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If we check the old trusted internet way back machine we can see that only a few days ago Delta.com showed that you could, as someone purchasing a Delta domestic 1st class / business class ticket, get up to 3 bags at up to 70 lbs each. But look today:
That domestic perk has been reduced to only 2 bags at up to 70 lbs each. An in fact an update to travel agents plainly tells us:
Now you may think “big deal” but this IS a big deal for us all. Let me lay it out for you just why this does matter so much.
First, for those buying domestic 1st class for say their employees, they may buy 1st class just for the 3 bags free perk. It may be cheaper for them to simply buy the 1st class ticket and send the person on the job. Now, maybe other choices must be made. Also notice that Delta and Skyteam elites still get the domestic 3rd bag free perk when booking and flying in 1st class.
But now to why this is, in fact, a big deal. I listened to the Delta Q215 earnings call and will share some of the bits that stood out to me, but one thing no one can miss is just how much money Delta is making from “ancillary revenue” that is, things like bag fees. How much? 3.2 Billion in 2014.
Again, so what. We know airlines are making a fortune on fees. But here is the key point to me and what I have talked about over and over again. There is only so much Delta can do to keep earning more and more money year after year. They have already segmented two classes of seats into five with OFCMB seating. In years past they cut the Silver Medallion free bag allowance from 2 down to 1 unless they have the co-branded Delta AMEX card (Gold, Platinum or Reserve personal or the Delta business cards all work for this). But where do they go from here? And that, my dear friends, is the rub of the matter.
Delta must now, as we see with this bag fee change, cut existing perks to make more and more money. Delta has over the past year simply decimated the SkyMiles program to make more money. Now they are turning their attention to other areas they can cut. Expect much more of this going forward. Expect and be prepared that things that were fee free will soon either be devalued as well or have some restriction or fee tacked on.
Fees really are the golden goose for Delta and the airlines. They can, much like with SkyMiles, do anything they want and it is a rather simple equation to simply see how much cutting a perk or adding a fee will add to the company bottom line for the year. Get ready for more of the same!- René
(HT to reader Aaron.)
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As far as I can see DM (for the time being) traveling in F or D1 still get three. They may not want customers cherry picking First Class fares between airlines. They want you to fly Delta exclusively to become Medallion to get more bags checked free.
@Don in ATL – As noted in posts, Delta & Skyteam elites still get 3.
It’s interesting that they make such an amount from ancillaries. Much has been said about airline profitability but I wonder if it’s a chimaera as it seems primarily due to decreased fuel costs.
Will they continue to be profitable once aviation kerosine prices inevitably rise again?
I’m (temporarily) a silver medallion, who pays for his first class seat as I don’t have enough points for a freebie seat, I really wonder what all the fuss is about – 2 large bags free, priority boarding, hopefully first off, it seems that some expect miracles – “I’m a Skymiles elite and I expect a free upgrade to business or first every time I fly”.
Good luck with that, maybe it’s unreasonable to expect such when a full fare business or first class passenger (me perhaps) is willing to pay for that seat.
My needs are simple – a smile at the sidewalk or terminal check in, priority security clearance and a smile at the airport lounge, gate and upon boarding. I’ve found Delta folks to be friendly and obliging, and I pass out $5 Starbucks coffee cards to flight crews, lounge staff and others providing a smile when attending to you.
Folks may find that it’s more rewarding to give than to complain when they don’t get their perceived entitlement.
I look forward to flying Delta in November/December but can’t imagine achieving the extra points required to maintain my status, and can’t “buy” those points via some credit card or hotel reward card scheme.
Rene, as you noted, it is not like these skymiles devaluations and fee increases are because delta is losing money or just scraping by. If that was the case, I would not be so annoyed. Delta’s 2Q15 net income was up 85% over 2Q14, and 2Q15 EPS increased by 95% over 2Q14. Operating margins are around 20%. Delta stands to gain further from lower fuel prices when Iranian oil hits the market.
A business ought to (not is entitled to) earn a reasonable rate of return for its shareholders. But a business should also strike a reasonable balance between the interests of all of its stakeholders — employees, shareholders, customers and others. Delta’s never ending series of devaluations and fee increases at a time of record profits smacks of greed. Management is determined to meet or exceed Wall Street’s expectations and cash in on their multi-million dollar bonuses no matter what they must do to customers. We are all on delta’s hit list no matter our ff status, past loyalty, or how much we (or our employers) spend with delta.
Delta is in the driver’s seat right now because many have no problem being the well that delta turns to whenever it decides to cut costs or raise revenues, and those who are unhappy have limited alternatives.
Any who said airline deregulation was a good thing?
AS a DM this year, and a PM next year, this is fine by me, at elast until they decide to mess with us again and take away the Medallion baggage allowances.