Delta Air Lines’ frequent-flier change likely to be emulated, analyst says

By RICHARD N. VELOTTA LAS VEGAS REVIEW-JOURNAL

11 years ago

A traveler uses a Delta Air Lines credit card to buy an airline e-ticket at the Bob Hope Airport in Burbank, Calif., in this Dec. 14, 2007 file photo. Sweeping changes in Delta Air Lines’ SkyMiles frequent-flier program are likely to show up in other airlines’ loyalty clubs in the months ahead, an analyst believes. (AP Photo/Damian Dovarganes, file)

In this Tuesday, Aug. 28, 2012, file photo, a Delta connection airplane approaches LaGuardia airport, in New York. From about 7 a.m. to 9 a.m. PST, on Thursday, Dec. 26, 2013, certain Delta fares on the airlines own website and other airfare booking sites were showing up incorrectly, offering some savvy bargain hunters incredible deals. A roundtrip flight between Cincinnati and Minneapolis for February was being sold for just $25.05 and a roundtrip between Cincinnati and Salt Lake City for $48.41. The correct price for both of those fares is more than $400. (AP Photo/Charles Krupa, File)

Delta Air Lines jets are shown in this file photo. Sweeping changes in Delta Air Lines’ SkyMiles frequent-flier program are likely to show up in other airlines’ loyalty clubs in the months ahead, an analyst believes. (MARK LENNIHAN/THE ASSOCIATED PRESS)

The sweeping changes in Delta Air Lines’ SkyMiles frequent-flier program are likely to show up in other airlines’ loyalty clubs in the months ahead.

Atlanta-based Delta, the second-largest air carrier by passenger volume and the second-busiest at McCarran International Airport, announced last week that it is revamping the award system it uses to compensate members. Beginning Jan. 1, the airline will reward customers based on the amount of money they spend for a ticket instead of the number of miles they fly.

The plan has received mixed reactions from customers.

Under most circumstances, SkyMiles members would receive less for their loyalty under the new system and big-spending business travelers would benefit most. That’s because leisure travelers most often seek out the least expensive fare while free-spending business travelers on expense accounts can spend what they want for the most convenient flight.

In addition, only the cost of the ticket and Delta’s flight-related fees, not taxes and government-imposed fees, will be counted toward program miles.

Mike Boyd, president of Evergreen, Colo.-based Boyd Group International and an expert in aviation issues, said Delta’s program would likely be duplicated by other major U.S. air carriers in the future.

“United (Airlines) already has a dollar figure in place on its loyalty tiers and I expect American will have something similar to offer sometime later this year,” Boyd said.

Delta’s new system of basing free travel on dollars spent instead of mileage flown is similar to those of Southwest Airlines’ Rapid Rewards and JetBlue Airways’ TrueBlue loyalty programs.

When Southwest revamped its Rapid Rewards program in 2011, it shifted from offering a free flight after 16 one-way trips to a point system based on dollars spent for tickets.

JetBlue rewards TrueBlue customers with three points per dollar spent — six if booked online. The airline also allows families to pool their miles.

“It’s a great business decision by Delta,” Boyd said. “Airlines really don’t need loyalty clubs anymore because most people look for the easiest way to get to their destination and the best fare. That’s why it makes sense for Delta to shell out less to provide more inconveniences to the customer.”

Under the revamped SkyMiles program, Delta will continue to track accounts by miles, but accrue them at a rate of five miles per dollar spent. Under the airline’s Medallion Program, which isn’t changing under the new system, customers who spend the most earn miles at higher rates in four different tiers. Delta’s Silver Medallion members — those who travel at least 25,000 miles and spend at least $2,500 a year with the airline — will earn seven miles per dollar spent.

Gold Medallion members (more than 50,000 miles, spending at least $5,000 a year) will get eight miles per dollar, Diamond Medallion members (more than 75,000 miles, spending $7,500) will earn nine miles per dollar and Platinum Medallion members (more than 125,000 miles, spending $12,500) will get 11 miles per dollar.

Customers who purchase their tickets on Delta-branded American Express cards get two additional miles per dollar spent.

Delta officials say later this year they will publish updated charts to explain how many miles it would take to purchase a ticket.

Under the new program, Delta said it would expand the number of seats made available for SkyMile purchases. It’s also eliminating blackout dates, days on which loyalty points couldn’t be used for travel.

Customers booking flights on Delta’s partner carriers will be eligible for a percentage of the loyalty club miles.

Several Delta customers flying from McCarran on Tuesday weren’t aware of the pending change and those who were either didn’t like it or didn’t care.

“For me, it sucks,” said Concetta D’Agostino, who was catching a flight from Las Vegas to Detroit. “I usually try to buy the cheapest fare so this won’t be good for me.”

Kay Gilbertson of Albert Lea, Minn., wasn’t too excited about the changes, either.

“It’s based on what you pay? I don’t think that’s fair,” she said.

Because she buys all her tickets through Delta partner American Express, Orlando, Fla. resident Debra Wallauer had no qualms with the changes.

“I don’t think it’s going to make any difference to may,” she said.

Contact reporter Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow him on Twitter @RickVelotta.