Delta CEO admits going 'too far' in changes to SkyMiles program

Yahoo Finance , Akiko Fujita and Eyek Ntekim

Thu, Sep 28, 2023, 11:32 AM

AKIKO FUJITA: Delta Airlines Chief executive Ed Bastian saying the company went too far with the sweeping changes and will be announcing modifications in the next couple of weeks. This comes after Delta tied frequent flyer status to spending and limit or eliminating lounge access for credit card holders. Rachelle, I mean, this is one of those stories that you knew the day it was announced, it would just prompt outrage.

People take their miles seriously. And Delta, though, really just following in the footsteps of American Airlines, which has made that change, to say, look, it doesn't matter how many miles you travel, it's about how much you spend. Now, worth saying Ed Bastian hasn't said specifically what he's going to walk back out of those things he announced.

But there is, I think, a broader discussion to be had around this-- that airlines are increasingly moving towards building out an ecosystem. It's not just about profits on those routes and selling tickets. It is about building out an ecosystem where not only you book your flight, you do your hotels, you do your car rentals-- that's kind of what Delta is going for, and that's where the industry has been headed.

RACHELLE AKUFFO: I mean, it's true. But if you're going to have a loyalty program, people want to see their loyalty rewarded, not just their spending. I mean, you had a lot of people who had top tier status and that was their way of getting those first grade upgrades, cutting in line, and things like that-- and free checked bags, priority boarding. But what was interesting is just how much those qualifying miles, when you did have to spend, started to jump up.

So to get them the medallion diamond status, which is the highest, in 2022, that required 15,000 of these medallion qualifying miles. In 2023, 20,000. And then they propose that being 35,000 starting in 2024-- so basically making it even higher for people to be able to get into these lounges and enjoy these perks. So people were like, well, why should I have to sign up for, like, a card partnership with American Express as also part of that ecosystem? Why is my loyalty not being rewarded? But it's interesting-- we haven't heard the details on the changes, but, clearly, they're responding to the backlash.

AKIKO FUJITA: I will say, just on a personal note, I do get miles off of my card. So my credit cards-- I used to have a United card. I got miles off of that. Since then, I have switched over, so I have a Chase Sapphire card where every time I spend money, I accrue miles.

To me, that seems to be a better system so that you have a little more flexibility. Of course, my dad would argue that he's a 1K member at United. He wants every single mile logged, because he's been a loyal customer. So there's an even split, for sure. I don't know how you see it, Rachelle.

RACHELLE AKUFFO: I mean, I definitely-- it's definitely an incentive. When you're picking credit cards and things that you're going to do, seeing that you're going to get those perks for hotels and for flights, I mean, it edges out the competition here. But then if you have to have these super high thresholds even to enjoy the perks-- or if you have the card, and you show up to a lounge, and you're tired, and they're like, no, sorry-- we're going to need a bit more from you in order for you to come into the lounge.

I mean, it feels like a slap in the face. It's hard enough that people are pinching their pennies at the moment. Airfare, even though it's starting to come down a little bit, it's still very high. So then to then add that extra element of then having to suffer when it comes to your loyalty points, eh, it stings. It hurts in a special place.

AKIKO FUJITA: The lounge is a nice perk, I agree, if you get to the airport early enough, right? I mean, it feels like it's a more pleasant experience than just hanging out in front of the gate. But I do wonder, with the credit card, for example, being able to board early, I mean, how often is that line really long? Because everybody has the same credit card. At that point, that loyalty or whatever perk that you have feels like it doesn't have as much meaning, because you can sign up for it, not necessarily have to travel for it.

RACHELLE AKUFFO: And I think that was actually Delta's point. It's like that line in "The Incredibles"-- if everybody's special, nobody's special. So I think that's why-- that's part of the reason they tried to go for this. But yes, backfired somewhat. We'll see what changes they end up making.

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