A few more thoughts on Delta’s new revenue based program…

Last night I made a post about Delta’s new revenue based frequent flyer program, though it was 1AM in Singapore and I wasn’t really in a position to provide much analysis (not that I’m ever in a position to rationally analyze Delta’s decisions).

I said the new program doesn’t look too bad, and I got a lot of flak for that. So let me explain. I can sit here and wag my finger at Delta for this and say “how dare they” but the fact is that we all knew this was in the works for a long while now, and at least they gave us some advance notice.

Before they made this announcement I was expecting the worst. I was expecting that status would almost exclusively be dependent on spend with high thresholds, and worst of all, I was expecting that award redemptions would have been revenue based as well. That would have been horrible. Imagine if each mile got you one cent in travel towards the cost of a ticket, in which case you can kiss goodbye to a $5,000 international business class ticket on miles.

So is there anything in this for customers? Of course not, the changes suck. But given that we knew they were going to introduce a revenue based program, this is about as mild as it gets. Not only are the thresholds reasonable, but there are easy ways around them, like not being US-based or spending $25,000 on a co-branded Delta credit card.

Now of course I wish they would have actually introduced some benefits along with this, but that seems to be asking too much from Delta.

There are a few other things that either suck or that I find interesting. The first thing I find interesting is that the revenue requirement only applies to US-based members, so how will they control who’s US based and not? I mean, it’s not that tough to change the address in your profile to a foreign country, so I’m quite curious how they’ll handle that.

Next, in theory this really decreases the value of rollover miles. With Delta any excess Medallion Qualifying Miles (MQMs) can be rolled over to the following year, so previously if you had 250,000 MQMs in a year, for example, you would get Diamond status for two years. Now there’s also the spend requirement, so that really decreases the value of that. It would be nice if they offered rollover Medallion Qualification Dollars (MQDs) at least. Then again I don’t think putting $25,000 of spend on the a Delta co-branded American Express card is that tough.

Another frustrating aspect of MQDs is how Delta calculates them. Only Delta marketed flights qualify towards MQDs, which means if you book a codeshare through another airline for travel on Delta that doesn’t qualify. To some extent it really undermines the value of an alliance.

Lastly, and perhaps most importantly, Delta is making substantial changes to their earnings structure for both travel on Delta and their partner airlines.

For travel on Delta, “M” fares will no longer earn the 50% MQM bonus, while the MQM bonus for many paid first and business class fares will go from 150% to 200%.

That’s kind of funny to me, since “M” fares are pretty expensive and they’re the minimum fare class you needed to upgrade international flights, so I suspect they figured they didn’t have to offer the bonus since people were buying those fares primarily to upgrade.

But the even more screwed up changes are the earnings charts for Delta’s partners, especially those in Asia, where they massively cut the earnings rates across the board.

Anyway, I’m not a Delta flyer, so I’m just pleased to see there are no changes on the redemption front… yet.