Delta is changing the rules in their frequent
flier program. Of course they tell us that very few people will
suffer, and that it will provide fairer benefits to those who most deserve
But is this really an accurate
description of what is happening? And are they changing the program
rules simply to make it fairer for us? Oh, and would you like to buy
the Brooklyn Bridge at the same time? :)
The Evolution of Frequent Flier Programs
American Airlines released the first
ever frequent flier program, Aadvantage, in May 1981, offering it first to
a core group of 150,000 regular passengers that it managed to identify by
matching phone numbers in its computer reservation system records.
That 150,000 has subsequently grown to something over 40 million members
today, and their initial clumsy attempt at finding and tracking frequent
fliers has now become incredibly sophisticated.
Literally within mere days of American's
program launch, United followed with its Mileage Plus program (was this a
'cosmic coincidence' or did American's plans leak, I wonder!). Later
that year, Delta and TWA introduced programs and the concept soon became a
necessary element in all airlines' marketing activities.
A few airlines were slow to embrace
Frequent Flier Programs, most notably Southwest. Eventually it too
found itself forced to create a program, because, as then CEO and Founder
Herb Kelleher said, 'We didn't want an FFP. But it came to my
attention that FFPs were siphoning business travel away from us. We
did it defensively, and I think if we had not done that we would have been
Not All Frequent Fliers are Equal
With all airlines offering frequent
flier programs, people would simply sign up for them all. This
negated the loyalty effect of the programs, and so the airlines quickly
responded with a clever twist. They offer additional benefits to
their 'best' customers. A 'best' customer is a customer that flies
very frequently with the airline each year.
Airline programs now typically have
three levels of increasingly 'elite' membership, with the first level of
enhanced benefits usually being offered to people that fly about 25,000
miles a year. Highest level benefits are typically offered to people
that fly 100,000 or more miles a year.
These extra benefits include such
bonuses as getting 150% or even 200% of flown miles credited to one's
account, discounts on membership of airline clubs, free official upgrades,
priority access to upgrades, 'waivers and favors' with airfare
restrictions, special checkin areas and priority boarding, and unofficial
'free' upgrades in addition to the official upgrades.
Offering these substantial extra
benefits worked brilliantly for the carriers - they motivated fliers to
concentrate their flying on only one airline so as to build up their
elite status, and, once having secured their elite status, they'd of
course continue to preferentially fly only on that carrier both to
re-qualify for an elite level the next year and to enjoy all the benefits
of their elite status.
At last the airlines had programs that
truly did 'capture' clients and gave them virtual locks on large chunks of
their most valuable customers. The dual strangleholds of elite level
qualifications and 'fortress hubs' made it extremely difficult for new
carriers to take frequent fliers away from the major airlines.
Frequent Flier Programs Become Profit
Initially, frequent flier programs cost
the airlines money to operate. Managing their programs were
expensive; however the returns on this promotional investment were
universally believed to make the costs very worthwhile.
The FFPs continued to grow, adding more
and more partners, and giving their members increasing opportunities to
earn miles from other types of travel related activities - eg car rentals
and hotel stays. The FFPs evolved even further so that members could
earn still more miles by using an affinity credit card, and then they
continued to grow so that members could also earn miles in completely
non-travel related ways, such as by signing up for long distance service,
buying flowers, or subscribing to magazines. At the same time,
members had increasing opportunities to redeem their miles for non-travel
The final extension of this concept was
marked when the airlines started to actually sell miles directly to their
members, saving them the need to actually fly at all. During the
evolution of the programs, the airlines realized that by selling miles
(typically for between 1-2.5 cents a mile) for ten or even perhaps one
hundred times what it costs them to redeem the miles, they were making
massive profits from these sales.
Most industry watchers now believe that
more frequent flier miles are awarded through non-flight activities than
through direct flying. The hugely profitable sale of these miles by
the airlines have made the programs major profit centers, in some cases
surpassing the profits the airlines make (or don't make!) from actual
Which brings us to the present day.
With a unique type of negative mentality, Delta decided that they need to
'punish' frequent fliers who don't buy ridiculously expensive tickets.
Of course, they express this concept differently - they say they want to
better reward 'their most valuable' frequent fliers.
And so Delta has changed the rules for
the 'Holy Grail' of frequent flier membership - the elite status levels.
A Delta frequent flier's miles no longer all count equally towards earning
For example, the most expensive fares cause each flown mile to count
for twice as many 'qualifying miles' as do other fares, and some
discounted fares count for only half as many as 'normal' while their
most discounted fares no longer earn any 'qualifying miles' at all.
Theoretically a person could fly tens of thousands of miles but now no
longer qualify for any type of elite status with Delta!
Are Delta saying they don't want the
business from people who sensibly buy the lowest airfares that Delta
American and United have not changed
their qualification rules. Continental and US Airways offer an extra
bonus for full fare travel, but - unlike Delta - do not have a penalty for
discounted ticket travel.
On the face of it, it is perhaps fair
that Delta progressively reward its higher paying customers. But at
the same time it is rewarding the highest fair paying passengers, it is
now penalizing its prudent customers who choose to buy the lowest
possible, rather than the highest possible fares. No-one can object
to extra bonuses being selectively offered, but when penalties are
introduced, that is a totally different ballgame, and many of Delta's
frequent fliers are crying 'foul' over this.
And there is also a very subtle but
massive issue that now arises that Delta probably hopes we'll overlook.
The Awful Temptation
In the past, a frequent flier would
choose to fly on one preferred carrier whenever reasonably possible, but
would still responsibly choose to purchase the lowest possible fares (on
his preferred carrier) for his flights.
The ugly reality that all frequent
fliers choose to ignore is that by selectively flying on a preferred
airline, at that airline's best fare, rather than by flying on any airline
at all, with the lowest fare in the marketplace, there were definitely
some cost penalties associated with this strategy. To date, everyone
seemed willing to overlook this and to pretend that these extra costs were
very minimal, and in any case the travelers felt that they were fairly
compensated by the extra care that they would get on their elite-status
But now Delta is upping the ante.
They're telling their hopefully elite frequent fliers that they not only
have to fly lots of flights, but that they also have to buy the more
expensive tickets on those many flights as well in order to retain their
elite status. What Delta is trying to do now is to increase the
yield - the average fare paid by their frequent fliers.
We have all of us, as frequent fliers,
at some time or another in our travels found ourselves pretending that
there wasn't a cheaper fare on a cheaper airline, and we have all of us,
as frequent fliers, occasionally chosen to make an extra flight or two
that perhaps weren't essential, but which would help us then to get over
the next elite level qualification point for the following year.
But now Delta is hoping we'll not only
continue to make these types of morally dubious decisions, but that we'll
also choose to pay over the odds for many of the tickets we buy.
Resist the Temptation!
If you are presently a Delta elite level
frequent flier, switch your loyalty to any other carrier that offers
convenient and suitable services. Almost certainly, if you contact
the new carrier's frequent flier service desk and explain that you're a
current Delta Medallion member, and you're willing to switch all your
business to this other carrier, they'll immediately give you a matching
elite level in their program based on your Delta status. You'll
probably have to show a statement to prove this, of course.
This means you won't lose any benefits
or privileges by switching.
Then - after having switched, please do
one more thing. Cut up your Delta Medallion card, and mail it back
to Delta and tell them why you're no longer going to be an active member.
And if you're responsible for managing
corporate travel policies, make Delta a non-preferred carrier.
Remove the Delta temptation from your staff and use airlines with fairer
elite qualification policies.
Such actions have influenced airlines to
change their policies before and will do so again if there is a sufficient
groundswell of negative response.
Don't let Delta's new rules become the
Tell David your opinion.
Send him an Email -
written 14 Feb 2003, last update
15 Oct 2013
Copyright 2003 by David M
You may freely reproduce
or distribute this article for noncommercial purposes as long as you give credit to me as original writer.