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Delta's frequent flier plan is overdue for the changes announced last week, columnist Lee Schafer says.

Ron Antonelli, Bloomberg

Schafer: Rewards plan at Delta never made much sense

  • Article by: LEE SCHAFER
  • Star Tribune
  • March 5, 2014 - 8:57 AM

It’s about time that Delta Air Lines established a rational frequent-flier program.

It took three years of focus group discussions and planning, but Delta finally announced that its SkyMiles program will operate under the principles of business common sense.

That is, rewards on Delta beginning in January will be determined by how much a customer spends on Delta airfares, not how far he or she flies on a Delta flight.

This kind of change is so overdue that Tim Winship, publisher of FrequentFlier.com, said “the question is not why Delta is doing this. The question is why it has taken Delta so long to do this.”

Big U.S. airlines created programs like SkyMiles more than 30 years ago to reward customers for their revenue contribution and to make sure their best customers knew they were appreciated and would remain loyal.

“It just so happens that in the early ’80s, the airlines did not have the technical wherewithal to accurately capture and record the airfare [spending] of their customers,” Winship said. “Miles were used as a proxy for revenue. So 30 years later Delta is realizing what has always been the goal of these loyalty programs.”

Winship noted that the rest of the travel industry has always awarded points this way. The rest of the business world also runs loyalty programs based on how much customers spend, not the size of the product they buy.

Could anyone really argue that it makes economic sense for Best Buy to let customers earn more loyalty-program points toward future purchases by buying a $449, nearly obsolete RCA TV that weighs 44 pounds than a new Samsung model that costs $899 but weighs only 42 pounds?

Atlanta-based Delta cannot deny that the changes will likely benefit customers who spend a lot on the most expensive trips, such as business class trips abroad, and be less generous to the infrequent, price-sensitive traveler.

On the other hand, Delta spokesman Paul Skrbec explained that these changes are not intended to be an airline version of treating the have-nots worse than the haves, what he called “back of the plane” vs. “front of the plane,” where first-class and business class passengers sit.

He gave as an example the case of two passengers on a domestic flight, seated in the same row.

The passenger in seat 13D is on her way to a family wedding, and scored the ticket online weeks in advance for $200. The passenger in seat 13C is a business traveler who was ordered to a client meeting on short notice, when the best price available was $750.

The business traveler spent almost four times what the leisure traveler did for the same seat. But the SkyMiles program today rewards each of them the same.

As Skrbec put it, “it’s becoming more and more difficult to justify to the person in 13C why they are not getting something more for their experience.”

There was grumbling, of course. Brian Kelly, a travel loyalty program blogger known as the Points Guy, said the reaction was “overwhelmingly negative” to the changes Delta announced.

Skrbec said he would characterize reaction as “mixed.”

In any case, there’s not much that regular Delta fliers can do to protest the change. Winship said he expects the other two big “legacy” carriers, American and United Continental, to adopt a similar structure for their frequent-flier programs.

So in addition to sitting in the back of the plane next to Jed Clampett, with luggage stashed where feet should go and a can of overpriced Pringles for lunch, fans of cheap tickets will find it harder to fly enough to get a free ticket. That’s assuming the redemption of points for airfare stays about the same.

Here’s an example: From MSP to Los Angeles International, the travel website Kayak found a round-trip fare for $278 on Delta for travel in May. Under the current system, that trip would generate 3,072 miles. Next year it will generate 1,390 miles.

That means only the road warriors who pay top dollar really generate the miles.

Business travelers can’t be utterly insensitive to price, of course. Corporate policy usually demands the cheapest convenient fare, but on very short notice, convenient might be the flight that gets to Los Angeles in time for the meeting. That would favor a carrier with several nonstop flights a day — like Delta.

That Twin Cities to Los Angeles route on Kayak’s site came up with the best Delta round-trip fare of $1,155 on short notice this week, for a two-day business trip. Buy that ticket, and next year the Gold Medallion traveler will get 9,240 miles, compared with the current 6,144.

Winship said he expects Delta’s plan to work as intended, with more rewards going to Delta’s best and most profitable customers and with those customers making sure they use Delta whenever they can for business and leisure travel.

For the rest of Delta’s customers, the infrequent and value-oriented travelers, Winship suggests another common-sense approach: Stop worrying about miles. Buy the cheapest ticket that gets you where you want to go.

 

lee.schafer@startribune.com • 612-673-4302

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