There is much to laugh about when it comes to my life as a blogger. I never ever invest in airline stocks including DAL, that is Delta Air Lines, but I have spent years and years listening to DAL earnings calls but not for investor information. No, I listen to try to glean nuggets that will impact us as Delta frequent flyers.
Let me start with the fact that most of these calls are boring. They are so boring that one company analyst stated during the call that he almost fell asleep! That said, both analysts and media folks during the Q&A do all they can to get anything beyond the prepared remarks by the VIPs from Delta.
Did they get anything? Not really – but I think I did just listening and reviewing the PDF provided to us by Delta.
Are you wondering what many asked about and got no information? The two big ones were is Delta going to buy Boeing 737MAX jets as well as more Airbus A220s (the latter beyond what has already been agreed upon). The funny part about the A220s is that this blog was the first to break the rumor that the A220 (then the CS100) was soon to be purchased by Delta. Let’s move on.
Delta has a problem and it is a big one we all know about:
- Too many folks have club access.
Before someone says something in the comments – I agree that the blog is “part of the problem” that is offering Amex cards to access to Delta Sky Clubs. But do keep in mind reading the blog is free and must be supported to exist.
During the call Delta Air Lines President, Mr. Ham Sandwich himself, told us that 1 out of 4 new Delta Amex cards are either Platinum or Reserve high end cards with the latter giving you free access to Delta Sky Clubs when flying Delta.
Do you see the problem?
If you again look at the slide from Delta above, and according to what Delta folks said on the call, Delta expects to add a BUNCH more Delta Amex card holders to their portfolio and if this follows the current trend then some 25% of them will be those who will add to the massive overcrowding situation in the Sky Clubs.
Delta has tried the ridiculous limitation of three hours before flight that does not work as Centurion clubs have this policy and their lounges are still packed beyond belief.
The solution to the problem is not simple. Like anything else when there is high demand the solution is supply of the product. Clearly regarding Skyculbs there is no quick way to build more clubs overnight to fix what is as well as what is to come (per Delta with new card acquisitions).
So we should expect more pain.
With all the above we know something has to give and we are approaching the fall when Delta tends to drop nasty news on us. What do I expect to happen?
We are now into the guessing part of this post but I fully expect to see the end of non-Delta Amex Platinum cards allowing access to Sky Clubs – OR – maybe limiting how many visits a year you would get as a card holder. Either that or requiring massive spend (say $50,000) per year to include Sky Club access with the card. Thus Delta will be restricting unlimited access only to those who hold Delta branded Amex Reserve cards (personal or business as well as Reserve card authorized users).
Again breaking in to inject to anyone who may comment something like “DON’T GIVE DELTA ANY IDEAS“! Please understand revenue management has looked at every possible option already and I feel these are the most likely we will see implemented soon.
The only saving grace we have, as talked about in the call, is that for the coming months Delta is capping capacity until they are able to increase staffing levels across the board and at that point exacerbate an already ugly Sky Club situation. – René
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