The grass is not always greener on the other side and the changes at Delta Air Lines announced this week will not necessarily move people to abandon Delta. But the rather punitive changes Delta announced for its SkyMiles program do present an opportunity United Airlines should not take lightly to poach flyers away.
The Biggest Loser In Recent Delta SkyMiles Changes
As the dust settles, it seems to me the biggest loser in this week’s news is not Delta travelers (though they lost big), but American Express. As I see it, there is simply no compelling value in holding on to pricier Delta co-branded credit cards any longer for most travelers who could heretofore justify it based on SkyClub access. The paltry number of lounge passes plus the low MQD earnings suggest to me that the discerning traveler is better off saving money with a cash-back card than blowing it on a high annual fee Delta card.
That does not mean most people will stop flying Delta. My friend Gilbert Ott makes the argument that these changes are genius and something only Delta could pull off because it has created such a superior product over its competitors. I disagree. I think Delta’s product is nice enough, but it is not in another league over United Airlines or American Airlines. And I also think United is knocking at the door, which we will get to below.
Those hub-captive flyers will continue to fly Delta, regardless of how difficult it is to obtain elite status. Elite status itself has been largely illusory when Delta sells out the vast majority of its premium cabin seats (versus elite upgrades) and offers little other meaningful benefits (it has also eviscerated mileage upgrades and has few compelling SkyMiles redemptions for any travel that begins or ends in the United States).
The sort of premium cabin travelers Delta is targeting through its high spending requirements already buy premium cabin tickets, which greatly lessens the need for elite status in the first place.
Many flyers will continue to fly Delta because of its schedule and may even pay a slight premium over others for that nonstop advantage or when faced with other connecting options because Delta tends to run a good operation with friendly service.
But I also think that many once-loyal Delta travelers will start taking nonstop options, even if that means defecting from Delta on certain trips. Because a seatback screen or package of almonds or smiling flight attendant is not enough to justify an extra stop. And if enough travelers defect from Delta’s most valuable customer (American Express) and from buying Delta tickets, maybe Delta will realize that the loyalty pendulum has swung too far in its favor.
A Chance For United Airlines To Differentiate Itself And Poach Delta Flyers
United has a chance now to poach Delta flyers. The Chicago-based airline has tried to position itself as the premium alternative to Delta and is making strides in terms of updating its cabins, improving its food offerings, and making wi-fi more consistent. Most importantly, United is trying to run a reliable operation.
Last month, Delta edged out United in terms of on-time performance…but only by a hair. 82.80% of Delta flights were on time while United followed with 81.61%.
Smart loyalty programs are about delivering value to travelers at the margins. Those whose companies spend vast sums of money on their United or Delta tickets seem to me precisely the wrong customers to target. If they are going to fly Delta or United anyway, why heap extra benefits on them for doing so?
If I’m sitting at MileagePlus, I would think about how United could offer an alternative to Delta that still forces high spending in exchange for benefits, but does not raise the bar so high for benefits that are illusory in the first place (United now also sells the majority of its premium cabin seats, leading to fewer elite upgrades).
If you have to essentially buy first and business fares only because it costs so much to obtain elite status, you really don’t need the upgrades or other perks that come with top-tier status. But imagine instead of further devaluing the redemption side, United actually made it more valuable to earn and redeem United miles?
United miles are already much more valuable than Delta SkyMiles for those who prefer premium cabin redemptions, but I think United could really poach Delta travelers by:
- Highlighting its competitive on-time performance
- Showcasing the investment it has made in its hard and soft product, including high-speed wi-fi and seatback screens
- Continuing to build a robust international route network
- Offering redemptions that actually make it valuable to collect United points
Delta truly banks on its perceived superior product to rob consumers of any meaningful redemption options. Contrary to naysayers, those days of your miles netting more than a penny or two per point in value are not over. Airline products around the world continue to offer valuable redemption options via award chart sweet spots. United does not have to give away the farm: award chart inflation is expected. But offering a compelling alternative to Delta on the redemption side really does set the two loyalty programs apart.
As United builds its domestic and international network through 500 new aircraft and begins to mimic Delta in terms of onbaord products, it can be a compelling alternative to Delta if it is willing to make redemptions actually worth collecting United miles.
CONCLUSION
Delta’s decision to simultaneously make elite status harder to get and lounges harder to access is a bold move. I am not convinced it will end well for Delta and American Express, but the point here is that United can poach Delta flyers by offering similar friendly service and on-time operations as a baseline and a far more compelling redemption-side loyalty program as a stark alternative to SkyMiles.
image: Delta
Being loyal to an airline in the sense of taking one airline so you get upgrades or other valuable benefits is already pretty much dead. There are few benefits, so customers will increasingly just purchase the flight that works best for them. For DL, that means where an ATL connection is okay or a flight to the upper Midwest is involved. Given UA’s largely superior network, I think they will win that game outside of ATL. And people who want good treatment will buy F.
United and AA is Chevrolet, Delta thinks they are Porsche, in reality they are closer to a Buick.
@Matthew – several folks on FT are already strategizing (while crying about it) to make the $75k AMEX spend for unlimited lounge access (above the normal $25-40k for waivers/boosts), so I’m thinking DL/AMEX sees some increased spending for some flyers when they planned these changes.
@ Jan — People sure are stupid. $75,000 spend on a DL card earns 75,000 DL miles and incurs a $550 annual fee. $75,000 spend on an AMEX Blue Bbusiness card or Citi DoubleCash card earns 150,000 miles/points and incurs no annual fee. The DL miles are worth $938 at 1.25 cpm, and the AMEX/Citi points are worth $2,400 at 1.6 cpm. That means people are willing to forgo $1,462 of points and pay a $550 annual fee ($2,012 total) to get a $695 membership for “free.” I guess DL and AMEX are counting on lots of math-challenged people to go down this road.
I fogot that the AMEX Blue Business has a $50,000 cap on its 2x, but my point remains the same.
Not stupid, just uninformed. I bet that for most folks, SkyMiles = “free” domestic flights for a family summer vacay to Florida, and that’s that
God Matthew you’re such a shill for UA !
Delta’s hub of lax will always beat sfo , likewise lga/jfk over Newark. It’s about where you live and where you’re going that counts overall.
And will you eat your words when UA follows Delta in devaluation (as Delta did following AA who devalued first?)
I think you should reread what I actually wrote. Obviously, this advice is predicated on UA not simply matching DL.
But I think they will just match Delta to a large extent. Why not they don’t have much risk now that Delta has made the move. They can wait a little while and then decide. Which actually is the answer. This is considered a drastic change by the FF community. United can wait and see what happens to Delta and then proceed.
In LAX, there’s a difference of only a few percentage points between DL and UA. There’s no winner in LAX, especially since all of the competition across domestic and international carriers depresses yields. Compare to SFO where UA is significantly bigger with a much better route structure than anyone else.
In NYC, UA carries more pax there than DL, and their massive hub in EWR is much better for connections than the split operation that forces some connections to change airports for their next flight.
I canceled two Delta Skymiles Amex cards, the first on Wednesday and the agent made absolutely no attempt to change my mind. My, what a difference a day makes. Thursday, after going online and switching all my auto pay accounts from the second Delta Skymiles, I called to cancel. I was promptly transferred to an “account manager” who desperately tried to keep me from canceling by mentioning the benefits of the card (yeah, good luck using that companion certificate on a flight somewhere you actually want to visit) and then offering me 15,000 Skymiles and a $100 credit to remain. Skymiles used to be worth something. The old 65,000 point award ticket is now 500,000 or more on many itineraries. I politely declined her entreaties. I wonder how many people canceled their cards this week. No longer will I forego a non-stop on a competitor for a layover on Delta. Price and convenience from here on out. Upgrades? WFBF
That’s awesome! I did switch all my auto-pay (delta / Amex simply will not see a penny from this 2MM/Diamond) but have couple of flights already booked, switched one of them to earn FlyingBlue and my Reserve renewed in July so might keep it until Jan 2024 (not 25) and then cancel! Can’t wait to make that call.
Best thing about United is Star alliance, I travel mostly internationally and been sucker for delta for far too long. 2MM/Diamond but earlier this year I started flying other airlines but I kept on the Reserve card…until now! After these changes I’m cancelling my Reserve, using up my miles and GUCs and delta/Amex will never see a penny from me. I’ve been charging everything on the C1 card.
If Delta ever wants my business, they have to work hard to get it.
This post will age itself quickly. The Big 3 don’t care about the few customers left that they feel take advantage of them.
More importantly to them is trying to find a way, not to profitability, but to avoiding bankruptcy. Look at AA this week downgrading guidance due to their new union contracts. Easy to see in reality downgrades of programs are the way of the new world.
The few left complaining about hustling airlines are lab rats chasing a spoiled piece of cheese.
I fly 95% Delta and 5% United because sometimes UA is the only option. I am sorry but it is a night and day experience. Have you shopped at Target and Walmart? Yes, Delta is Target and United Walmart. This is my opinion so if you prefer shopping at Walmart, go for it. Changes on SkyMiles suck but between Delta and United I will fly Delta any day.
I fly UA in/out of Chicago frequently and find their service to be solid. Planes are clean, flight attendants friendly, Clubs are nice, on time arrivals, and it’s all done safely. I’m also in Economy 100% of the time because the front is always full and my status doesn’t stack well in Chicago against all these other UA flyers. So if I want F I buy it.
Can there be improvements? For sure, that’s always the case. But I get the sense that UA is focused on closing those loops while DL is blind to the fact that their loops have come undone.
Matthew is right that UA is knocking at the door.
Id argue that United runs a better operation. Their hubs are more prone to delays than Delta yet their on-time metric is virtually the same.
You make some interesting points. As a counterpoint I would mention that on time performance between the top four airlines only had a three percent spread so they’re all pretty much equal. On the international network front United has been bigger than Delta since they bought Pan Am’s pacific routes in the 80’s. Regarding the 500 aircraft, unless United wants to create a new domestic hub somewhere they’re pretty much forced to fly internationally.
While your assertions have some merit you’ve been honest enough to admit that you have rose tinted glasses when it comes to United. When I abandoned Delta because they despise engaged loyalty members I was an independent for a while but now I’m strong with American, who makes loyalty rather fun and interesting for now like IHG used to a half dozen years ago. Ultimately, outside of hub captives and some fanatical loyalists I don’t see much reason to fly Delta, especially since they’re perpetually showing what they think of the people handing them money.
I have 1MM with UA and have been a 1K for 12 years. Agree with those that say that benefits of top status are fleeting. I lived in SFO and DEN but now LA and Deltas LA hub is vastly superior facility wise and for domestic flights. But the biggest differentiator for those that thing there is no difference is consistently great service at every step of the journey. It’s literally night and day and United is light years behind. Years of toxic labor relations, an off the rails merger, and corporate arrogance have taken their toll on United. Not everyone is an airline geek like this blog, knowing the difference in alliance. Of course Star Alliance is superior. I find it telling friends and family who fly a few things rave about Delta. Why, you don’t feel abused flying them. Things change, however, Continental was once light years better than Delta!
Wishful thinking, at best.
I feel like all the airlines are devaluing frequent flyers. I was fanatical about UA loyalty and even made it to 1K for the past 6 years (won’t fly enough this year to requalify). However, over the last 2 years I’ve only gotten one upgrade and that too I spent plus points on. Granted I fly out of a hub usually, but I’ve never gotten a domestic upgrade. As others have said, all premium cabin seats domestically and internationally are sold now so status really doesn’t mean anything. I echo the above. Pick the best times, cheapest price etc, and if you really want just pay for the F ticket.
I live right in between GVA and ZRH on the train line. I don’t fly enough for status, and my family lives near MSY. I unfortunately had to fly several times this year due to a parent’s health issue which has since resolved.
The price difference between flying economy GVA or ZRH to MSY was fifty percent cheaper on United compared to Delta from both airports with the bonus of avoiding ATL.
Maybe someone who flies enough or always flies in front can justify flying Delta even with points devaluation but for me United was a no brainer. If I’m suffering in a middle seat in back I would much rather know I didn’t waste 1500 bucks to do so.
I do know that the number of United flights out of GVA might not be forever and may be one reason for the prices I got this year, but again, delta’s prices are just not it for casual fliers.
“Many flyers will continue to fly Delta because of its schedule and may even pay a slight premium over others for that nonstop advantage or when faced with other connecting options because Delta tends to run a good operation with friendly service.”
Can you honestly say that United consistently delivers on the “good operation with friendly service” piece, though? I think Tyler W’s comment sums it up well. I’ve flown UA more the last couple of years than I had previously, and I’ll concur, overall, it’s gotten better. But it’s also consistently inconsistent. One of my best Y flights in recent memory came courtesy of UA (SFO-PPT) on a 787-10, where the FAs were outstanding, the meal actually tasty, and the hard product good and modern. Then I step on an ancient A319 that’s BYOD only, or an ex-CO 737 with Live TV still installed but with screen quality that was cutting edge circa 2008. I haven’t gotten any outwardly hostile UA crews, but with one exception, they’ve been completely unmemorable. DL is just more consistent, especially when it comes to quality of its crews, than either AA or UA. That does make more of a difference than you might think, especially since such a large chunk of flyers simply don’t give a flip about the FF program like you or I do.
There are ten modification lines open to reconfigure domestic planes to the versions with large bins and seat back screens. There should be close to 200 with the new interior by the end of the year, hundreds more next year.
If that’s the main differentiator it won’t be there too much longer.
I got rid of all my DELTA Amex branded cards years ago. First of all the return on spend of 1 to 1 is terrible. For every dollar I spend I want to get as many points back in return as possible. Why spend a dime on their cards when I can get 4 to 1 or even 5 to 1 on many other cards. Secondly, Sky pesos redemptions are so terrible for business class across the pond that I just about never fly DELTA metal internationally. I transfer points to Flying Blue and fly Air France or KLM for a quarter of the amount of points that DELTA wants. As for the limitations of 6 entries for the year to their sky clubs with an Amex Platinum I will just see how that works out for me throughout the year. Thankfully Amex is opening a Centurion Lounge in ATL soon. I expect it to be very busy the second it opens as people will be minimizing their Sky club visits where possible. So I will see how that works out for me. But when it comes to domestic travel I stick with DELTA being ATL based. I expect others to do the same that also live in cities that are mainly DELTA hubs like Detroit, Minneapolis, and Salt Lake City. Others based in cities like NYC and LA may decided to change since they have multiple options of hub airlines. I refuse to connect domestically unless I absolutely have to so I’m sticking with DELTA regardless of what changes they make. The older I get the more I realize just how valuable my time is.
I definitely agree with you. As a Diamond Medallion member since it has begun I’m extremely disappointed in these changed. As some who spends $50 to $60 thousand dollars on airfare the changes don’t really effect me. But I do feel Delta just stabbed me in my back. Yesterday I canceled 3 trips on Delta and booked them on United, who was happy to to offer me status match on United. I also canceled my Amex Delta Reserve Card, no reason to keep it now that I’m fly United and applied for the United Club Card.
Where United severally lacks is in the customer service at the check-in counter. Delta and American print your boarding pass and tag your bags for first class passengers, whereas United makes even First Class passengers fumble with their awkward check-in kiosks and tag their own bags. Until this changes and I am offered complete First Class experience, I will avoid United as much as possible.