Delta confirms semi-revenue based SkyMiles program starting in 2014!

In what is no doubt the most shocking news since Lance Armstrong admitted to doping, Delta has finally announced a long rumored revenue based frequent flyer program. While I feared a revenue based frequent flyer program would be the worst thing to happen to the industry in a while, it actually doesn’t look that bad.

Starting January 1, 2014, Delta will start counting Medallion Qualifying Dollars MQDs), which will count towards the 2015 Medallion program. So kudos to Delta for the advance notice at least.

The good news is that it’s not nearly as bad as it could have been. Instead of going strictly revenue based they’ll still require you to earn status the old fashioned way (on miles or segments), and add a new requirement to spend what translates to an average of 10 cents per mile on status. That’s not unreasonable nowadays given how high airfare is, and I have to assume a vast majority of elites are already spending that amount.

That requirement can be waived by spending at least $25,000 per year on a Delta SkyMiles American Express credit card, which seems like a reasonable alternative.

Assuming they don’t devalue their award chart by switching to a revenue based redemption chart, I don’t think this is all that bad.

Comments

  1. MQDs don’t include government taxes/fees, so it’s more like 12cpm. I rarely pay fares that high.

    That said, I easily put $25K on Amex last year for some MQMs, so I guess I don’t have anything to worry about.

  2. If i was a Delta elite, which i am not, it would go down a lot easier if they unrestricted their systemwide upgrades, which are basically useless, and added elite upgrades to the Hawaii market to/from the mainland.

  3. I’m not much of a mileage runner for status myself, but I see a lot of disappointment in the faces of those who do earn status primarily in this fashion. A big hit to those in this boat!

  4. This is terrible news, and I can’t believe you aren’t being more critical. Not to be too melodramatic, but this is the death knell of pure mileage running. We may have expected this, but that doesn’t mean it isn’t bad!

  5. “In what is no doubt the most shocking news since Lance Armstrong admitted to doping”

    Clearly the Manti Te’o news hasn’t reached Singapore yet…

  6. $25k on one credit card is a lot. Especially if you’re receiving Skymiles as part of that spend. Skymiles aren’t exactly the most useful frequent flyer currency when it comes to redemption capability (non-existent low level reward, difficult to redeem for international premium travel). For the points conscious among us, that kind of spend is difficult to justify on an AMEX delta card.

  7. Lucky, do you know how this will affect Delta’s international customers. In particular I was wondering about Delta’s Canadian customers who can not get a Delta Amex, but can get a Delta MasterCard®. With the MasterCard® also earn MQM’s?

  8. The chart says MQM’s AND MQD’s. How do MQM’s awarded from the Reserve Card work into this? Is it possible to have 75,000 MQM’s (30,000 from my Reserve) and not have hit the MQD threshold and therefore not be a PM?

  9. @BrewerSEA: I feel for ya, but I suspect DL has figured out that low-yield customers like you are crowding the high-yield customers and want to thin the herd or segment it more based on actual value to the company. And although mileage runners and gamers represent real revenue, I suspect DL is prepared to see you defect to UA or AA to keep big spenders happy, with less competition for upgrades, etc.

  10. @Michael: If you’re getting MQMs from the Reserve card, it means you’ve met a $30K spend threshold, your MQD threshold is waived, and the world in 2014 is no different than 2013. That doesn’t mean they won’t change the way DL/AX cards award MQM, but that’s a different issue.

  11. Sweet, I’m loving the 200% MQM for those paid F AS trips using old BofA BOGO$99s (I have three left)! You can rack up 21,576 MQMs FLL-SEA-HNL-SEA-FLL with stopovers at SEA in both directions! I see lots of weekends in FLL and HNL in my future…

  12. I have been a DL DM (all BIS biz travel with no MRs or CC miles) the last 2 years and have enough MQM’s rolled over to be a GM next year. I spent way over those MQD thresholds each year and always liked DL service with in US. However I just spent a good portion of 3 days to find one international J ticket (could only find US segments in Y) at low level with great flexibility on the dates of travel. I finally decided to jump ship to UA/AA and quickly burn the remaining 1M miles before my status expires in couple of years. Even without any status I have found using UA miles lot easier. Don’t know much about using AA miles though but I am sure it would be as painful as using DL miles.

  13. You are right. This change is not all that bad. But it seems one-sided to me–no real improvment for the best customers.

    This would be more fair if they coupled it with one or both of two changes: Genuine system-wide-upgrades like AA, redeemable from any fare class, and allowing mileage redemptions at low-levels for Diamonds.

  14. No upside for Diamonds, but as I’m already spending $50,000 a year on the Delta AmEx, I’m not even worried about the MQD requirement. Nobody has pointed out that M class fares are losing the 50% MQM bonus. While you still get the extra 50% on miles, you don’t get the MQM bonus any more. I probably make 3,000 or so MQMs a year on that, mostly last-minute tickets, so it’s gonna hurt a little bit.

  15. @Bill: Yes, the loss of bonus MQMs on M fares is one of the travesties here. That DL fliers are forced to pay double or more than other FFPs for upgradable international flights was bad for DL FFs, but made a little more bearable by giving us some extra MQMs for our money. Now the international upgrade scene at DL is worst-in-class: high priced upgradable tix with the same MQMs as L/U/T (cheap) fares. Unless M-fares are lowered by 50% or more (currently ~$4k for US to Asia or even Europe) DL just slapped us in the face.

  16. Next week when AA announces that they are copying DL’s new requirements, we’ll see how ‘reasonable’ Lucky thinks this is…..

  17. It doesn’t look all that bad… yet.

    Another layer to qualify for elite status, another element thrown into the program to give them leverage to play around with. Just need to see what will qualify as an MQD, whether they’ll start giving them away, whether there are bonuses…

    *waits, worriedly and pessimistically about the rest of the changes*

  18. Of course it’s not awful yet – but once they set spend levels, they’re only going to go higher over time.

  19. Yay! Finally, an airline is taking proactive steps to weed out bottoms feeders and mileage runners.

    Hopefully upgrades and other perks will now go to the flyers that the frequent flyer reward system was designed to reward.

  20. Delta really does seem to be pushing themselves to be THE WORST FF program in the US. They’re succeeding.

  21. I guess this news would affect mainly people with status…myself, a leisure traveler, don’t care about status, as I don’t have any status. I do care if Delta will charge me 200K miles for a R/T ticket to Europe, or something like that.

  22. Unless you fly on the company dime a lot I never see a real interest in Elite Status. Too many ways to earn miles and burn them on Biz or FC. Then you dont have to blow a gasket over their watering down of the mileage program.

  23. I agree with Lucky that this change isn’t too bad. For me Delta is the easiest program to achieve and maintain elite status given rollover MQM and the ability to earn up to 30K MQM per year from credit card spend. These are 2 huge benefits that no other USA program comes close to matching. So a spend requirement isn’t unreasonable, especially since the same credit card spend eliminates it.

    That’s not to say there aren’t problems with Delta’a FF program, including big ones with upgrade certs and award availability. But the earning end is still ok.

  24. If you were spending $5K a year to get gold on Delta, you simply didn’t know how to shop or your boss was paying the bills. And who in the real world charges $50K a year on credit cards who isn’ an idiot with a problem, some kind of hustler, or again on the expense account/some other person’s money. Of course this plan is terrible news and the end of true mileage running. However, it makes decisions much easier, which has a value of its own. Delta’s miles are already of little value, and now status is not worth the cost of chasing, so I can go back to the old fashioned game of shopping based on price and never buying an extra “mileage run” ticket. If time saved is money, I just made a lot of money by being kicked out of the Skyteam mileage run hobby. 🙂 So I guess it’s all good.

  25. The big problem I see is with rollover miles. Last year, I rolled over about 21,000 miles. Just a couple trips took me to Silver. That wouldn’t happen with the new requirements because even though I would have enough miles for the status, I would not hit the spending threshold.

  26. I think your post title is wrong… it’s not a revenue-based “SkyMiles program” which makes it sound like the entire earn/burn/elite program us based (solely) on cost/cash. It would be more accurate to say they have “introduced a spend component to elite qualification”.

    Though I suspect this is only the beginning of an eventual change to RDM earn and burn.

    WIll be interesting to see how long it takes the others to follow suit with this though.

  27. You bloggers need to study the new partner MQM earnings charts. Delta has GUTTED the earnings from most economy fares on partners.

    First we suffered through worst-in-the-industry award redemption rates and availability, then the 72 hour rule, and now this.

    I’m a Diamond, and I AM LEAVING! You hear me, Delta? I’m off, and will encourage others in my company to leave you also. Hopefully the market will force you to reconsider–or just go bankrupt…again, your pensions included.

  28. On second thought, we couldn’t they just change the program to give 1,000,000 miles for each flight, but disallow award redemptions entirely? 🙂

    “Hey, I’ve got a trillion miles with Delta! Can’t spend ’em, BUT I’VE GOT ‘EM!”

  29. I just continue to be amazed as I look at the partner charts. Delta has become an Asian airline. Just wait until LUT fares only earn 25% MQMs.

  30. @ BrewerSEA — I’m not more critical because we’ve seen this coming for a long time. And does anyone really *purely* mileage run on Delta, and if so, what’s wrong with them? :p

  31. @ Greg — Apparently the MQD requirement doesn’t apply to international customers, so it looks like you won’t have to put any spend on a card.

  32. @ John — Totally agree, zero upside for customers here. But I’m just saying that *if* they introduced a revenue based program, this is about as mild as it gets.

  33. @Lucky,
    There’s quite a few I can name that actually pure mileage run on DL. In fact there’s a guy on FT that posts from up near BOS that brags about being double diamond due to straight mileage running.

    The $25k requirement on the card isn’t that big of a deal as it sounds so I think it’ll be a non-event.

    The problem is much like a government tax, once they implement it, it’s hard to see it go away so I suspect the requirements will go up and the spend on the CC requirements will go up as well.

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