The reasons AGAINST Delta going REVENUE BASED Skymiles this year!

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It seems like everyone is saying that it is a done deal and that Delta will switch over the Skymiles program to a revenue based earning model with similarities to the new discounter ticket award model that took place September 1st of last year. Others are even saying they will go to a distance based awards model making the cost to spend your points for long distance reward trips even higher.

To me, there are many reasons this is NOT going to happen this year! There are also reasons it may not happen next year or ever for that matter. Why? I have a rather long list. See what you think.

  • Profit. There would only be two reasons to switch over. The most important, to Delta, would be money. Could they make MORE money with a revenue based (RB) system? Doubtful as you will see below. The only other reason would be if flyers wanted it and would be more happy with it. We know a majority would not be!
  • MQM’s are a HUGE money maker to the company. AMEX must pay a bundle for the ones they give away each year. Also, this is year two for selling MQM’s. (see much more on my guest post at PM&M today on this topic).
  • Skymiles program is a money maker. Again AMEX buys a bunch. Delta gives them out for every kind of issue because they have value to us. If they become worth ½ what they are now, the “point” of the program begins to go away. Also, right now, with the award calendar broken, and most flyers uneducated on how to get low level awards, most just redeem at mid or high. Thus, the program right now, “works” for the company. If it ain’t broke, don’t break it!
  • Partners. Think about Skyteam. AF is already upset at Delta over award space. If now, they make it even harder for the rest of Skyteam to get Delta seats, the French Revolution part deux may be on the way. AF/KLM needs to get their labor and other costs in line and make money. Delta is now making nice money. Upsetting the rest of the children at this point would not be good!
  • Promotions. We have seen e-Miles and e-Rewards exit from promotions with Skymiles. White board is new and we are sure to see many transatlantic bonus Skymiles deals as the market tightens up and other airlines giving away points as well. If the points become worth much less, these promotions will also be worth much less. Being able to give away something that costs you basically nothing to earn real money is great biz when you can get it. Why make it harder when it is so simple now?
  • Social media. Delta is uber aware of “us”. Not just Delta Points that so many at the company read each morning, but you and me. With Twitter, Facebook, MilePoint & Flyertalk – we can make a lot of noise. Back when SSM, that is Save Skymiles, happened so many years ago there was no social media to drum up attention (back in 2003). Can you even imagine what a full court press could do now? The bashing would NEVER end or letup. People would come unglued!
  • Legal. With the uproar from flyers, some jumping ship and going to other airlines, like the new AA/US AIR, who I am sure would LOVE to get upset Delta flyers over to their program, spending money they will need, to everyone who stays deciding to get the Feds involved or other ways if they can. I am not saying this will work, but Delta is PROUD that there have been so many less complaints to the Feds in 2012. This would ensure a never ending stream of litigation, complaints and red tape. That sounds like a great way to mess up a money making machine that now is Delta!
  • Selling the kitchen sink. Right now, you can bundle everything. Everywhere you turn Delta is selling “stuff”. You in the seat are like a captive viewer for the “Home Shopping Network”. Drink, Food, WiFi, movies, Sky Mag within reach of every flyer. This is a marketing GOLD MINE. Think of each of these flyers tuning OUT due to the fact they feel they are being ill-treated by Delta. Would I get stingy with my flight dollars if a RB system came into effect? You had BETTER BELIEVE IT! And I think I would not be the only one to feel the same way. Why would Delta kill the cow that is giving them the milk to make the best cheese this side of Wisconsin.

So there you go. Now I do not put it past my beloved airline of doing something totally and utterly stupid and self destructive like making the jump to RB, but I would like to think that the money right now is way too good to just mess it all up! – René

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23 comments

  1. Happy New Year Rene, I agree, I think it would be a bad move. I am a Diamond this year, I would be lucky to be a revenue based Gold. I was actually waiting for an end of year announcement that would make it a 2013 move. Changing once people have trips booked and plans for 2013 would be a bad PR/Legal move, 2014 might be fair game. I think rollover miles was a brilliant move on Delta’s part, I was always willing to shift business when I had nothing to gain for the following year, including MQM purchases, and mileage runs. I think to make this work, Delta might have to grandfather a year or else the risk making rollover miles useless as well.

  2. Many of these objections do not affect a rev-based system. Partner awards could still be allocated. As for being a “money maker” a revenue-based program guarantees that people like us don’t “abuse” the system, and that ever mile has a specific value. Ultra frequent fliers will likely become more elite as they arent earning status after a single R/T to Asia. Some fliers may prefer it, as award space may be more freely available (if Southwest’s program is any indicator). Skymiles could still be sold to AMEX and other (WN and B6 sell miles, and they are revenue based).

    Im not endorsing the plan by any means, but let’s object based on fact, not fear.

  3. I’m just curious as to how it would work. Husband earns all the miles, I use all the points. His trips are mainly in the u.s. and almost always involve a connecting flight which means a minimum of 2000 points each trip. But, 3/4 of those trips are last minute business trips, 1/4 10-21 days lead time. It’d be interesting to figure out the difference which I would probably do just because I like math brain exercises.

  4. I am PM for 3 years, Medallion for 6 with DL. I was going to do UA status match recently and decided I will wait to see what DL rolls out; if they go RB then I’ll do the status match, switch to UA and Star Alliance. I really prefer SA over Skyteam anyway; I fly DL mainly because of the Reserve card (love the 30k MQM) and the rollover MQM; they just make it easier to keep PM status. But I enjoy the SA carriers and ease of award booking (and OW) far better than DL’s options. Not a threat, just a fact; RB and I’ll make an easy switch.

  5. @Jim A – thanks for your “real world” and good input. DELTA needs to read about flyers like YOU! To see that something like RB would be the last straw to push flyers away from flying DELTA! – Rene

  6. Rene, I think this is now an inevitability. It is going to happen, the wheels are in motion, but IT problems are delaying its implementation. I know this to be the case, but can’t share how I know. I expect the airline to make some announcement of the plan and see it implemented in full for membership year 2014. The airline is aware it will be unpopular, but is undeterred.

    What I’m not close enough to know is the company’s motivation. If it is to improve overall availability of Skymiles based on the annual criticism the airline receives for the lack of low-level award space or if it is perceived internally to be something that will bring more revenue or reduce paper liabilities. As someone connected to the airline, I can tell you it embarks on no new initiatives that are not believed to be revenue rich.

    I think all that remains to be settled are various details of the plan. It may be that international premium cabin awards are still available at a discount to paid tickets. It may be that elite status is easier to obtain by just paying an annual fee. It may be that award availability is no longer capacity controlled.

    But it is happening, unless the carrier changes course 180 degrees.

  7. jim — me too will switch! better to switch than complain , S. A. AND ONE WORLD go to same places for the most part — bye-bye Delta keep your RB

  8. This might be a small objection for some, but for me it’s worth something:

    When choosing whether or not to fly somewhere (for work or pleasure), I find the long-distance flights to be more tolerable just knowing that I’m earning a ton of miles. For example, if somebody from our office gets the short straw and has to fly to Denver for the 10th time this year, one of things that keeps us sane is just dreaming about all those MQMs we get flying out to the west. The price is usually great to Denver (under $200). So in a revenue based system, we’d be out of luck.

  9. I don’t understand the las point: you’d be tuning out of the marketing messages because you are upset with Delta? And right now you are willing to listen to them because they have a distance-based loyalty program? Really?

  10. Delta SkyMiles has been good to me. I always travel solo and usually a little off-season, so I have never had trouble getting award tickets. I prefer to save up miles and use them for international travel in Business Class.

    The threat of going revenue-based, however, is why I changed how I earn rewards. I used a Delta SkyMiles Amex for over 10 years, charging more than $25K annually. It was win/win/win for Delta, Amex, and me. I have dropped that card now and use the SPG Amex so that I can earn points and decide where I want to convert them. The 5K bonus for converting 20,000 points is a big plus. [I do not work for Amex BTW. This card just works best for me.]

    I will definitely use a points-based system over revenue-based unless the latter had some compelling algorithm that lets me get similar international flights. If Delta changes to revenue-based, I can and will easily find flights with another carrier.

  11. just because the distance based awards benefit some of us. it doesn’t mean revenue based awards make less money for Delta.

    as i am a flyers out of MSP, delta is the only game in town.

  12. What seems so obvious to me: look at the KL/AF FB program and you’ll pretty much know what to expect. Delta copies most of their stuff (or sometimes the other way around) so Skyteam really becomes ‘one team’. Just noticed the same thing on the EC cost Medallions and FB members, rules are 100% identical now. KL/AF also introduced the rollover miles last year. No, it’s not good news, but I’m afraid it’s going to happen anyway. The points business will still be a huge profit maker and now, with the AA-USAir merger and United issues still playing is a good time to make that move imo. Do you stop the Delta Points blog because of it? Probably not…. People make all kind of comments, but in the end 80-90% will just stay with Delta. Wait and see.

  13. Skyrupiah is already worth so little, DL has few aspirational award partners, and their SWU are a joke…. and now they want to further devalue it by making it into Trueblue and Virgin America ???

  14. It sounds like I’m going to be real glad southwest and AirTran merged! Dad is a million+ flyer with delta but that was because delta was the only game in town. I feel quite sure he won’t have a problem checking out how the merger will work for him/us because it should be well established by the time delta rolls out the new plan.

  15. If they did move to a revenue system do you think it would be safe to say the other carriers would jump at the chance to match our DL status to take our business away from DL?

  16. I am one that’s actually glad that Delta may move to a revenue based system. As an executive who flys to Asia often, I don’t really look at how much my business class ticket costs. I just fly my customers/suppliers expects me to be there. This may mean that I will get more benefits/miles/aviable award space in the future. It all depends on how the new numbers look.

  17. As a side note, as of today SkyMiles from Delta and Smiles from GOL Linhas Aereas announced shared benefits between elite members.
    Diamond members from GOL will enjoy Diamond Medallion Benefits when flying Delta, and Gold, Platinum and Diamond Medallion members will enjoy Diamond benefits when flying GOL.

  18. Came across a good way to rack up some miles .. Spafinder is giving 8 miles per dollar on gift cards purchased in January. Spafinder gift cards have fairly wide acceptance and NEVER EXPIRE. With Valentines Day coming up, could be a great way to get a few extra miles! I went through the Delta.com site under “Earn Miles” with partners

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