Last night I made a post about Delta’s new revenue based frequent flyer program, though it was 1AM in Singapore and I wasn’t really in a position to provide much analysis (not that I’m ever in a position to rationally analyze Delta’s decisions).

I said the new program doesn’t look too bad, and I got a lot of flak for that. So let me explain. I can sit here and wag my finger at Delta for this and say “how dare they” but the fact is that we all knew this was in the works for a long while now, and at least they gave us some advance notice.

Before they made this announcement I was expecting the worst. I was expecting that status would almost exclusively be dependent on spend with high thresholds, and worst of all, I was expecting that award redemptions would have been revenue based as well. That would have been horrible. Imagine if each mile got you one cent in travel towards the cost of a ticket, in which case you can kiss goodbye to a $5,000 international business class ticket on miles.

So is there anything in this for customers? Of course not, the changes suck. But given that we knew they were going to introduce a revenue based program, this is about as mild as it gets. Not only are the thresholds reasonable, but there are easy ways around them, like not being US-based or spending $25,000 on a co-branded Delta credit card.

Now of course I wish they would have actually introduced some benefits along with this, but that seems to be asking too much from Delta.

There are a few other things that either suck or that I find interesting. The first thing I find interesting is that the revenue requirement only applies to US-based members, so how will they control who’s US based and not? I mean, it’s not that tough to change the address in your profile to a foreign country, so I’m quite curious how they’ll handle that.

Next, in theory this really decreases the value of rollover miles. With Delta any excess Medallion Qualifying Miles (MQMs) can be rolled over to the following year, so previously if you had 250,000 MQMs in a year, for example, you would get Diamond status for two years. Now there’s also the spend requirement, so that really decreases the value of that. It would be nice if they offered rollover Medallion Qualification Dollars (MQDs) at least. Then again I don’t think putting $25,000 of spend on the a Delta co-branded American Express card is that tough.

Another frustrating aspect of MQDs is how Delta calculates them. Only Delta marketed flights qualify towards MQDs, which means if you book a codeshare through another airline for travel on Delta that doesn’t qualify. To some extent it really undermines the value of an alliance.

Lastly, and perhaps most importantly, Delta is making substantial changes to their earnings structure for both travel on Delta and their partner airlines.

For travel on Delta, “M” fares will no longer earn the 50% MQM bonus, while the MQM bonus for many paid first and business class fares will go from 150% to 200%.

That’s kind of funny to me, since “M” fares are pretty expensive and they’re the minimum fare class you needed to upgrade international flights, so I suspect they figured they didn’t have to offer the bonus since people were buying those fares primarily to upgrade.

But the even more screwed up changes are the earnings charts for Delta’s partners, especially those in Asia, where they massively cut the earnings rates across the board.

Anyway, I’m not a Delta flyer, so I’m just pleased to see there are no changes on the redemption front… yet.

Posted on January 17th, 2013 by lucky
Filed under: Delta | 30 Comments »

  1. January 17th, 2013 at 7:47 pm

    Helixcardinal said,

    When was the last time you redeemed Delta miles?

  2. January 17th, 2013 at 7:52 pm

    rice said,

    i am not good in writing, please forgive me if i did not express well.
    here are few of my opinions:
    1. Delta needs to resolve roll over mileage, currently no clear instruction about roll over mileage
    2. for MQD, i don’t think the requirement is too crazy, today’s far is high and it will not be hard to reach 2500/5000/7500/12500 dollars.
    3. i think it is good Delta annouce such early instead of last minute, maybe Delta will modify or loose if FFers objects.
    4. for asian carriers, if you check KE/CZ/MU/CI own mileage rule, it is never easy to accumilate mileage, and i think Delta is fair.

  3. January 17th, 2013 at 7:54 pm

    lucky said,

    @ Helixcardinal — A couple of weeks ago for an upcoming trip.

  4. January 17th, 2013 at 7:56 pm

    Tom said,

    Basically, Delta just changed from being an American carrier to being an Asian / Middle Eastern carrier. “You pay, you play.”

  5. January 17th, 2013 at 7:58 pm

    ShaneinTulsa said,

    The MQD only on DL really is the killer.

  6. January 17th, 2013 at 8:05 pm

    Manti Te'o said,

    How do I book a ticket for my girlfriend?

  7. January 17th, 2013 at 8:07 pm

    lucky said,

    @ Manti Te’o — Sorry, what do you mean?

  8. January 17th, 2013 at 8:07 pm

    Tom / SitInFirst.com said,

    “So is there anything in this for customers? Of course not, the changes suck.” You’re missing the point, mate. For some, the changes are disadvantageous. For customers that really drive revenue to DL – the ones that DL really cares about – they’ll have a far superior experience compared to what they have now – with hopefully far thinner elite ranks.

  9. January 17th, 2013 at 8:08 pm

    lucky said,

    @ Tom — Well, sure, but that’s the same as arguing that increasing award prices by 50% will create a “far superior experience” for those with lots of miles, since there will be less competition for award seats.

  10. January 17th, 2013 at 8:15 pm

    BOSfish said,

    Lucky – google Manti Te’o and you’ll understand the comment

  11. January 17th, 2013 at 8:25 pm

    Tom Brady said,

    I have a lot of DL miles I would like to use before there are more changes to the program. How do I book an award ticket to Ray Lewis’s retirement party on Sunday, January 20th?

  12. January 17th, 2013 at 8:43 pm

    Mac said,

    As low rev maximizer who flies 45k/yr to reach PLAT every year I think I’m digging the changes. Basically status quo for me – upgrade % will probably even improve!

    It validates my decision to fly DL b/c anyone who was reaching status on DL without AMEX bonus MQMs (I.e. the poor BIS ATL drones) has been playing the game totally wrong. All this does is validate that.

  13. January 17th, 2013 at 8:45 pm

    steve said,

    It’s clear Lucky doesn’t watch american football

  14. January 17th, 2013 at 9:00 pm

    Santastico said,

    I would guess that if you change your address to another country to try to game the system but your Delta flights originate in the US it will raise a red flag.

  15. January 17th, 2013 at 9:10 pm

    Andrew said,

    Earning rate cuts aren’t that bad, problem is MQD is only for Delta marketed flights and they don’t market everywhere. As you’ve stated, this really undermines the idea of an alliance.

  16. January 17th, 2013 at 9:10 pm

    Andrew said,

    Earning rate cuts aren’t that bad, problem is MQD is only for Delta marketed flights and they don’t market everywhere. As you’ve stated, this really undermines the idea of an alliance.

  17. January 17th, 2013 at 10:33 pm

    Tom // Sit in first said,

    Lucky – You’re missing my point. Having fewer elites makes domestic upgrades (those most important part of the program for many) more likely for those that are the highest revenue generators for DL. That is an improvement for people who spend a lot with DL (or on their card).

  18. January 17th, 2013 at 11:45 pm

    spkg said,

    aw, at last some benefit for being Canadian

  19. January 18th, 2013 at 1:17 am

    BO said,

    So happy that I jumped towards the end of last year. It’s horrible that even some paid BUSINESS fares on KE/CI/MU/CZ don’t earn 100% MQM. UA has not lowered the miles required for status challenge from Delta. Will see some moving away from DL. ANA has JV with UA so milage earning on NH metal is protected to be at the same level as UA’s own metal. Plus ANA is a great airline even in coach.

  20. January 18th, 2013 at 6:52 am

    JOR said,

    Changes in mileage programs like this are going to be very bad for business, lucky. Very bad indeed.

  21. January 18th, 2013 at 7:18 am

    NEPIC said,

    Stay tuned for the redemption changes…it won’t be pretty!

  22. January 18th, 2013 at 1:04 pm

    Chris B. said,

    From DL FAQ:

    “MQDs are the total of the SkyMiles member’s spend on Delta-marketed flights (flight numbers that include the “DL” airline code)…”

    So, does this mean only tickets bought through Delta OR does it mean a ticket bought from Alaska (for example) to fly on a DL aircraft would also count?

  23. January 18th, 2013 at 1:07 pm

    Chris B. said,

    Hey Lucky,

    Maybe this would be a good time to create a report on AS elite benefits usable on DL. (as well as Virgin and other partners) ;)

  24. January 18th, 2013 at 1:18 pm

    Chris B. said,

    One last thing :) , DL DOES have a true revenue based SkyMiles redemption option, as DL AMEX holders can use their miles to purchase tickets at a $0.01 value per mile. This essentially doubles the spending power of skymiles, since the customer can either book on price or straight redemption depending on what is available.

  25. January 18th, 2013 at 4:32 pm

    James said,

    Agreed that this really lower’s the value of delta being a part of the alliance. I wonder how delta’s partners are going to react now that on eo fthe centeral benefits of alliance membership is gone.

  26. January 18th, 2013 at 6:10 pm

    lucky said,

    @ Chris B. — If it has a Delta flight number it qualifies. If it’s an Alaska codeshare with an Alaska flight number for travel on Delta it wouldn’t qualify.

  27. January 18th, 2013 at 6:35 pm

    D said,

    Is it just me, or are SkyTeam and One World imploding as alliances? With the Qantas/Emirates/Qatar mess, now with “a founding member” of SkyTeam destroying all Middle East & Asia accrual…

  28. January 18th, 2013 at 6:42 pm

    lucky said,

    @ D — I totally agree. And I’m sure Star Alliance isn’t far behind either…

  29. January 18th, 2013 at 6:52 pm

    ffi said,

    Lucky
    in your earlier post you got the tables wrong
    Basically it is
    MQS or MQM
    AND
    MQD or Amex Spend

  30. January 18th, 2013 at 9:28 pm

    Andy said,

    I fully agree with Lucky that delta is horrible this time. It benefits a few people who fly and spend a lot on delta and deprives benefits from elite members like me who fly delta from time to time but not constantly.

    fortunately, i have always spent $25K each year on my amex skymile premium card and it has little impact on me. however, it further destroys my confidence in delta. whenever possible, i always choose AA miles rather than skymiles (i mean, when i choose to earn miles in hotel stays) because AA miles are more vaulable in term of redemption and avaiability.

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