If we check the old trusted internet way back machine we can see that only a few days ago Delta.com showed that you could, as someone purchasing a Delta domestic 1st class / business class ticket, get up to 3 bags at up to 70 lbs each. But look today:
That domestic perk has been reduced to only 2 bags at up to 70 lbs each. An in fact an update to travel agents plainly tells us:
Now you may think “big deal” but this IS a big deal for us all. Let me lay it out for you just why this does matter so much.
First, for those buying domestic 1st class for say their employees, they may buy 1st class just for the 3 bags free perk. It may be cheaper for them to simply buy the 1st class ticket and send the person on the job. Now, maybe other choices must be made. Also notice that Delta and Skyteam elites still get the domestic 3rd bag free perk when booking and flying in 1st class.
But now to why this is, in fact, a big deal. I listened to the Delta Q215 earnings call and will share some of the bits that stood out to me, but one thing no one can miss is just how much money Delta is making from “ancillary revenue” that is, things like bag fees. How much? 3.2 Billion in 2014.
Again, so what. We know airlines are making a fortune on fees. But here is the key point to me and what I have talked about over and over again. There is only so much Delta can do to keep earning more and more money year after year. They have already segmented two classes of seats into five with OFCMB seating. In years past they cut the Silver Medallion free bag allowance from 2 down to 1 unless they have the co-branded Delta AMEX card (Gold, Platinum or Reserve personal or the Delta business cards all work for this). But where do they go from here? And that, my dear friends, is the rub of the matter.
Delta must now, as we see with this bag fee change, cut existing perks to make more and more money. Delta has over the past year simply decimated the SkyMiles program to make more money. Now they are turning their attention to other areas they can cut. Expect much more of this going forward. Expect and be prepared that things that were fee free will soon either be devalued as well or have some restriction or fee tacked on.
Fees really are the golden goose for Delta and the airlines. They can, much like with SkyMiles, do anything they want and it is a rather simple equation to simply see how much cutting a perk or adding a fee will add to the company bottom line for the year. Get ready for more of the same!- René
(HT to reader Aaron.)
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