At dominant airline, only 5 percent matter

In the airline industry, unless you’re a fat cat, you don’t matter much.

Example: Delta has announced changes to its frequent flyer miles designed to keep “basic flyers” — the people who fly on cheap tickets — in steerage.

There’s a good reason for the airline’s indifference to the little people. One quarter of Delta’s revenue comes from just 5 percent of flyers, according to BusinessWeek.

So Delta is raising the amount of money a person has to spend to qualify for upgrades under its frequent flyer program.

To become a basic elite member, Delta customers will need to spend at least $3,000 in 2015 and fly either 25,000 miles or 30 qualifying flight segments. Reaching top-tier “diamond” status will require paying at least $15,000 in air fare and traveling 125,000 miles.

“Let’s face it. When you spend a lot of time and money with us, you should enjoy our top-of-the-line benefits,” Delta said in an e-mail to the program’s “medallion” members. The changes don’t affect those who reach elite status by spending $25,000 or more per year on a Delta-branded American Express (AXP) card.

But the part of the change that has some customers upset is that people flying on Delta’s cheapest tickets will not longer be eligible for any upgrade, no matter how many frequent flyer miles they’ve got.

Tim Winship, who blogs at FrequentFlyer.com calls the change “mean spirited.”

The PointsGuy website says it’s done with Delta.

This announcement is on the heels of a long list of moves that, in my opinion, are not frequent flyer friendly. Delta claims this move is intended to add “exclusivity”, but clearly if they wanted that, they’d get rid of the spending waiver on the Delta Amex cards.

These moves (especially limiting Membership Rewards transfers to 250,000 per year) are clearly being made to increase the number of Delta American Express cardholders.

That’s fine, but let’s call it like it is- this means it’ll be harder to qualify for status, and frankly I don’t see any additional perks/benefits that will make it worth jumping through these extra hoops.

Delta is free to do as they wish, and so are consumers. I have to say I’m happy I dumped Delta last year for American. Clearly changes are coming to the American/US Airways program, especially as they move to combine frequent flyer programs in early 2015.

Until then, I’d recommend giving Delta feedback on these recent changes via Facebook and Twitter, and taking your business elsewhere if you feel like there’s another program that better rewards you for your loyalty.

Still to be determined, Hack My Trip says, is the impact on the Delta Skymiles card from American Express, which requires customers to pay an annual fee to accumulate miles that are worth less and less.

According to my Airline Elite Status Comparison Table for 2014, I argued that the best tradeoff between benefits and expense for Delta SkyMiles is in the Platinum and Diamond tiers.

It’s simply too easy to replicate the benefits of Silver and Gold with a credit card. Now that the total cost of flights required to earn status is going up, it’s possible that Platinum is no longer justifiable, either. But there’s a long tail of people who are spending $15,000 or far, far more.

Fortunately for the other 99% of us, you can get a MQD waiver by spending $25,000 on a Delta co-branded credit card. Some credit cards also earn elite qualifying miles. The takeaway message is that fewer people will be earning status, and of those who do, more will be earning it without actual travel.

But maybe the credit card waiver won’t be carried over to next year. I’m also interested to learn if United will raise its requirements. I have a feeling their shift has been less successful.

  • Gary F

    Airline industry has created a big mess. By charging for bags, everyone now tries to carry on luggage, making it a free for all for overhead space and lots of screwing around.

    But part of its our fault, internet has us shopping them down to the penny, and that’s what you get when you base your decision on price.

    Lowest price, best quality, best service, you cant have one of the three. That goes for any industry.

    Flew to Chicago last weekend. First the jump starter wasnt working, so they had to get another one, 1/2 hour delay, then, we sat waiting to take off because of air traffic control tower thing in Chicago. On the way back, pilot that was flying our airplane hadn’t got in yet, his incoming flight was delayed.

    Next time I drive to Chicago, Wisconsin is a beautiful drive in October, and you can buy fireworks and Spotted Cow.

    • Jack Ungerleider

      If when you leave and when you get there are less important you could try Amtrak. The route it takes across Central Wisconsin is lovely this time of year.

      The problem is that you have to be up for random departure times. The last couple of days haven’t been bad according to the status map site. On-time today, 15 minutes late yesterday. But the train due in tomorrow morning is already an hour and half behind in western Montana. That could easily mushroom over the rest of the day to being several hours late.

      • Gary F

        Time is money. Amtrak doesn’t cut it in the business world.

        Flying to Chicago is becoming less and less worth it.

  • kevinfromminneapolis

    It’s all about the margins, baby.

  • wjc

    Airline flight = bus ride in the sky. Stop expecting more, and everything is OK.