Delta has made a few recent moves that would cause some to ask if they are the smartest airline in the sky. Before you get all worked up, hear me out.
Investments In Future
First of all, there is the FAA grounding of the 787 this week. Delta was not impacted at all by this move because they took steps to avoid it. Taking (late) delivery of a plane that is now grounded is not, “Ok” as one person put it, especially if you are an executive decision maker of a global airline. Instead, Richard Anderson said:
“We need to have some certainty about delivery schedule…So instead we made an investment in our existing fleet, put interiors in the existing fleet..We need to see the 787 and A350 be successful …We need certainty about when airplanes are going to come.”
Notice the mention of the A350 and the need to know when planes are going to come? An obvious dig at the delays to the Boeing 787. Delta also has a few Airbus planes flying around as holdovers from the Northwest acquisition so they could be holding these are cards during discussions with Boeing, but I don’t know that, just suspect it.
Even though Delta picked up 18 orders for the 787, they deferred the delivery of those orders until 2022. Instead of making costly investments in an airplane that was delayed and is now grounded, they invested in their current fleet, picked up some cheap planes from other airlines like AirTran and American Airlines. In addition, they bought a refinery and made a significant expansion play with an investment in Virgin Atlantic for an expanded presence in London. I’d say these were all smart moves. Would you agree?
Loyalty Program Change
Now to the 800 pound gorilla in the room, Delta’s tilt towards a revenue based model is not yet proven out. It could be a great business decision that drives incremental spend towards their flights or their American Express credit cards. Or it could be a costly decision that drives away loyal customers. I will personally benefit from the change. To remain in the elite ranks one will have to meet the following criteria:
SILVER Medallion Status
- 25,000 MQM – OR – 30 MQSs
- And $2,500 MQDs
Gold Medallion Status
- 50,000 MQM – OR – 60 MQSs
- And $5,000 MQDs
Platinum Medallion Status
- 75,000 MQM – OR – 100 MQSs
- And $7,500 MQDs
Diamond Medallion Status
- 125,000 MQM – OR – 140 MQSs
- And $12,500 MQDs
Beginning January 1, 2014, top tier elite members that fly international business class on a paid ticket will earn a 200% bonus MQMs. If you buy one full fare business class ticket to Asia, you’ll likely have enough MQDs to qualify for the Platinum level. And there is always the option to spend $25,000 on your Delta branded American Express card.
The MQDs requirement will be waived if you make at least $25,000 in Eligible Purchases in the qualification year with your Delta SkyMiles Credit Card from American Express.
So on paper, it looks like driving your customers who like elite benefits to spend more on flights and on their credit card is a good business decision. Until you think about they still have a broken SkyMiles award booking engine that we’ve proven hides low level award flights on partner carriers in favor of displaying 200,000+ flights on Delta metal. Also what about future changes to redemption options? So I still believe this move is yet to be proven a wise one or not.
Given these two recent moves, do you think Delta is the smartest airline so far in 2013? If not, then who is and why?