It’s been nearly two months since Delta announced some of the greatest changes to its SkyMiles loyalty rewards program since its 1981 launch. And yet, I’m still left with an uncertain feeling. Will it be an airline loyalty program triumph or is Delta’s decision in for a bumpy ride?
If you’re not familiar with the details, here’s some background: in January 2013, Delta announced that frequent fliers who are members of the carrier’s rewards program will have to spend a minimum amount of money in addition to the number of miles they fly in order to accumulate points. There are a number of ways to view Delta’s decision: the traveler’s perspective and the airline’s. And my view is that Delta’s move is more about preserving SkyMile’s biggest source of ancillary revenue – co-branded cards – than it is about traditional customer activation and loyalty.
The harsh reality is that Delta had little choice but to bring these types of qualification changes to its Medallion program. SkyMiles has one of the most bloated elite programs in the frequent flier industry, which has blurred the lines between a relatively small group of truly frequent travelers and an aggregate group of ancillary revenue generators through the co-brand credit card program. One could argue that Delta brought this on itself by allowing its own elite tier management to be influenced by its co-brand partner, American Express. The Amex Reserve Card awards 10,000 Medallion qualifying miles with an initial purchase, which is in line with the rest of the industry. But it doesn’t stop there. Travelers can earn an additional 30,000 Medallion qualification miles with a spend of $60,000 on the card – no other major airline with the membership size of SkyMiles even comes close to an award of that level.
Regardless of their size, it’s never a good thing to roll back privileges or benefits, especially under the guise of a rewards program. Delta has now added a fair amount of complexity to the program. Loyalty programs, irrespective of industry, should simplify members’ lives, not confuse or complicate them. Otherwise, members will conclude, rightly or wrongly, that the changes boil down to more hoops to jump through – and travelers already have enough of those. I fear the perception of Delta’s goal will be this: the airline is making it harder for fliers to achieve elite status, thus reducing costs –and the popularity – of its SkyMiles program.
In doing so, however, Delta may get much more than it bargained for. As a corporate culture perceived to be taking away rewards rather than showering elite travelers with perks, its move may backfire as too many members exit the program and it becomes difficult to fill seats – any airline’s nightmare. There’s certainly a bevy of other airlines passengers can choose from. The same can be said for hotel chains, which earlier this week announced that they, too, are upping their loyalty point requirements.
The Bottom Line
Travelers will still achieve elite status. What’s the point, after all, of being elite if part of that status doesn’t include some measure of exclusivity? It wasn’t all that long ago that flying itself was an exclusive experience. The truth is ticket prices only cover a fraction of airlines’ total expenses, but the traveling public is generally unaware of this. Changes to the SkyMiles program are a pragmatic response to a variety of economic, industry and societal challenges. By alerting its members and travelers to the changes more than a year in advance speaks to an airline dedicated to the utmost in transparency and direct communication. That’s a lot more than I can say for many of our elected leaders – senatorial filibusters notwithstanding. But that’s a post for another time.
So, will Delta’s program changes herald an age of airline rewards triumph or turbulence? Before this story leaves the gate of public consciousness, I’m interested to hear your thoughts in the comments section below. Will Delta’s decision help or hurt their brand? How can they best argue their position and how do you suggest Delta handles SkyMiles members who are no longer elite travelers?