Delta makes bid for lucrative business travellers with big change to frequent-flier program

DALLAS – Delta Air Lines is changing its frequent-flier program to favour passengers who buy the priciest tickets instead of those who fly the most miles.

It’s a bid to lure higher-spending business travellers, who often book flights on short notice and pay more than bargain-hunting leisure travellers.

Beginning next year, Delta will base miles toward free flights on the amount that passengers spend on tickets. Currently, members of its SkyMiles program earn miles based on how far they fly — it doesn’t matter whether they bought an expensive first-class seat or the cheapest ticket in economy.

Delta will become the biggest U.S. airline yet to make such a change. American and United are likely to watch to see how travellers respond.

Wednesday’s announcement wasn’t a total surprise. Delta had already taken steps toward rewarding big spenders.

A year ago, it announced that starting in 2014 passengers would need to spend at least $2,500 with the airline to qualify for the lowest level of elite frequent-flier status, which carries perks such as free upgrades and a waiver from bag fees. Before that, they could qualify on miles alone. United quickly matched Delta’s change.

Virgin America and JetBlue Airways Corp.’s “True Blue” frequent-flier program award points based on dollars spent, not miles flown. Southwest Airlines Co., which carries more passengers within the U.S. than any other airline, overhauled its Rapid Rewards program in 2011 to award free tickets based on money spent, not trips taken. It seems to be paying off; a spokeswoman said the changes boosted Southwest revenue by $180 million in 2012 and an additional $100 million last year.

The move by an airline the size of Delta, with its international routes and important corporate customers, adds to a more fundamental trend in air travel — luring big-bucks travellers with better seats, fancier meals in first class, and VIP treatment at the airport.

“If you’re a corporate traveller, the IBM guy, this is good for you,” Randy Petersen, editor of InsideFlyer magazine, which tracks the airline-loyalty business, said of Delta’s move. “The infrequent traveller clearly is the loser here. Frequent-flier programs are no longer for them at all.”

Some of those Delta leisure travellers wasted no time complaining on social media. The same thing happened at Southwest. But if United and American follow Delta’s lead, “there’s not much a consumer can do,” Petersen said. “Where are you going to go?”

That’s the dilemma facing Ben Holcomb, who works in information technology in Norman, Okla. He said he has earned seven or eight free trips in the past couple of years and climbed to Gold Medallion elite status on Delta by racking up miles with bargain-fare leisure trips. “The days of being able to do that are numbered,” he said.

Holcomb said he understood why Delta decided to change its program, but added, “It really leaves no incentive to fly with Delta unless they have a better price.”

Al Meyers, who has worked for nonprofits in Atlanta and used to be an elite Delta member, said SkyMiles will go from a frequent-flier program to an expensive-flier one. He said the biggest airlines are catering too much to corporate travellers, forcing average consumers to consider budget carriers.

“We’re going to have the Lexuses and the Tauruses,” he said.

Delta Air Lines Inc., based in Atlanta, said that beginning Jan. 1, SkyMiles members will earn between 5 and 11 miles for every dollar they spend on tickets — the low end for general customers, and the biggest bang for elite Diamond Medallion members. All of them will continue to get a bonus for buying tickets with a Delta-branded credit card.

Other changes, Delta said, include more availability of reward seats at the lowest mileage-requirement levels, one-way awards at half the miles needed for a round-trip reward — American does that now — and more options to combine miles and cash when buying tickets.

Jeff Robertson, a vice-president who oversees the SkyMiles program, said that nearly all hotel and credit-card programs already base rewards on money spent, and Delta’s change was designed to better reward the airline’s most loyal customers.


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