Tuesday, June 4, 2013

Delta's double down devaluation

Earlier this year, Delta announced a sweeping overhaul for their frequent flyer program, switching over to a revenue-based system.  Before, elite status was based on elite-qualifying miles (EQMs) and segments, which is in line with all the other legacy carriers.  But starting next year, flyers will need to meet thresholds for both miles/segments and revenue in order to qualify for elite status.  In part, this is Delta's way of weeding out their bottom feeders and least valuable elite "moochers".

Yesterday, in yet another devaluation, Delta announced that EQMs will no longer be earned with one their very own and most important Skyteam alliance partners: Korean Airlines.  This is the first time any alliance member has refused to acknowledge EQMs period from an alliance partner.  Furthermore, reduced EQMs will also be accrued from a number of other Skyteam partners:
  • Aeroflot
  • Air Europa
  • Czech
  • Kenya Airways
  • Middle East Airlines
  • Saudia
  • Tarom
  • Aerolineas Argentinas
  • China Airlines
  • China Eastern
  • China Southern
  • Vietnam Airlines
  • Xiamen Airlines
So that leaves Aeromexico, Air France, Alaska, Alitalia, GOL, KLM, and Virgin Australia as the last true partners standing that will dish out full EQMs with Delta.  Evidently, requiring revenue exclusively on Delta flights wasn't enough to weed out the bottom feeders.  Everyone has to go, including those flying with "less valuable" carriers.  Delta's justification:
We’d like you to understand that each airline determines its level of participation in partnership with us, so there are varying levels of customer rewards when flying with our partners.

As if Delta's program was already not one of the worst in the market.  In terms of the U.S. legacy carriers, Delta miles are by far the least valuable with the worst flexibility and most stringent rules.  But as airlines merge and fortress hubs abound, is Delta just adopting?  Perhaps this is the future of all frequent flyer programs, which are a scheme to begin with as 40% of members never bother to redeem their miles.  After their merger with Continental last year, United stripped their bottom and mid-tier elites from their most valuable benefits and made upgrades more difficult for top-tier elites.  Will American Airlines also follow suit after their merger with US Airways later this year?  Time will tell, but as history has always shown, yes.

1 comment:

  1. "Time will tell, but as history has always shown, yes." Way to completely contradict yourself in a single sentence.

    You apparently forget that CO tried to institute a revenue-based program several years ago but none of the majors followed suit. This time will be different. This isn't DL adopting, it's actually ahead of the curve.

    I don't blame the Skyteam fiasco on DL - it's perfectly rational for DL to limit EQMs on partners that fly routes in direct competition with theirs - I blame it on Skyteam for having loose partner requirements to begin with. Moves like this defeat the purpose of having an alliance.