Airlines

Delta pulls back on Skymiles Diamond tier

Delta pulls back on Skymiles Diamond tierAirlines have become so focused on catering to the top tier of elite business travelers, lavishing the first-class cabin with ever more perks while shrinking coach seats down to postage-stamp size, that changes impacting the one percent can result in the entire frequent-flyer commentariat reacting as if the airline in question suddenly announced their support for baby seal-clubbing. So it was the Delta’s recent announcement that they would make the path to Skymiles Diamond status narrower was met with the usual explosion of righteous indignation on social media. Is Delta’s move an egregious affront to the airline’s most loyal flyers, or is it a right-sizing of a tier that had become too bloated to provide any real differentiation for top flyers? Depends on who you ask.

By Rick Ferguson

Delta announced that one route to Diamond Medallion status – spending $25,000 a year on the American Express Delta Skymiles card, in addition to earning 125,000 Medallion Qualification Miles – would be restricted. What surprised Diamond members was the magnitude of the restriction: earning status through credit card spend would now set members back a staggering $250,000. Typical among the reaction was this quote from Points Guy editor Zach Honig, quoted in Marketwatch: “A jump from $25,000 to $250,000 is a little insane. It definitely seemed to catch a lot of Delta Medallion elites off guard.”

Social media erupted with apoplectic outrage, of course, as social media is wont to do. Once the dust settled, however, more measured responses understanding that Delta’s move was ultimately a positive one for the airline’s most valuable flyers, however bonkers that tenfold increase in spending requirements might seem. Money quote from the Points Guy:

“At the heart of the airline’s decision is a desire to make sure that only its most valuable customers — those who spend the most money with the airline — are the ones that most often secure complimentary upgrades to premium cabins. TPG Senior Points and Miles Contributor Richard Kerr summarized why this move is actually positive for Delta‘s most loyal Diamond Medallions: ‘Diamonds in 2018, who earn either the $250k waiver or $15,000 MQDs, will be [a smaller] minority and rewarded more for their monetary loyalty to Delta. Thinning the herd to reward only those that earn you more money is a right business decision.’”

Delta certainly seemed to indicate as much in their statement announcing the move. While acknowledging on its web site that “We understand this is a significant increase,” the airline also told Business Insider:

“Feedback from Diamond Medallion Members drove Delta’s Diamond MQD Waiver adjustment. The goal is to enable those who fly and spend most with Delta to better enjoy their Diamond Status benefits including Complimentary Upgrades and the Delta Sky Club experience.”

That certainly sounds like a move designed to restrict Diamond status to those members who actually earn it by flying rather than through credit card spend. This writer can personally attest to the overcrowding of the Diamond tier; in 2012, I actually earned Diamond status through business travel, and rather than enjoy the unprecedented set of lavish perks and exclusive access that I had expected, I often found myself bumped from upgrades on long-haul flights because there were ten other Diamond members in the queue ahead of me. In my flying experience, there was no discernable difference between Diamond and Platinum status – which made me less concerned with pursuing Diamond status the following year.

In addition to improving the Diamond experience for those members still able to earn it, the move also potentially improves Delta’s bottom line in other ways. Thanks to the increasing “luxury gap” between rich and not-so-rich flyers, airlines are now able to sell more first-class tickets for cash than they could in days past; a recent Delta investor presentation revealed that the airline expects to sell 70 percent of its first-class seats for cash in 2018, up from 57 percent in 2015. As rDialogue’s Phil Rubin points out over at the Boarding Area:

“At the risk of antagonizing many readers here, I applaud Delta’s move. It is in sync with its yield-based strategy of prioritizing customers and to be blunt, spend on DL regardless of tender is higher yield than spend at any other merchant on an AX card (for DL)… Bottom line: if you’re a frequent business traveler and DL is a viable option for most of your travel, this is good for you. If you’re also a DL shareholder it’s even better.”

Outside of those Skymiles members who were earning Diamond status by charging their monthly household nut on their Amex cards, then, the consensus appears to agree that Delta’s move was a smart one. The only party at risk here seems to be American Express, which now finds many of its Diamond-level cardholders with less reason to consolidate their spending on their Skymiles cards – unless they remain satisfied with Platinum status.

For ultra-elite flyers, then, the rich keep getting richer. If you spend most of your time in coach, however, then prepare yourself for the upcoming influx of disgruntled former Diamond members man-spreading in the seat next to you; they’ll be in dire need of your sympathy.

Rick Ferguson is Editor in Chief of the Wise Marketer Group and is a Certified Loyalty Marketing Professional (CLMP).

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