What Does Delta’s 15% Off Amex Award Discount Mean For The Future Of SkyMiles?
Delta and American Express have a new benefit called “TakeOff 15” where cardmembers of their consumer and small business Gold, Platinum, and Reserve cards receive 15% off the SkyMiles cost of award travel. I discussed this on Thursday, in conjunction with new Delta American Express card bonuses, but it’s worth pulling out separately.
Delta can, of course, increase the cost of awards to compensate for this. There’s not enough data yet to say this, but anecdotally several readers have found that specific award flights they were looking at recently went up by… 15%. (To be sure, Delta Amex customers should check the current price on any existing redemptions.)
Put a different way though remember that Delta has been consistently raising the cost of award travel so in a sense they already did this whether they’re doing it in conjunction with this change or not.
What TakeOff15 says is you only get the best value out of your miles if you’re a co-brand cardmember. And that dovetails with recent moves the airline has made to push customers to card. Already they suggest they’re converting 1 in 8 members to the products.
For instance if you want access to Sky Clubs you can only buy a membership if you’re an elite frequent flyer, the cost of memberships has gone up, and club members are excluded from access on Basic Economy fares. All of those conditions do not apply to customers accessing clubs via card.
Under Delta’s current deal with American Express, which is driving multi-billion dollar increases in revenue, you’re clearly a valuable customer to the airline if you have a card and not so much if you don’t. (Delta Reserve cardmembership is also an upgrade tie-breaker.)
It doesn’t make sense to fly Delta without joining the program, because SkyMiles members get inflight wifi for free. And now the new TakeOff 15 benefit is a clear message to customers that if they’re going to engage with SkyMiles, they need to do it with a card.
Does this take things too far? It certainly leaves out those who can’t or won’t get a co-brand American Express card including most of their international members. But the message is clear that a member’s value to them comes from co-brand cardmembership.
On the other hand international members actually get the best value out of the program since partner airline awards that don’t travel to or from the U.S. generally price for a fraction of what U.S. travel prices at. You can book Delta partner awards for not much more than United or American would charge for the same thing!
This Takeoff15 change also says, by the way, that Delta doesn’t believe they need a frequent flyer program to put butts in seats on their planes. Historically they’ve clearly taken this approach, albeit less explicitly. Delta’s revenue premium has been driven by,
Delta’s on-time performance is still better than rivals but its reliability has eroded. So has its premium inflight offering. Delta also has a uniquely strong position in Atlanta, Salt Lake City, and some of its other hubs that make flying other carriers inferior. This has all been enough to fill planes at good yields in the past, even with a less rewarding SkyMiles program.
This move takes it a step further. They’re giving even less value to the median member of the SkyMiles program, who doesn’t have the card. And they don’t seem to be concerned that this will erode brand loyalty.
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