Delta Looks To Further Simplify Its Loyalty Program

Delta SkyMiles program director Jeff Robertson recently spoke with BTN airline editor David Jonas about changes to the carrier's loyalty program and recent industry developments affecting frequent flyers.

BTN: There is a perception in the market that fare simplification and reduced first class fares have made it much more difficult for business travelers to obtain upgrades. Is Delta observing that?

Jeff Robertson: Companies are not jumping on the bandwagon yet and all of the sudden letting their employees travel in first class. You are not seeing a lot of shift from coach yet and we are not seeing a huge impact on the ability to upgrade. That could change. We obviously hope it does. In the event we do see more true full-fare first class passengers in the front of the cabin, we will have to look at other things to offer our customers to bring value to the Medallion program. For now, we are probably doing some swapping out of customers in the first class cabin, since we now allow complimentary upgrades at the time of booking for Medallion members who purchase Y, B or M coach fares. In general, if you are a heavy traveler on Delta and buy very discounted fares, you might see slightly less ability to upgrade. On the other end, if you are a customer at a lower elite level who frequently buys those higher fares, you might get into first class a little more often.

BTN: The amount of mileage required for a class-of-service upgrade on Delta still is dependent on the original fare type purchased. Doesn't that confuse matters for the traveler?

Robertson: I am not happy with that. I am not happy with the number of award levels and the complexity in our award structure. It is something we are working on as part of phase-two simplification. We could announce something around award structure and more simplification in late spring or early summer.

BTN: Given Delta's move to simplify, why not eliminate fare categories altogether as a factor in the SkyMiles program and base rewards and points earned on dollars spent?

Robertson: We looked at three types of programs last year: dollar-based, segment-based and the same mileage-based program but making it simpler. The segment-based approach—maybe buy 10 and get one free—would not work for Delta, given our size and our network. We didn't want someone to buy 10 tickets to Orlando and get one free to London. We also saw the AirTrans and JetBlues of the world move away from that model. A lot of customers did not like the idea of the revenue-based program.

BTN: Please summarize the latest simplification as it pertains to frequent flyer mileage accrual.

Robertson: Last year, we had four multipliers: a 200 percent bonus for first and business class fares; a 150 percent bonus for Y, B and M fares; a 100 percent bonus for midrange H, Q and K coach fares; and a 50 percent bonus on discounted L, U and T fares. The intent was to slow the buy-down to cheap fares by our business customers. It did work, but we knew we would launch SimpliFares soon. We decided we needed to make it a lot easier and create only two multipliers: a 150 percent bonus for higher Y, B and M coach fares as well as first and business class fares, and a one-for-one exchange for everything else. It is not an incentive to buy a higher fare, but more of a reward for buying higher fares.

BTN: Why does the Delta loyalty program still not offer completely comparable terms to those of partners Continental and Northwest?

Robertson: Whatever the most restrictive rule is between carriers always applies. Because I legally cannot control what Continental or Northwest does with their programs, I have to abide by their requests if they are more restrictive. Typically, right or wrong, we avoid going into great detail with our customers about why we cannot offer certain things on Continental or Northwest, because of the legal risks of stating something somewhat publicly. We are now working on building a better relationship with Northwest and Continental. There are things we likely will announce this year to build a bridge on the alliance.

BTN: Is Delta still providing elite status to a potential corporate account's most frequent flyers as part of a negotiated agreement?

Robertson: Selectively, yes, we do that. It depends on the corporate agreement, their likelihood of flying Delta and their location. The Medallion program provides value to corporate sales, assuming the Medallion program in general is as competitive or more competitive than the industry. I believe it is the best program right now in the marketplace. I am not going to settle for that. There are things we need to fix and improve. Because of that, it will provide sales a better tool to use for corporate accounts.

BTN: Are you seeing corporate clients pool earned mileage into a central account?

Robertson: Yes, there are some companies that do it. The concept of pooling miles is certainly a part of our thoughts looking forward.

BTN: What else is on tap for the loyalty program?

Robertson: We are in the process of formulating plans for ways to offer incentives to our best customers. We are thinking about things in the program that customers dislike most and how we might use them to incentivize customers to give us more of their business. That business should not only be business on Delta but also business through the use of the American Express credit card and other types of things.