A Reminder of Why Delta Air Lines Does Not Have to Give Notice of SkyMiles Redemption Increases

“F rom Delta metal to all partners it now costs at LEVEL 1 awards at least 70,000 SkyMiles one-way and 140,000 round trip in business class or Delta One. It took YEARS for Delta to jump the price from 100,000 RT to 125,000 RT but many less for this latest jump to 140,000 RT.”

Taking what René de Lambert of Renés Points wrote in this article at face value, that is because during those years in the past, Delta Air Lines was not doing as well financially, to understate the obvious; so the airline did what it could to attract more business — but given that the redemption of SkyMiles for a round-trip itinerary between the United States and Australia increased by 30,000 SkyMiles earlier this year, is anyone really surprised about the latest stealth devaluation?

A Reminder of Why Delta Air Lines Does Not Have to Give Notice of SkyMiles Redemption Increases

Let us say that you operated a business — and you probably already do. Your company is experiencing consecutive financial quarters of record revenues and profits. Would you voluntarily offer ways to discount your product or service — whether it is in the form of a straight decrease in price or via a loyalty program — when business is doing so well, with the possibility of the savings you are giving your customers cutting into your profits?

In most cases, of course you would not do that. Discounts — or, in this case, offering miles for discounted or almost free flights — are meant as an incentive to increase business, which is especially necessary when the financial aspects of your business are not at their best and could be doing better.

If Delta Air Lines wanted to raise the redemption rate of SkyMiles to 95,000 each way — or, for that matter, raise the cost in terms of money — for a seat in the premium class cabin without negatively impacting its bottom line, then it will. That is the simple economic principle of business known as supply and demand. What are you going to do about it — say to yourself, “well, I will just switch airlines and save up enough miles to redeem for a similar ticket on that airline”? Are you going to redeem your SkyMiles for something else? Should they just sit there and collect dust — only to further be devalued at some point in the future without notice?

If you have not already noticed in recent years, United Airlines and American Airlines have basically followed Delta Air Lines in terms of a number of “enhancements” to their respective airlines and frequent flier loyalty programs — which is a reason why I find the extensive recent coverage of Scott Kirby switching jobs as president of American Airlines to immediately becoming president of United Airlines almost to the level of ludicrous. As talented and experienced as Scott Kirby may be — I have never met him and do not intend to take anything away from him — it does not take much to copy the “innovations” of a competitor. Other than Scott Kirby himself — who apparently will be handsomely rewarded by both airlines as the result of his change of positions — and to those who will benefit from this move, does this news really matter to anyone?

Why Award Redemption Increases Should Not Be Done Without Advance Notice

When you shop at a grocery store, you typically use a form of currency issued by the government called money — whether you use a credit card, check or cash. If the grocery store raised the price too high for your taste, you can shop around at competitors in an attempt to find a better deal and use the same currency there if you are successful.

That scenario is not true with the use of frequent flier loyalty program miles or points, as you are at the mercy of the whims of the airline. In the case of Delta Air Lines, they can raise the redemption rate of SkyMiles on any award ticket they want — any time they want — and you have no recourse. You cannot take your SkyMiles and shop around to redeem them for a flight operated by any other airline directly, hoping to get a better deal by bypassing Delta Air Lines. You are obligated to follow the rules set forth by Delta Air Lines if you want to redeem your SkyMiles for any award. That is the main reason why I eschew affiliate credit cards which earn frequent travel loyalty program miles and points: because as generous as some of those offers might be, the company which issues the “currency” can change the rules at any time as to how you can use it.

Never Play With the Trust of Someone Else

More importantly, my trust in doing business with many of the frequent travel loyalty programs has been eroding significantly over the years — especially with several scenarios which I am currently experiencing. Two of them involve frequent travel loyalty program miles and points not being credited properly or at all to my respective accounts; and I have had to go through a lot of time and effort — and the issues are still not resolved after almost a year. While the one with American Airlines has been resolved to my satisfaction, the issue with which I am currently dealing with Avis is still ongoing after well more than a year since I first earned the number of Hyatt Gold Passport frequent guest loyalty program points which should have been properly credited to my account.

Delta Air Lines recently suffered a significant embarrassment with the systemwide outage of its operations. Despite the number of proactive moves to allay concerns amongst its customers, trust has basically eroded — at least, amongst some customers…

…and while trust of the operations of an airline is certainly substantially more important than that of a frequent flier loyalty program, toying with the trust of the members of your frequent flier loyalty program is still a dangerous game, as that lack of trust by customers could seep into other areas of the business — and once any modicum of trust is lost, it is incredibly difficult to regain.

Honesty and Integrity

As I stated in this article, I have written many articles over the years based on trustleadership, and maintaining perspective and adjusting expectations and regarding honesty and integrity — or lack thereof — pertaining to frequent travel loyalty programs.

For example, award redemption increases should not be implemented without notice.

I offer this example of what an honest marketing message might actually sound like after the recent announcement of a merger between two lodging companies.

Stephen M. R. Covey of FranklinCovey agreed with me about how the airlines should value the trust their customers have in them — especially for the day that they might really depend on it when the economy falters.

I can go on and on; but at least there is one bright spot: one former executive in the commercial aviation in particular industry exhibits a candor and honesty which earned the trust of customers — including frequent fliers.

Summary

Delta Air Lines has every right to charge whatever it wants for its products and services — whether in terms of SkyMiles or cash or both — but to hide an important reference such as award charts to then be able to implement dynamic pricing and increased base levels of award travel more easily is an example of playing around with the trust of its customers…

Click on the economy class SkyMiles award chart for an enlarged view. Source: Delta Air Lines.

Click on the economy class SkyMiles award chart for an enlarged view. Source: Delta Air Lines.

Click on the premium class SkyMiles award chart for an enlarged view. Source: Delta Air Lines.

Click on the premium class SkyMiles award chart for an enlarged view. Source: Delta Air Lines.

…and as long as financials continue to be good — combined with fewer competitors in commercial aviation in the United States — do not expect this playing around with the redemption of SkyMiles and the omission of award charts to stop anytime soon.

When things get bad — and they usually do, as the economy always consists of cycles — only then will we see if there will be any positive changes from the point of view of customers with regards to the SkyMiles frequent flier loyalty program; but the return of any trust by some customers will be much more difficult to restore…

Photograph ©2011 by Brian Cohen.

5 thoughts on “A Reminder of Why Delta Air Lines Does Not Have to Give Notice of SkyMiles Redemption Increases”

  1. Steve L says:

    Delta is matching UAL’s Star Alliance partner level award of 70K o/w US-Europe, figuring the difference of 12.5k difference now vs. UAL metal for 57.5k won’t be noticed. The eventual move by the Big 3 US carriers is to end the current mileage program. If they do then it’s likely that other world carriers will follow suit. What might remain is a cash back program where you get, say, 2% that can
    be accumulated in a ‘flyer savings account’ for use on future paid tickets. That’s about the extent of anything that will exist for the general flying public.

    1. Patrick says:

      But don’t the Big 3 make a ton of money selling miles? You get rid of the mileage programs and there goes a big revenue stream.

  2. René says:

    Hi Brian!

    I agree with much of what you said but the issue you do not touch on is how much they earn from points sales. They are making billions (yes B is a big number) in profit from this. At what point will that number fall due to these changes?

    Also, the lie, that those who spend the most are rewarded the most. It seems all are equally hurt the same way by these no warning events!

    Best

    René

  3. Max says:

    Gary,

    When Delta increased some business class routes earlier this year, they decreased several economy routes. Have you noticed any of the same changes, and what do you think their reasoning for doing that previously was?

  4. Captain Kirk says:

    I get offers from AMEX in the mail every few days for the past 3 years trying to get me to get the Delta AMEX card. They keep trying to lure me in with increased bonus mileage amounts usually 30K now 50K! Big whoop. Your miles are like skyrubles and are garbage. Yes, they never expire, but the award chart (or lack thereof) and the astronomical redemption rates makes me laugh and throw the offers right into the shredder as soon as I get them from my mailbox.

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