What the 250,000 AMEX->DELTA 2015 change tells us (reading between the lines).

ICYMI or in other words, “in case you missed it” next year, that is as of 1JAN2015, you will only be able to transfer a total, from all kinds of AMEX cards, including cards like the non-Delta AMEX Platinum card as well as SPG cards a grand total of 250,000 per year to each Delta Skymiles account. However, we see no such restrictions on earnings from the CO-branded Delta Skymiles credit card as you can see in the expanded terms and conditions of the cards.

As a side note there is a workaround, sorta, that you can add an additional user to your AMEX membership rewards card and then send them points, that they can then send to THEIR Delta Skymiles account. The only major downside is you cannot combine Skymiles without HUGE cost (making it all but worthless) so if you do book some big trip using more than one Skymiles account you will be on separate itineraries or PNRs. There is no way for Delta to combine PNRs after they are issued and this can cause issues with perks etc. But I am off course now so back to the topic at hand.

We already know Delta is really cutting back on the number of Skymiles they will be awarding / printing under Skymiles2015. After all, to be able to provide more low level seats, as promised on the home page as well as on jets and everywhere else, they have to shrink the number of miles in circulation (that is their logic anyway – I have better ideas but they did not ask me).

I see this as just one more isolationist step. We saw last year the frankly shocking and still bewildering move to enforce ZERO MQMs/MQDs with Korean air tickets (a founding Skyteam member) unless they are code share tickets at most times much higher prices. We all know and can see for ourselves that Delta does not play nice in giving up award space with other partners like KLM/AF and others (one could say it is them not giving up the space but we all know it is a two way street).

So reading between the lines, what is next? The new “batch” of folks in shiny new positions at Delta all need to make their mark and show they too can wrangle more profit for the company. So expect more of this type of DAL centrist thinking. If there is anything that can be changed to yield higher net for DAL vs. a partner or other interest, think how this can be changed or cut. Like what? This can be hard and again don’t slam me for give our mothership ideas – I am sure they have talked about all of these (and many more).

• Alaska. My fellow blogger Ben posted the other day about the fact that Alaska has fired back at Delta by matching up to their highest elite level. Impressive. What can Delta do to fire back? Well, do you really think they are going to allow you and me to get full Alaska point credit flying on Delta jets for much longer? After all, most say Alaska points are WAY more valuable than Skymiles. Why in the WORLD would Delta pay to subsidize you earning Alaska points on cheap tickets based on mileage? Expect a drastic cutback.
• Club access. We have already seen the cut to 3rd party lounge access. Delta did upgrade the medallion access with GM+ getting Skyteam access when flying coach (and connecting or pre-departure). I bet this choice now results in much “wringing of hands” by the bean counters and will go away or be “enhanced” soon. I bet paying Skyteam members to let coach flyers into their lounges is costing the company way more than bargained for.
• Food. While I don’t think Delta is going to cut the quality of the food they may adjust more when we get food and expand the sales choices maybe even to 1st class. After all, those in first are already paying big bucks why not get more from them from nice EATS choices? This would not only save a ton on catering costs, but the option to make more money from HVCs who like to spend already. Oh and keep in mind it is not like an upgraded medallion can use their HOOUs to buy a nonperishable treat anymore in 1st class!
• Cleaning. It is not like Delta jets are all that clean now to begin with as I have blogged about before. I am just not sure on this one and it could swing the other way with all the Ebola fears and such. I am sure the contracts for cleaning are squeezed year after year.
• Ground staff outsourcing If you fly in and out of DTW you have “enjoyed” the learning curve of outsourced ground staff this year. Long waits when arriving at the gate and more. If these changes are saving the company money, expect more of this at other airports. I like Delta people is all I will say on this!
• GoGo prices. I expect GoGo prices to go up soon. They are still a relatively good value and there will be much cost to add GoGo to the international birds. The jump will not be much but expect 5-15% across the board.
• Regional squeeze. You may not know it but regional ground folks are making 7-8 bucks an hour to start out, yes we are talking minium-ish wage! Sure they have some travel perks but at that kind of income, unless they are collecting millions of points like we do, they will not be able to afford even non-rev travel! The bottom line is I think regional service will get worse at these low wage prices.
• MQD requirement for Million Miler’s. I am really shocked we have not seen this yet. I mean the wording has already changed from “lifetime” whatever status you are gifted to “annual” status. Delta does not care what you have done in the past to get them to profitability but only cares what you are spending NOW! It only makes financial sense to extract some money from MM’ers to keep their annual status.

Shifting gears I think there are a bunch of things Delta will NOT cut as they are part of their big marketing push and for now will keep paying out until it hurts too much. Like what?

Crossover Rewards. This was ground breaking in the airline industry to team up with a hotel chain in this kind of manner. I just cannot see Delta cutting this new deal for now. After all, a made-up award at the Freddie’s last year was all they won and I doubt they will win anything this year when it is hosted at Atlanta other than this same type award again! I mean the Delta credit cards perks have been CUT so no awards there and not seeing anyone voting for Skymiles2015 as an award winner (or what do you think)? Had Delta JUST added unlimited upgrades from domestic including Hawaii this could have been an award winner IMO.

Expanding IFE and Delta Studio for tablets. We all know IFE systems are heavy. Once GoGo is all over the fleet there will be less need for IFE in seat backs and almost everyone has their own devices nowadays. For now Delta is positioned both ways to offer seat back until the need becomes obsolete.

I could go on an on with tech, maintenance and other bits that Delta either is moving in house or does very well at and makes money on but I think this covers the topic in detail enough. The bottom line is that the reduction of Skymiles transfer from AMEX each year is just part of the big picture. Sure it affects us the most but there will be other bits that go along with them and we should read between the lines to see that there is nothing that cannot and will not change to make a buck. I will personally end the year with well over 1 million Skymiles in my account as I am banking on Delta keeping the promise that more low level seats will be made available (not that I have much of an issue finding low level seats now but that is for another post). If Delta does not live up to this promise I think the combination of less rewards and mostly mid and high level redemption (or mostly low + big dollars add-on saying “see we said less miles”) will be the tipping point for most to say “we are done with Skymiles”! – René
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Editorial Note: This content is not provided by American Express. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by American Express.
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