Delta changes its frequent flier program

Delta Air Lines has revamped its frequent flier program in a way that hurts leisure travelers and helps corporate customers.

Delta just reported the largest profit ever in the history of the industry. Now they’re planning to switch to a model that rewards frequent fliers based on purchase price of the fare, not how far you fly.

Southwest Air did this a few years ago. What you pay for a ticket is everything when it comes to earning free tickets. Southwest claims they’ve earned hundreds of millions more in revenue as a result of this change.

So for example, you’d earn more miles by taking a short (but expensive) flight from Cincinnati to Knoxville than you would from flying New York to Beijing, where fares recently have been as low as $800.

They’re basing everything on your profitability index score, which is big in corporate America. There’s also a belief in the 2/40 rule. It’s the idea that 2% of travelers produce 40% of a company’s profit.

So in the past, when you were rewarded based on miles, a lot of people in December would take long flights (usually to Asia) without even visiting where the plane went in order to maintain their status. And they might do 2 or 3 mileage runs in a week just to maintain status! That era is now over.

The other facet of the new Delta changes go back to the profitability index again. If you have a Delta American Express card, your rewards will now be magnified. That’s because it’s mostly business people who work for large companies that have Delta AMEX cards. So they’re trying to tie-in closer with high profit business customers.

Leisure travelers, meanwhile, get the short end of the stick. So do price-sensitive entrepreneurs and people who work for small companies where every dollar matters.

Look for more full-fare airlines to follow the Southwest/Delta model with their frequent flier programs.

For further reading:

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