“Yes, there’s more to travel than miles and points, but we don’t have to just give up. Like I said, vote with your wallet, and that may mean voting with a flexible points option card from time to time too. There are still options out there to leverage points to help us enjoy more of our travels.”
This is what Marshall Jackson wrote in this article in which he quoted what I said — and I agree with him…
Stop the Complaining Already About Delta Air Lines SkyMiles — But Choose Your Battles Wisely
…but — to be a little clearer — I am not suggesting that you should simply give up and accept the changes. Just stop the complaining — as it does little more than offer a catharsis — and choose your battles wisely.
Please take a look at this article which I posted on pertaining to “No Fly, No Buy United” Day being the first Thursday of every month starting with December 4, 2014 — part of which I have included in this article.
Have you been participating? No? Why not?!?
Because that is not choosing your battles wisely. Does anyone really believe that complaining or any protest movement would actually be effective? Members of Milepoint do not believe so — and neither do I. In this article posted on April 12, 2013, I listed the reasons why a protest movement such as SaveSkyMiles — which was launched in 2000 by four FlyerTalk members and gained significant momentum approximately three years later — would not be successful this time around, in no particular order:
Delta Air Lines is financially stronger today than it was in 2003.
Delta Air Lines pre-tax income for the December 2014 quarter was $1.0 billion excluding special items — and ancillary fees are part of the reason why Delta Air Lines and competitors are performing better financially than they did almost 12 years ago. In fact, in April of 2003, Delta Air Lines was so financially strapped that it was asking its pilots to reduce their pay by approximately 33 percent while its executives were securing their pensions and increasing compensation as the airline was reportedly struggling to survive.
Delta Air Lines has different management.
Richard Anderson — the current chief executive officer of Delta Air Lines — has almost 30 years of experience in commercial aviation, which includes executive-level positions at Continental Airlines and Northwest Airlines, where he eventually became its chief executive officer. Compare that to Leo Mullin — the chief executive officer of Delta Air Lines from August of 1997 to January 1, 2004 — who had virtually no experience in commercial aviation other than serving as chairman of the International Air Transport Association, as the bulk of his experience and background was in banking and finance. The very mention of his name is still reviled to this day by both passengers and employees of Delta Air Lines, as many say he drove Delta Air Lines towards bankruptcy and had no business being involved in commercial aviation — let alone be chief executive officer of a major airline.
Too many customers chasing too few benefits.
Genuinely high-value customers are expecting to enjoy more benefits as “the herds thin out” in terms of elite status as a result of the implementation of all of the announced “enhancements.” Those high-value customers tend to believe that they are being denied the benefits which they truly deserve, as the demand for those benefits greatly outweigh the supply due to a number of factors — seemingly more so today than in 2003. The simple concept of supply and demand dictates that if there is too much demand for too little supply, the company can introduce and raise prices with little attrition in terms of customer base. Think about it: when was the last time prices for products or services were reduced as demand significantly exceeded supply? This, of course, is part of the impetus which leads to…
Monetized benefits and ancillary fees.
If you are not a high-value customer and want to enjoy a benefit, Delta Air Lines is betting that you will pay for it — and experience suggests that the airline is correct. Delta Air Lines earned $814 million in revenue from ancillary fees alone in the third quarter of 2011; and earned greater than $2.52 billion in revenue from ancillary fees for the year 2013. As much as passengers may not like the benefits and amenities split out — or diminished or even eliminated altogether — from what used to be included in the price of the airfare back in 2003, Delta Air Lines would be foolish to stop now. In fact, the airline appears to be continuing to find new ways to profit from ancillary revenue. However, I would tend to agree with you if you believe that Delta Air Lines could improve how it implements these “enhancements.”
Affinity credit cards.
If you cannot earn and enjoy your benefits and amenities the traditional way — by flying many thousands of miles — you might be more tempted to apply for an affinity credit card. Just pay an annual fee of $450.00 for one of those affinity cards — this one in particular did not exist in 2003 — and earn yourself 10,000 Medallion Qualification Miles after your first purchase and earn up to 30,000 Medallion Qualification Miles and 30,000 bonus SkyMiles each calendar year. You can earn elite status before you know it — and without ever stepping aboard an airplane. Affinity credit cards are another revenue generator for Delta Air Lines.
Diversification of business.
In addition to its cargo business, did you know that Delta Air Lines also owns an employment agency, a credit union, and a vacation provider service, amongst businesses other than passenger service as a commercial airline? Moreover, the Technical Operations Center is world renowned in that it services and repairs the aircraft of other airlines and the United States federal government in addition to the ones owned by Delta Air Lines — and let us not forget about the investment by Delta Air Lines in an oil refinery in Pennsylvania, which was purchased in 2012 to save money on fuel. Whether or not these businesses significantly contribute to the bottom line, diversification helps to not be as dependent on your main business for revenue — leading to having more control over what policies you decide to implement, even if that increased control is only marginal.
There are fewer competitors in domestic commercial aviation in the United States.
Airlines which were operational businesses in 2003 but no longer exist today include Continental Airlines, Northwest Airlines, America West Airlines, American Trans Air, Midway Airlines, Aloha Airlines, AirTran Airways — and eventually, US Airways. Fewer airlines means less of a reason to be as competitive today as in 2003.
…so to which competitor will you defect?
With American Airlines and US Airways merged together as one company — and with United Airlines still experiencing fallout from its less-than-smooth merger with Continental Airlines despite its good fortunes as of late — is there really a better airline to patronize? Perhaps, depending on what its important to you — but what are your other options — Southwest Airlines? jetBlue Airways? Train, bus, boat or car? Not travel at all? Regardless, it seems as though Delta Air Lines is betting that you will not defect to its competitors — direct or indirect. The commercial aviation industry is shaping up to be the classic result of the forces of an oligopoly at work.
There is no reason for airlines to cater to the whims of members of frequent flier loyalty programs — at least, for the short term.
For these reasons and more, Delta Air Lines has less of an incentive and would not be under nearly as much pressure to cave into the demands of its customers, no matter how passionate — which is why I do not believe a campaign such as SaveSkyMiles would be as successful today as it was almost 12 years ago. Even the post-bankruptcy stock price per share of Delta Air Lines hit an all-time high of $51.06 last month — and although it settled back to a share price of $44.45 at the close of the stock market yesterday due to traffic reported by American Airlines and Southwest Airlines as well as the increasing price of oil, the stock is still up significantly over last year.
To exacerbate the conundrum of the frequent flier of today, other major airlines — such as United Airlines — enjoy at least some of the same reasons for their success as Delta Air Lines.
Please do not misunderstand me: just because I do not believe that a campaign similar to SaveSkyMiles — such as “No Fly, No Buy United” Day — will be as effective today as it was almost twelve years ago does not mean that I am suggesting that you forget about it and discourage you by not trying. I am simply arguing that the conditions which exist today — economic and otherwise — are significantly different than they were almost twelve years ago. Delta Air Lines may want your business, but let’s face it — they are not desperate for it these days like they might have been back in 2003; and the same is true for United Airlines.
Things happen in cycles.
I have written many times over the years that things happen in cycles:
Then again, I do believe things happen in cycles. Whatever “gravy train” — or airplane, I suppose — on which the commercial aviation industry may be riding will certainly not last forever. Some customers will remember the unfriendly policies implemented by the airlines and not patronize them due to a perceived lack of trust — and lack of trust can be potentially harmful to a company in a significant way.
However — as with any other company in any other industry — if you are not happy with the changes in policy, the product you experience, or the service you receive, then vote with your wallet and do not patronize United Airlines anymore. If revenue from customers is reduced significantly enough, then United Airlines <em>might</em> roll back one or more of the changes in policies; and if not, that means that the changes in policy are working for United Airlines, which means that they made the right decisions — even if only for the short term, but with an unknown effect on the extent of the future detriment of its customer base, if any. It is that simple…
…so which would you rather have: a struggling airline which “gives away the store”, or a strong airline which restricts benefits to all but its highest-value customers?
Whatever your answer may be, one thing is for certain: a protest movement is not the way to go. That would be little more than a waste of time. Voting with your wallet is more effective; and if enough people do so, some changes may be reversed.
I mentioned earlier that the prices of shares of airline stocks were lower yesterday based on this news: In both of the following cases when comparing financial results in January of 2015 to those reported for January of 2014, the total revenue passenger miles for American Airlines dropped by 2.8 percent to 16.8 billion; and the passenger revenue per available seat mile for Southwest Airlines is expected to decrease by 1.2 percent.
No, the sky is not exactly falling for airlines; but this news should be minor reminders that things can unexpectedly go wrong — and when they did in a significant manner last time, who was there to support the airlines?
You. Me. Frequent fliers who supported our favorite airlines as much as we possible could. Jack and Jill Onceayearflier will most likely not be there when times get tough for the airlines; and perhaps neither will Joe and Jane Megabucks.
Protection and competition.
Airlines had already received bailouts from the federal government of the United States in the past when times were bad. They have also received permission from the Department of Justice to consolidate, which created a less competitive environment.
“What ticks me off the most about this is all the bloggers that were crazy for or indifferent to the AA-US merger”, posted Chase, who is a reader of The Gate. “People, this is what reduced competition gets you! We let DL-NW and UA-CO go through without so much as a sneeze. And when the objections came to the AA-US merger everyone was surprised and up in arms! Yeah, monopolistic pricing is one thing, but did anyone stop to think about what these mergers would do to FF programs?! This should have been stopped entirely or more scrutinized back when UA-CO wanted to merge. Now, only customers lose.”
Now — to add insult to injury — the airlines based in the United States “met last week with the secretaries of Commerce and Transportation to complain about competitors from the Persian Gulf”, according to this article written by Adam Minter for BloombergView. “Their main accusation was that Gulf carriers have been receiving billions of dollars in hidden subsidies from regional governments as their business in the United States has surged. What did they want? The very thing that airlines are always whining about: government regulation. But in this case, on their behalf. The Obama administration, they argued, should start limiting the access that Gulf carriers have to U.S. airports.”
Losses were not that long ago.
Remember when many airlines were losing billions of dollars per year? It seemed like that would never end. Who would have thought that passengers would even think of paying for the privilege of eating an airline meal or checking a bag — both of which were at one time considered musts to avoid…
…but people have been paying in the form of billions of dollars in ancillary fees — but not I, as I still refuse to check baggage or pay for a meal aboard an airplane.
Look — you and I both know that this “gravy train” for the airlines will not last forever; so the shortsightedness of the executives, stakeholders and members of the board of directors of airlines are dictating that as much profit as possible needs to be realized in the short term. It will take a major event — a downturn in the economy or the emergence of disruptive technology, as two examples — before airlines might once again be brought to their knees and where your help is requested.
Remember when the airlines needed your help?
Do you remember when back in the summer of 2008, the airlines banded together and wrote an open letter — which basically asked for your assistance to restore and enforce regulations and limits to “control excessive, largely unchecked market speculation and manipulation” pertaining to oil contracts which supposedly fueled a rise in oil prices per barrel — to you, which was signed by the chief executive officers of twelve domestic airlines based in the United States at that time? You were to have contacted the members of Congress who represented you, letting them know that you are joining other Americans and the airlines in a unified front to pull together as a nation “to reform the oil markets and solve this growing problem.”
So — did you do that?!?
Better yet: if that scenario ever happened again — and never say never — would you run to their assistance?
Sure — you may very well be irrelevant to the airlines now; but what about in the future? One year, five years, ten years down the road?
The real solution…
What the management of the frequent flier programs of airlines should be doing is attempting to find that “sweet spot” where they can still profit — I have absolutely nothing against them profiting as much as they possibly can, as they are businesses after all — but also keep the trust and loyalty of their customers and ensure that they have enough benefits and amenities on which they will remember when times go bad for the airlines…
…and they will go bad one day — we simply do not know at what magnitude or when that will happen.
Airlines should stop making nonsensical moves which are perceived as unfriendly to the customer — especially the frequent flier — such as all of the inexplicable actions taken by management of the SkyMiles frequent flier loyalty program of Delta Air Lines recently. There are many people who do not enjoy airline travel, as it can be quite stressful. Selling the idea of free travel with miles — only to yank them with goofy policies such as not letting anyone know just how many miles are needed for a trip — borders on false advertising at best; and can lead to mistrust and anger…
…which are feelings you do not want your customers to have when times go bad.
Go ahead, airlines — do your dirty work. Cut, mislead, “enhance” — but even though frequent fliers may not be your ideal customers, we will remember all of this that one day when you want need our business once again when times are not so good…
…and just because frequent fliers may not be your ideal customers now does not mean that we will not be your ideal customers one day in the future — especially when loyalty is strong.
Summary
As for us, yes — spread the word. Yes — let us band together and share information, for it is information which will help us through this seemingly irrational free-fall wanton destruction of the Delta Air Lines SkyMiles frequent flier loyalty program. Yes — cut up those affinity credit cards and close those accounts…
…but incessant complaining will not help. Thoughtful action — even if only to not patronize a particular airline until further notice — is what should be done, in my opinion.
Meanwhile — as I wrote here only three days ago — the service and product offered by Delta Air Lines will keep me as a customer when it is convenient to me; but I do not intend to go out of my way to be a customer of Delta Air Lines like I did in the past with the main reason being its seemingly dying SkyMiles frequent flier loyalty program…
Photograph ©2015 by Brian Cohen.
