Delta SkyMiles changes announced earlier this year received tremendous consumer backlash, other brands have taken note and aren’t pushing it. That’s a gift to every frequent traveler.
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Botched: Delta SkyMiles Changes
Millions of words have been written about the September changes to Delta’s SkyMiles loyalty program and elite requirements. For those who missed those articles, in essence, SkyMiles previously announced massive increases in requirements to achieve elite status in the program. The overhaul had required as much as twice as many Medallion-Qualifying Dollars to maintain 2023 status levels. The changes affected the number of Sky Club visits allowed for both the personal Platinum Card from American Express and the Platinum Business American Express card.
The changes were wide-reaching affecting earnings on everything from Delta Vacation packages to car rentals, and seemed to have little to do with those taking Delta flights.
After a near-universal revolt including from mainstream media, Delta Air Lines reduced the requirements from the proposed changes but still raised what was necessary. It added some benefits for lifetime elite status holders, and adjusted rollover MQMs along with some other positive changes.
The consumer response, however, was felt throughout the industry.
Hyatt, United, Other Programs Being Careful
Hyatt brought some Boarding Area bloggers (neither Matthew nor myself) to Chicago to announce changes to its World of Hyatt loyalty program. The typical “enhancements” seen around this time of year include raising elite qualification requirements, devaluing the reward currency, and removing benefits.
But Hyatt didn’t do any of that.
It moved some deck chairs around: milestone awards were adjusted, some changes to the guest of honor; and travel advisors are now able to earn elite night credits based on sales. There was nothing crazy, and nothing detrimental to World of Hyatt elites. Some will like changes, but there’s nothing to push customers to another brand.
United was much of the same a few weeks earlier. The airline added the ability to earn PQMs in addition to status but didn’t increase requirements, and didn’t overtly devalue the currency.
Southwest made it easier to earn status, not just by spending on cards but also 20% easier to qualify by flying and soon by redeeming a combination of points and dollars.
American Airlines has said nothing so far – good news for Advantage flyers. Alaska made positive changes too, allowing flyers to buy elite qualifying miles “under the guise of contributing towards their efforts in sustainable aviation fuel.”
Delta took a step too far, and no one followed them down the same path.
How Prohibitions On Changes Last?
Delta Air Lines, despite the backlash, still increased requirements dramatically. Diamonds need to spend 40% more than they did last year (28,000 MQDs instead of 20,000) in the revised requirements. CEO, Ed Bastian, indicated that Delta will still raise requirements again in the future, but acknowledged that the carrier moved too far too quickly. The only question is how long before the rest of the changes are enacted.
Here’s where frequent travelers should feel empowered.
Delta suggested that rather than fleeing, many SkyMiles members increased their investment in the airline by upgrading their financial relationship by moving to the SkyMiles Reserve Business American Express Card, and also the personal version of the card from American Express. Yet its actions seem inconsistent with such notions. The SkyMiles program is far and away the leading financial contributor to the airline’s balance sheet and specifically, its relationship with American Express which buys miles from the program to the tune of $7bn estimated for 2023 alone.
Bad publicity would not be enough to make Delta change its mind, it’s part and parcel with the business. American Express must have indicated enough concern, or seen enough product changes and cancellations to warrant action. It’s conjecture, I don’t have tapped phone lines in Atlanta. The only way to move Delta in the way in which the airline responded would be to threaten its profit pipeline.
That’s good news for travelers who have felt helpless in a one-way relationship with loyalty programs. By programs – not just airlines, but hotels too – consistently favoring their financial relationships with banks and pushing credit card products on customers, they also die by that same token. Customers, not just travelers, have proven that if they take action and cancel their credit cards or move their spend, they can encourage some of the largest airlines in the world to reverse course.
How long will this movement remain? The fatalist in me says, “not long” because consumers will lose sight of these changes, and without huge status requirement increases or reductions in benefits, they won’t be moved to act. However, these programs have become so dependent on bank relationships to carry them to profitability, that so long as consumers remain willing to cancel their credit cards, they will be able to level the playing field.
Conclusion
Delta Air Lines is often a first mover in loyalty program changes and trends. Other airlines and hotel chains saw the visceral reaction from consumers who have demonstrated their displeasure with their dollars (and potentially their feet.) Those travel suppliers seem cautious to upset consumers and suffer the same reaction as Delta. The power to curb negative “enhancements” will be in part led by consumers who are willing to change their behavior if they feel loyalty programs are not loyal to them. By Delta radically raising its requirements only to back them off, it’s been an amazing gift to travelers regardless of where their loyalties lie and we should all thank Delta for doing it. Except for Delta flyers, of course.
What do you think? Did the travel community benefit by Delta botching its elite requirement ramp-up? How long do you think this will last?
Kyle, your conjecture re: Amex is absolutely spot-on. I’m in the payments industry – not Amex, but one of their competitors – and belong to several trade associations & technical workgroups. I have heard firsthand from people directly involved in this project that:
1) Amex signed off on the original deal after reviewing the projections from Delta and conducting their own impact study
2) Amex anticipated a certain percentage of “attrition” (cancellations and product downgrades/changes) and was more than comfortable with this attrition percentage
3) Amex was willing to forgo 2-3 quarters of negative product revenue growth across the portfolio for the promise of better revenue growth starting in mid-2024
As the changes were rolled out, Amex was blindsided by a few things:
1) The attrition rate was CONSIDERABLY higher than projections. I’m hearing ~20% higher though I don’t know the base amount
2) Spending on the non-cobranded cards dropped almost immediately and precipitously. This, apparently, was not expected (it was projected that those angry with DAL would simply cancel their Amex Platinum cards (or threaten to do so)…not keep them but sock drawer them
3) These behaviors caused Amex to revise the projections using the new data (to note, a very good friend of mine worked on this aspect of the project, though not the original forecasting). The revised numbers were deemed unacceptable.
4) It seems that Delta was unhappy with the revised projections from Amex and didn’t want to change course (and this is admittedly my conjecture, since the people I know with details of all this were not involved in the talk with DAL, but I trust what they have heard around the water cooler). We do know that Delta made a presentation to Amex disputing the new numbers and even offered to backstop some losses if they agreed to stay the course. The answer was no.
It makes sense, really. Amex found the whole affair to be (at least potentially) brand damaging and weren’t willing to take that risk, whereas DAL had already damaged their brand and thought they’d suffer MORE by backtracking and appearing to “give in to the noisy rabble”. In their mind, it was a case of in for a penny, in for a pound. As Kyle surmised, Amex was holding the cards here (pun intended). From what I’m told, this whole affair has caused serious tension in the relationship between the two companies as well as internally within them. Amex places most of the blame on DAL (even though they did their own studies which ended up being WAY off), while DAL leaders feel that they’ve been bullied and overruled by a bank. What’s fascinating is that I’m hearing Delta’s customer service leadership is the most upset, seeing as they feel they bore the brunt of the anger when people called/wrote/texted in to complain and demand changes…and now the company isn’t backing them up. Again, I don’t have a pipeline into the customer service side of these companies, but it’s what I’ve heard from a few people that do.
One thing is certain though. No other travel company has the same type of relationship with their CC issuer as Delta does with Amex, and nobody else wants to emulate it. At the end of the day, they are pretty much stuck with each other because they both realize that, while there’s plenty of other banks and airlines, nobody on either side would cede as much corporate control to a partner as these two behemoths have. If you want to see what I mean, just look at how hard it is for Goldman and Apple to break up….nobody else is willing to take that on at current terms…
This reminds me of the Amex-Costco affair: Many people got Amex cards because they shopped at Costco and when Costco negotiated terms, the banksters told them to eff off. It didn’t occur to them how huge Costco is and the stock price of Amex took a hit. Amex’s brand also suffered, at least for me on the backend, when they did a corporate restructure and laid off Americans in their IT operations.
I have an Amex card I’ve had for 20 years which I don’t pay an annual fee on and I largely don’t use it. There are a few features that are handy such as the $25 rental car insurance feature which I find handy but otherwise it’s not a go-to card for me now.
STILL posting pics with chin diapers? Seriously? Nobody is awarding virtue signaling points anymore. Move on from this nonsense.
+1
When you say ‘these programs’ you mean the US ones.
As per my comment on Matthew’s post [on the proposed legislation to limit credit card merchant fees] the other day, I think that the relentless devaluation of US FFPs is a good thing for actual frequent flyers. I’d rather not compete for lounge space and award seats with Amex customers who only travel a couple of times a year.
Delta Diamond here.
I cancelled my business platinum card and moved spend to a lot of other cards.
I spend 4-5 million dollars a year on cards with my business.
No more of that going to delta. Mostly to chase and capital one, with light Amex spend on gold biz card.
I’m moving on.
The lower end Hyatt FIND credit is almost worthless as the “experiences” in America at least are priced higher than available directly. See the bus ride in Nashville as a great example.
What Delta could and should have done is gone to a “dynamic timing Model.” So instead of totally restricting access to four times a year with certain credit cards you get access four times a year and then after that on a case by case basis, so if you show up at a lounge and there’s a long line you’re not getting in. But if it’s at a time of day where there are a fewer people or at an airport that generally sees fewer people then you can get in, regardless of how many times you’ve been in for the year.
As a not-top-tier DL flyer I am also happy that they got exposed, and that Sky Team Elite Plus is actually easier to achieve with the revised 2024 rules.
We got an entry level delta gold card about 10 yrs ago. Racked up about 100k miles on it before realizing that the flight redemption options are not good. Very limited availability and they are priced higher on skymiles than they are on such sites as kayak etc. We now have 60k miles on that card sitting for the past 8 yrs. Our spend goes to cap 1, chase, other amex cards.
Delta miles are worthless : on a flight last weekend, they were asking for 100k miles to upgrade to a premium economy seat from south America – one way! American’s ask was 40k for a first class .
As a 25+ year Skymiles/Amex flyer with about 1.2M actual miles flown and just shy of 4M Skymiles, 2024 is my last year flying Delta and having the Delta Amex. It’s just not worth it anymore.
My wife and I have already started the burn down and plan on being out of Skymiles by this time next year.
No we won’t be flying United or American either. Most of our flights are to Europe and for the price and comfort level, level of service we will be flying on Icelandic most of the time post 2024. Our domestic travel is limited now.
Goodbye Delta