When Delta Air Lines switched to a more dynamic pricing model for its SkyMiles awards program the company was reasonably clear on the driving factor: Fares vary over time so why shouldn’t award prices, too? The early iterations of those efforts were relatively easy to follow, as different award buckets were tied to different points requirements. The company continues to tweak the way awards are priced and the results can be surprising for passengers. Especially when the award and cash prices diverge significantly.
Read More: Delta’s advantage in loyalty: Dynamic Award Pricing
Take, for example, a trip from Tokyo to New York City. There is no official chart for the prices of those awards, of course. That’s the way Delta wants things. On a recent search I noticed a variety of options ranging from 35,000 to 80,000 points, all with a single stop in Minneapolis. Unlike in past searches I’ve performed, however, the variable pricing all showed up as the same booking class – “N” in this case – for the multiple price points.
Even more impressive is that all three of these itineraries, with their different award prices even in the same booking class, cost the exact same amount if booked as a paid/cash ticket. All of them booked into “T” inventory and thanks to the way cash fares are constructed the price is identical across the trips. Lining the revenue and award rates up next to each other presents a most confusing set of data.
Airlines work hard to convince passengers that fares are dynamic based on ever-changing supply and demand. The “black magic” of revenue management handles that task by adjusting available fares and inventory to maximize yields for the airline. And all of that can be easily applied to award inventory, too. I don’t necessarily love the transition, but I understand why the airlines chose that path.
But when the net result is a system wherein the dynamic controls vary wildly between the two systems it becomes harder to trust that the process really is working as designed. And losing that trust from customers can crush a loyalty program mighty quick.
To be fair, there is no rule that points must have a specific cash value, even in revenue-based/dynamic programs. JetBlue’s TrueBlue program values points differently based on a variety of factors, even occasionally when the cash fare is identical. But never to the tune of a 2x spread like what Delta showed here.
That’s a wrap for this trip to Japan. On board @Delta DL120 for HND-MSP now. Just 18 hours to home. #avgeek #paxex #wandrjplcc pic.twitter.com/1gX3wFPpuI
— Seth Miller (@WandrMe) November 2, 2017
And, lest there be any doubt, I booked the 35k EWR award. All the same to me in terms of getting home so no need to pay extra.
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No doubt this model will find its way into the new “simplified (sic)” klm/af program? !
As you so correctly point out (no pun intended! ) complicated, confusing and untrustworthy FF programs can quickly crush an airline by destroying the loyalty it has previously built with its customers.
the MSP-HND flight is one of the absolutely easiest across the entire DL TPAC network to get Level 1 Saver award in both Y and J. That should tell you a lot about how that flight is performing.
DL only submitted MSP to avoid scrutiny on their past failed SEA and DTW attempts, and absolutely nothing related to MSP at all.
I’m quite aware of the circumstances surrounding the MSP-HND route. http://blog.wandr.me/2016/04/haneda-slots-delta-american-united-hawaiian/
My flight was mostly full (I know that’s not a proxy for profitability) and had many passengers connecting onward based on what I saw and heard. That’s what Delta wants from the route, at least for now.
You say losing trust can crush a loyalty program. Has that happened to Delta?
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