Delta Air Lines recently announced a major change to its SkyMiles frequent-flier loyalty program that will allow passengers to earn award miles based on the fare they pay, rather than the distance in miles they fly.
“It reinforces the benefits of being loyal,” Delta spokesperson Paul Skrbec told Loyalty360.
The new business model won’t take effect until 2015.
Depending on their program status, Delta’s roughly 91 million frequent fliers will earn between five and 11 miles per dollar of their base ticket price, plus airline surcharges. They can earn an additional two miles per dollar if they book the trip with Delta’s co-branded SkyMiles credit card.
Skrbec described the change as relatively straightforward and simple.
“Over a number of years we have found that redeeming miles was getting to be more and more challenging,” Skrbec said. “About three-plus years ago, we put that question under the microscope.”
Delta’s SkyMiles program has been around since 1981, Skrbec said.
“The concept was we wanted to reward our customers for continuing to be loyal with us and continuing to fly with us,” he said. “In 1981 the price of the ticket was closely associated with the distance you flew. Over a period of time that pricing model has changed fairly dramatically through consolidation and market movement.”
On any given aircraft, Skrbec explained, there can be a passenger in seat 13a and one in 13c going the same route with the same destination.
“But one spends $200 and the other spends $700 based on when they bought their flight,” Skrbec said. “The person in 13c is wondering what is valuable for him or her. We want to reward customers who paid more for their ticket.”
With hotel loyalty programs, Skrbec said it’s almost intuitive for people to equate what they paid for a room with X number of points.
Before making the major change to the SkyMiles program, Skrbec said Delta sought feedback from a variety of sources including focus groups, customer surveys, 1-on-1 conversations at events, corporate accounts, industry experts, and Delta employees.
“We pulled together various groups to find out where are the opportunities,” Skrbec said. “Almost universally across all conversations was improve redemption.”
In the short time since Delta made the announcement, Skrbec said the reaction has been mixed.
“Customers understood and comprehended the change, and largely they understand it, which is a good sign,” he said. “We came out 10 months in advance of the changes and we will use that time to continue to have a dialogue with customers, letting them know this is how they will net out in the future. We’ll seize every opportunity to do that.”
Skrbec said Delta’s business travelers have accepted the major change well.
“For years, frequent flier programs have under-rewarded them for daily/weekly trips,” he said. “The benefits of the frequent-flier program weren’t necessarily rewarding them at levels they would expect or want. There is a definite sentiment of being happy we’ve made these changes, particularly for the business travelers.”