Let me start with a disclaimer. I do not own ANY airline stock nor do I plan to buy any for the foreseeable future. I am not that brave.
Having said that, if the widely discussed rumors about the changes to the American Airlines AAdvantage program are true, then it may be time to buy some DAL stock. Delta must be dancing in the aisles just salivating about what seems to be on the way. Here is why I say this.
AAdvantage is/was the one BIG advantage AA has/had over Delta.
We all know operational reliability, on-board experience and in just about every other measure that matters Delta wins. Customer service is better and innovation like Virtual Assist could be an elite game changer in the industry like no other. Delta takes care of frequent flyers in every way possible – other than SkyMiles.
But here is the thing, Delta can get away with a horrid frequent flyer program due to the fact that Delta flyers have, for a long time, gotten used to the award program being really bad. The fact that over the past year or two they have driven it into the toilet has not really been a shocker. Plus, as long as everything else is near perfect most loyal flyers just roll with punches. If elites are happy, with upgrades and great service, that is what matters most.
American can say none of this. They have had an excellent frequent flyer program for many years. When things go wrong, and flights are canceled or service is not what is expected, they could always fall back on the fact that they were rewarding a flyer for loyalty despite any issue that might happen. Flyers are used to good treatment as elites and good value and redemption from the AA award program.
But now if they cut the perks, like 8 Global Upgrades to 4 (like Delta has) and go revenue based in earning points (like Delta has) then they have to compete on operational performance etc., they are in big trouble. Cloning Delta’s frequent flyer program like United has done, and then running a sub-par airline, has clearly not worked out very well.
Then there are partners. Delta can and does treating partners, even founding Skyteam partners like Korean, like “red headed step children”. They can even treat semi-partners Alaska like dirt and get away with it. Delta does not care what anyone thinks about this and, at this point, flyers don’t really care either. It seems folks are used to Delta playing the big mean bully. But can American get away with this kind of nasty relationship with it’s partners and not upset flyers if their frequent flyer program has become sub-par (or worse)?
I think you can see where I am going with all of this. Delta, being on top operationally first, can make radical and disrespectful frequent flyer changes and could and can get away with them (at least to a point). If American does not wait until they are in the same position then the results may not be equally received by their loyal flyers. I can see big dollar HVC’s now jumping ship for Delta rather than the other way around.
These are truly interesting times in the travel space. Delta themselves may be about to announce more radical changes very soon (see tomorrow’s post). If American steps in line with Delta’s frequent flyer program changes it may embolden Delta for even more drastic changes in the future. Plus, with only 3 big airlines to choose from, just maybe all of them can do anything they want and it will not make any difference. Time will tell. – René
Responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.