Let me start with the obligatory bits that I NEVER buy or sell any airline stocks ever including DAL, that is, Delta Air Lines. I am not trying to give any investment advice and only care about the call and the data as it impacts me (and my readers) as a frequent Delta flyer. With that out of the way let’s dive in.
The first surprise hit me well before the call when Delta’s CEO Ed Bastian on CNBC stated that “Delta Premium Select is a business cabin“. Really? Does that mean the Delta One Suites is no longer business class but real first class? I just found this odd. Later on in the conference call Delta’s President Glenn Hauenstein stated they are selling about 85% of the seats in Premium Select. Perhaps these very large sell rates are one of the reasons they downgraded the “free” domestic first class seats when you buy Premium Select.
Most of the rest of the comments below are from Delta’s President FYI (you can listen to the full broadcast on the Delta IR site). First about Amex Credit Cards. Again this year very strong and he stated record spend on the cards. Perhaps due to the change of the $250,000 spend needed for Diamond Medallion waiver. I also wonder if after granting most anyone who asks for it a 1x waiver if that will impact next year and spend on Delta Amex cards.
Now on to the all important bits about upgrades. I stand by my feeling that C+ is not worth paying for as an “upgrade”. Glenn said it is “well worth it”. He stated that C+ had a 60% load factor. Do keep in mind as part of that number is the almost always instant “upgrade” for Platinum and Diamonds and the free upgrade on international.
On a positive note he mentioned first class up-sells has gone from years ago at 13% to now 60% and that “all” premium up-sells grew at 19%. Why is this a positive? The internal goal is only 20% of first class seats available for free upgrades, that is, 20×2020 so 40% still available for Medallion upgrades is not bad IMO. I hope they stick at these levels but do not count on it (keep reading).
The big push for the coming year will be more ways to “burn” our SkyMiles (his words here). As an example would be in the Fly Delta App “on the way to the airport” to buy an up-sell. He used the example that if an upgrade was $170 it would, next year, cost 17,000 SkyMiles.
This shows us that in the Delta executive’s mind a SkyMiles is worth 1 cent each – period. This does not look good for the pricing of award tickets in general moving forward. He also stated that cash or SkyMiles is the same as far as Delta is concerned. Interesting to me.
He also commented, regarding C+, that you may say pay $100 for a transcon upgrade but maybe $5 or $10 on a short-haul (or, as shown in a screenshot on FlyerTalk just $1.00). Considering some short flights will not even have a beverage service now why pay at all (you can still get a free drink etc. but have to ask for it). To me C+ is only really worth it on international flights but as we know, over time, ALL of those seats will be going away and new jet MODS will be Delta One Suites, Delta Premium Select and Main Cabin configurations.
Some final thoughts. My upgrades this year have tanked compared to almost not missing a single one in 2017 (about 65% this year fyi). Delta clearly wants more to flush their SkyMiles at 1 cent each. I hate this. This is the bottom floor value to me of SkyMiles. Redeeming for international premium cabins is how I get 1.5-2+ cents each value. But with hidden award charts Delta has done a great job of convincing flyers that 1 cent is good value for their hard earned SkyMiles – sad!
What do you think? Are you more or less loyal to Delta in 2018 and what about 2019? – René