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Let me start with a disclaimer. I do not own ANY airline stock nor do I plan to buy any for the foreseeable future. I am not that brave.
Having said that, if the widely discussed rumors about the changes to the American Airlines AAdvantage program are true, then it may be time to buy some DAL stock. Delta must be dancing in the aisles just salivating about what seems to be on the way. Here is why I say this.
AAdvantage is/was the one BIG advantage AA has/had over Delta.
We all know operational reliability, on-board experience and in just about every other measure that matters Delta wins. Customer service is better and innovation like Virtual Assist could be an elite game changer in the industry like no other. Delta takes care of frequent flyers in every way possible – other than SkyMiles.
But here is the thing, Delta can get away with a horrid frequent flyer program due to the fact that Delta flyers have, for a long time, gotten used to the award program being really bad. The fact that over the past year or two they have driven it into the toilet has not really been a shocker. Plus, as long as everything else is near perfect most loyal flyers just roll with punches. If elites are happy, with upgrades and great service, that is what matters most.
American can say none of this. They have had an excellent frequent flyer program for many years. When things go wrong, and flights are canceled or service is not what is expected, they could always fall back on the fact that they were rewarding a flyer for loyalty despite any issue that might happen. Flyers are used to good treatment as elites and good value and redemption from the AA award program.
But now if they cut the perks, like 8 Global Upgrades to 4 (like Delta has) and go revenue based in earning points (like Delta has) then they have to compete on operational performance etc., they are in big trouble. Cloning Delta’s frequent flyer program like United has done, and then running a sub-par airline, has clearly not worked out very well.
Then there are partners. Delta can and does treating partners, even founding Skyteam partners like Korean, like “red headed step children”. They can even treat semi-partners Alaska like dirt and get away with it. Delta does not care what anyone thinks about this and, at this point, flyers don’t really care either. It seems folks are used to Delta playing the big mean bully. But can American get away with this kind of nasty relationship with it’s partners and not upset flyers if their frequent flyer program has become sub-par (or worse)?
I think you can see where I am going with all of this. Delta, being on top operationally first, can make radical and disrespectful frequent flyer changes and could and can get away with them (at least to a point). If American does not wait until they are in the same position then the results may not be equally received by their loyal flyers. I can see big dollar HVC’s now jumping ship for Delta rather than the other way around.
These are truly interesting times in the travel space. Delta themselves may be about to announce more radical changes very soon (see tomorrow’s post). If American steps in line with Delta’s frequent flyer program changes it may embolden Delta for even more drastic changes in the future. Plus, with only 3 big airlines to choose from, just maybe all of them can do anything they want and it will not make any difference. Time will tell. – René
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Lemme guess:huge increases to MQM requirements and killing off rollovers?
It really is a race to the bottom. USAir, rather American, management has once again demonstrated it is better at ruining an airline than running one.
Great. Just when I thought there was a glimmer of hope by doing a challenge to AA. I hope Geoff above is not correct.
Should we max out MQMs if possible before year end?
Stick to complaining about IFE or other trivial things. airlines are to volatile
@rene are their any formal studies showing loss of revenue passengers based on changes in FF programs? I would love to believe there is a correlation on their revenue line once they begin to downgrade programs. I know I have changed habits this year and wont be Diamond again due to transitioning my business to a competitor domestically.
I bet DL/UA offer status matches to AA ExPlats on Oct of 2016 once Revenue kicks in.
AA is nearly as bad as UA is operationally and there service is awful lately, especially if you get a US AIr Crew. I had a flight delayed 5 hours last week, ExecPlat desk was worthless, overheard countless people in the lounge saying, so you’re not going to help me.
This is the new AA, they are going to lose ALL the people they brought over.
What are these airlines going to do when the economy takes a crap again in a few years and they have no programme to compete with?
Delta is going to grab a lot of people back, so will UA.
I continue to believe that Delta is leading the charge to eliminate the FF program not only at DL but at all the carriers. It is a huge liability that the carriers do not need when the black ink dries up, which it will at some point.
@Rick Christman You think that DL is moving to kill SkyMiles altogether? They do make money off these programs, with the credit card sign-ups and dining programs at the very least. And when the black ink dries up, they will be thirsty for customers. FF programs will be a primary factor in winning customers when this happens, the opposite of a liability.
@rick Christman, also unlikely they can get rid of the FF program anytime soon given that they just resigned with Amex