One week after Delta Air Lines announced the radical changes to its SkyMiles loyalty program, frequent flyers are still buzzing about the new way to earn miles, trying to assess winners and losers, and are speculating when the other shoe will drop with the legacy carriers United and American.
Beginning Jan. 1, 2015, Delta’s frequent flier program will be revamped to reward members not by how many miles they fly, as in the past, but on how much they spend on airfare. The move is seen as Delta’s way of rewarding its premium customers and to entice more business travelers, who not only fly more frequently but often pay higher fares because of last-minute bookings.
The frequent flyer changes that go into effect next year will reward passengers anywhere from five to 11 dollars per dollar spent, depending on ticket type, SkyMiles medallion program level and whether or not a customer used a Delta SkyMiles credit card to make the purchase.
With the breadth of several days behind us, the initial knee-jerk reactions have given way to pragmatism and many are starting to see the benefits, along with the drawbacks, of the new SkyMiles program.
Brian Karimzad is the Director of MileCards.com, the online portal that analyzes airline credit cards and frequent flyer programs. Among his winners and losers:
- Winner: Flyers who fly short distances for both leisure and business. Flights under 1,000 miles tend to earn the same or more than before at typical $300-$400 fares, and you could earn almost twice as much as before on short sub-500 mile flights with typical airfares. For example a New York to Washington Shuttle flyer will earn 1,750 miles for a $350 roundtrip versus 1,000 miles today.
- Loser: Business flyers who pay anything but the highest coach fares on flights of 1,500-2,500 miles in length each way (basically flights to and from the Midwest and East to the West Coast). For example, a $500 flight from Atlanta to San Francisco will earn a General member 4,500 miles with the new program versus 8,556 miles under the current program.
- Winner: Flyers who buy unrestricted fares or tend to fly on nearly sold out flights at the last minute. The airfare will be exorbitant; the reward equally so.
- Loser: International flyers who average flights of 5,000 miles each way or longer using typical coach fares. For example, a $1,200 San Francisco to Tokyo flight will earn 10,800 miles versus 20,496 miles today.
And the list goes on. The question now becomes whether or not United and American react. For now, both now airlines are taking a wait-and-see approach.
There are two sides to the argument. One view is United and American will launch similar programs to Delta’s if they lose the lucrative business traveler who can gain more miles by spending more on Delta.
Randy Petersen of InsideFlyer magazine wrote on his InsideFlyer blog: “While the ground they are covering here is novel for a global airline the size of Delta, we believe that in the next five years, we’ll look back and point to this decision by Delta as a course correction for the global frequent flyer industry. ... We can’t help but think it will influence the direction of other U.S. global carriers, such as American and United.”
The other possibility is both legacy carriers pick up enough business vacated by Delta customers to make it worthwhile to keep their current frequent flyer programs intact.
Karizmad said that, for now, United is the more obvious choice to mimic Delta’s changes and that American “has a big merger to contend with first, though all major airlines have explored this option. They haven’t rolled them out for lack of desire, but cumbersome IT systems and merger priorities can hold up rolling out these changes, so it is a matter of getting the infrastructure and organization in place that has held up implementation until now.”