Man do I hate being right on this one. I’ve been saying for nearly a year now that the three major global alliances are losing their cachet in various ways, mostly do to the big three Middle-Eastern carriers shaking things up in the market. This time around, however, it isn’t one of those carriers making a splash; it is Delta.
Starting on 1 September 2013 flights on many Delta partners will no longer earn full credit towards Medallion (elite) status in the SkyMiles program. The partners are being split in to four tiers, with the differences between the tiers basically the bonus earning as an Medallion member, bonus earning for premium cabins and whether the miles flown will count towards Medallion status. Quite frankly, it is ridiculously complicated, way more than it should be for any program.
Most surprising in the changes is that flights on Korean Airlines – also a member of SkyTeam – will no longer earn any credit towards elite status. This is on top of the changes which went into effect in March where many fares suddenly earned reduced Medallion credit. It is also, to the best of my knowledge, the only bilateral alliance partnership where no credit can be earnt towards elite status. That’s pretty crappy. To be fair, some KE flights carry a DL code and booking under the DL code can earn MQMs, but that is a very limited subset.
The real value for the airlines likely lies in the anti-trust immune operations. These tend to follow alliance lines but they aren’t exclusively so. And just being part of an alliance doesn’t guarantee participation. In other words, the real money comes not from the alliance but from having the right partners and government approvals.
Delta is putting this to work in a big way. Their joint venture partners (plus Alaska Airlines) are where the best earning happens. Other partners earn at lower rates. Delta isn’t the first to take such an approach. United changed the earning rates on premium cabin fares earlier this year, with non-JV partners earning no bonus while JV partner flights can net significantly more points. Similarly, United doesn’t offer elite bonus mileage earning on non-JV partners.
UPDATE (18:49 EDT 5 June 2013): It turns out that Delta and Korean do have an ATI in place for their trans-Pacific operations and they have for more than a decade now. Based on that this change makes less sense, but such is life.
The global alliances promise benefits like interline agreements for ticketing and bags, reciprocity for elite status benefits and some joint marketing efforts. But that’s all. They do not promise seamless award redemption or earning rules and they never have. Yes, they are good for customers but only when it comes to actual travel, not necessarily where the loyalty programs get involved. And it has always been that way. Delta is stretching the boundaries here, but it is nothing all that new.
This change is bad news for members of the SkyMiles program, to be certain. It also moves the line in terms of what competitors can change while remaining “better” than the other options. But Delta is not the first to pursue this approach to the programs and they won’t be the last. Ultimately it comes to this: If you want your business to be rewarded by a partner then you need to do business with them in a way which lets them also benefit. The more they benefit, the better they will reward you.
- How much does the Middle East alliance shake-up matter?
- Just how powerful are the Middle Eastern carriers? Ask Barcelona.
- Etihad invades Germany, buys controlling interest of airberlin
- United guts premium fare earning rates on multiple partners
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