not hub captive. Hopefully I don’t have to look for last minute ticket again when traveling to Japan!
I don’t think they will loose many travelers despite the devaluation. I mean their international award ticket costs are consistently crazily priced and they still have plenty of repeat customers. This tells me people who fly them either are hub captive and/ or don’t care to collect peso miles for international award tickets. When the none hub captives keep on coming back over and over, why wouldn’t Delta abuse them some more? It’s call being loyal to your shareholders! When FT posters are trying to figure out a way to reach that 75k threshold, you know you have these flyers by the balls.
Delta kept devaluing the program but it still had two unparalleled benefits: great domestic travel experiences and SkyClub access. The great domestic travel came from better customer service, and more competent operations. But Delta has clearly been slashing spending on customer service: they’re obviously outsourcing a lot of it to poorly trained (read: underpaid) staff and their operational advantage is eroding as well. Meanwhile AA has been getting steadily better, and they’re upping their game on lounges this year. Delta just torched the SkyClub so now what? Why bother with Delta at all?
Crazy like a fox. Delta is signaling to other airlines that they should move in this customer-unfriendly direction too and go along to get along so as to jointly enrich the airlines at the expense of the consumers.
I read this all a bit different. There was a time when the airline industry in the US was competitive and airlines went all out to compete. As competition on price is painful and unpopular the perks were one and maybe the tool of competition. I think the airline industry is just getting less and less competitive. Almost like the market for mobile phone plans, cable TV or gas stations. They just dont compete. Apparently they dont have to.
I’ve said for a few years that at some point I’ll drop out of the game and just fly schedule first (with some ULCCs just out of the question on reliability/comfort).
I’ll buy Y+ rather than manipulate spend on various cards to “earn” “free” Y+ for another year. And buy P.E. for longer flights, again on sched, and with a cash back card rather than earn more (devaluable) miles.
That time arrives somewhere into 2024. See ya, Delta. Maybe even just as often as before, in terms of flights. But I will downgrade my DL Amex, and I will just fly whoever is best for each trip, based on service, value and schedule.
Loyalty? Hahaha.
It will be very interesting to see how the NY market responds. We enjoy huge supply here across almost all of the major US and international airlines. It could be a good read on how non-hub-captive customers will react to these changes at DL.
They show loyalty only to cash therefore I will ack like them. From now on I will pick the best solution regardless of the airline. I was diamond for a few years with flights (not credit cards). Next year I will be a happy silver.
T
Many (most?) people posting in this thread are calling the upcoming SkyMiles/SkyClub changes a “devaluation.” I fully understand that may be the case for many/most SkyMiles Members and Delta AMX card holders. However, please recognize that these changes could increase value for some of us.
I have a lifetime SkyClub Executive membership and purchase 1st or D1. Big value to me from being a Diamond (since Diamond level was created) is the quality of service by Diamond Line agents including special attention during disruptions and when I choose to make flight changes, the ability to gift Gold status to family members, and the Global Upgrade certificates I use for traveling companions. I will have no problem maintaining Diamond status going forward under the new rules. If these changes work as intended by Delta, the incremental value to me will be less crowded SkyClubs (which have been awful), easier access to Diamond Line service, less competition for the use of Global Upgrade certificates, and a bit more value for the Gold status I will continue to gift to family members. I am not suggesting that these are all smart moves by Delta and I recognize the changes may motivate some current elite members and Delta AMX holders to change their air carrier and/or credit card decisions. But, Delta says it wants to make improvements for their customers who spend the most. If it works, I will value these changes and will be more committed to Delta than in the past because I will receive more value from the company.