Better Use Those Points: The Sad Decay of Frequent Flyer Programs

Photo: Delta

Photo: Delta

If you’re a frequent flyer, you might have noticed that your miles don’t go as far as they used to. Spurred by rising costs–from fuel to flight training–and too many passengers with too many points, airlines are taking the pruning shears to their loyalty programs, cutting everything from the value of a mile to the perks their most elite flyers receive.

Why? The industry never really recovered from the massive downturn in business after the September 11 terrorist attacks, and over the past decade, airlines have been trying to squeeze every last penny out of their operations. First it was baggage fees, then came overpriced snacks and drinks. Frequent flyers were insulated from many of these costs, receiving free checked bags, first class upgrades, and free flights in exchange for loyalty, but now airlines are looking to their most loyal customers to help keep them in the black.

It started with United last fall, which made sweeping changes to the amount of points its Star Alliance members needed to upgrade or book flights. Now its Delta’s turn. The airline, which flies more people more places and has a fervent rewards fan base, rolled out a new policy that makes transcontinental and other upgrades even harder to obtain for its SkyMiles members. In addition, a new pricing scheme set to begin next year will make earning points significantly more difficult.

As of January 1, Delta’s SkyMiles program is almost completely money-based. Instead of being credited for the miles they fly, SkyMiles members will earn points according to how much they spend on their tickets (and through Delta-partner credit cards). This upends a long-held model that benefits thousands of travelers no matter how much they spend, and puts Delta’s most affluent customers at the top of the heap, a point the airline conceded when it announced the plan.

“The introduction of a new model for earning miles will increase rewards for those who spend more as well as differentiate the SkyMiles frequent flyer program for our premium travelers,” says Jeff Robertson, Delta’s vice president of SkyMiles.

But even those premium travelers are already in an uproar.

Definitely time to switch airlines, Clear that Delta doesn’t care about me. Wasted 20+ years on that relationship. Take my diamond elsewhere

— Charles Ellis (@naptmanager) March 4, 2014

”They’re trying to spin this as good for business travelers,” says Brian Kelly, founder of the popular frequent flyer resource “It isn’t. They’re just adding more hoops to jump through.”

The first hoop is the complex points-earning scheme that awards credit based on your status. General members earn five miles for every dollar spent, while the top-level Diamond Elite guys get 11 miles per dollar.

In the past, if you bought a ticket from a discount website like Travelocity or CheapFlights, you were racking up the same amount of miles as the business traveler who booked a full-priced flight at the airport; a ticket from New York to Los Angeles for a bargain basement price of, say, $298, nets you more than 2,500 miles under the current system. Under Delta’s new program, you’d get just 1,490 if you’re on the low rung of the frequent flyer food chain. But if you’re a top-tier Diamond Medallion member, you make out, with 11 points for every dollar spent, netting 3,278 miles.

“If you’re spending $10,000 a ticket, yeah, you’ll earn more miles,” says Kelly. “But those people don’t need those miles.” He has a point. Frequent flyer programs have always been a great way for people to reduce the cost of a vacation, or remove a bit of cost from a small business’ overhead. If you’re spending top dollar on a ticket, chances are you’re not squirreling away miles in the hopes of some day making it to Europe.

Still, frequent flyer programs have always been always been a perk, not an entitlement. It’s a way to keep people loyal to one airline or partnership of carriers, maximizing the benefits for both the traveler and the airline. Smart travelers have been exploiting these programs for years, finding loopholes and racking up the charges on airline-sponsored credit cards in an attempt to game the system. But the question is whether this latest policy takes this correction too far and alienates airline’s most dedicated travelers.

#Delta Air Lines. Epic fail in changing policy to refuse Diamonds complmentary upgrades on transcon flights. Hello American Airlines!

— ryan harper (@RyaninSoCal) March 4, 2014

If there’s a significant backlash, Delta might rework the system. And while Southwest, JetBlue, and Virgin America already use a fare-based points system, the size and scope of Delta and its network of partners–Alaska, Hawaiian, KLM, and others–is far larger, which means United and American are keeping an eye on how this new rewards scheme plays out.

“The travel industry, including nearly all hotel and credit card programs, has already moved to a spend-based model,” said Delta’s Robertson. “Delta will become the first U.S. global carrier to make this transition to better reward our most loyal customers.”

But Kelly isn’t buying it.

“This is not about Delta looking out for its best customers,” says Kelley. “This is about Delta looking out for its bottom line.”

Written by Lewis Shaw

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