Delta Air Lines will announce tweaks to the overhaul of its SkyMiles frequent flyer program “in the coming days,” CEO Ed Bastian said on Thursday.
But don’t expect the old program to come back.
During the airline’s third-quarter earnings call, Bastian said he stood by the airline’s decision to revamp the program, even though the changes were implemented too quickly — “rip[ping] the band-aid off,” as he said previously.
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“We had too many changes rolled out at the same time,” Bastian said, “that we needed to go back and reassess the planned rollout for the new qualification levels.”
“There still will be changes to the program. I’ve been very clear about that,” he added. “But we’re going to make modifications to what we announced.”
Still, Bastian said, the broad overhaul was necessary, something that Bastian said most customers agreed with — even those who did not like the changes.
“Everyone sees that the premium number of customers that we continue to build are in excess of the premium assets that we have to offer,” he said. “Most everyone also agrees that something has to be done.”
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Bastian said that the additional changes were being made in response to direct customer feedback, rather than because of customers defecting to other airlines or shifting spend to other credit cards.
“We’re not seeing any changes to trajectory, whether acquisitions, or changes to spend levels,” Bastian said. “Everything continues to stay intact.”
In terms of the changes to lounge access policies, Bastian said that there was no sign of customers canceling premium credit cards en masse. To the contrary, even more customers were signing up for the cards.
“We did this together with American Express and if anything, we’ve seen a shift to higher premium card acquisition.”
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Notably, he added that the airline had received feedback from customers who supported the changes as originally announced.
“We heard a full 360-degree view of the perspective,” Bastian said, “but it gave us a chance to sit back and reflect on it.”
Delta announced changes to the SkyMiles Medallion program last month, which would make Medallion Qualifying Dollars — MQDs — the sole qualifying metric and also significantly raise spending requirements to reach the various levels of status. It would further emphasize spending on Delta credit cards while eliminating requirements linked to taking actual flights with the airline.
Delta simultaneously announced changes to its Sky Club lounge access policies, limiting the number of times premium credit card holders could visit the lounges each year.
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The changes and pressures come as the frequent flyer programs increasingly provide a crucial, high-yield share of airlines’ annual revenues. Banks pay airlines for miles, which they then distribute to customers as credit card spending rewards.
Delta, in particular, has benefited to the tune of billions of dollars annually from its credit card partnership with American Express. While the airline has pushed aggressively to grow its program and the brand, its success has become a double-edged sword: It has harmed the brand as Sky Club lounges became crowded beyond capacity and elite members found perks devalued to the point of being almost worthless.
Delta was on track to make $7 billion in revenue this year from its partnership with American Express, Bastian said on Thursday.
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