January 16, 2013 Delta SkyMiles Going to Revenue Based Model?
JetBlue and Southwest have done it, is it time for a legacy to do it? Delta released its changes to the 2013 Skymiles program. In addition to the normal downgrades that have become standard for airlines a little something extra was thrown in.
For 2014 in addition to normal EQM requirements members in the United States and US Territories will be measured by Elite Qualifying Dollars (EQD) the spend requirement to attain status will be $2,500 to $12,500 depending on level. This can be waived if the member has a Delta Skymiles Amex and has an annual spend of $25,000 on the card.
This according one Flyertalker was posted on Delta.com and then removed. So right now it exists as unconfirmed rumor. These revenue based models have been rumored for sometime. One aviation blogged declared in 2011 that the United 2012 program would be based on the same lines as outlined above. That rumor was proved false.
However, with the general increase in the amount of outstanding redeemable miles and the ability of airlines to track members activity, it seems like it is only a matter of time before this happens.
I personally believe that it really is only a matter of time before revenue models come into existence and replace the traditional EQM model. It is one reason why I am looking to get a lifetime’s worth of travel done as soon as possible in order to avoid being excluded by revenue programs.
Assuming this idea really does exist lets look at the actual numbers.
The price listed is $2,500 to $12,500, so figure $2,500 increments for each level.
Silver, $2,500 (25k Miles)
Gold, $5,000 (50k Miles)
Platinum, $7,500 (75K Miles)
Diamond, $12,500 (125K Miles)
Delta is setting minimum spend at 10 cents per EQM. Most mileage runners shoot for a goal of 3.5 cents/EQM, when applied to 125k miles is $4,375. So a mileage runner that made Diamond this year would be Silver come Jan 2015. (status is good for a year after earning it)
That seems a little high to me. The revenue based model will certainly exclude unprofitable travelers, I think the loss would not be made up by the increase in revenue by people driving for status. Think about it, Delta could get a 50% bump in revenue by setting the spend levels at 5.25 cents per mile or a 100% bump in revenue at 7 cents per mile.
At 5.25 cents per miles
Silver would be $1312.00 up to diamond at $6562.50.
The logical conclusion would be that this program is not designed to drive revenue but to cull the herd of elites to manageable level. The problem is Delta doesn’t have a huge number of elites to begin with. A Gold member on Delta will likely be upgrade most of the time, where a gold member on United gets the upgrade far less often. So, why is Delta trying to cull the elite rolls, where there are not that many to begin with? It is that question alone that makes me question whether or not this is really going to happen.
Tags: Delta Air Lines.