Delta Moves Toward Revenue Scheme with Elite Changes

It has long been speculated that at least some major airlines, principally Delta and US Airways, were preparing to follow the lead of Southwest and JetBlue in switching from traditional miles- or segment-based loyalty programs to a revenue-based program model that awards points according to the price of purchased tickets, and prices awards according to the market price of comparable paid tickets.

Delta yesterday announced changes to its elite program that are consistent with such a move, although there’s still no official confirmation that a wholesale change is forthcoming.

Beginning on January 1, 2014, to earn Medallion elite status for 2015 will require a combination of Medallion-Qualifying Dollars (MQDs) and either Medallion-Qualifying Miles (MQMs) or Medallion-Qualifying Segments (MQSs), as follows:

• Silver: $2,500 MQDs + 25,000 MQMs or 30 MQSs
• Gold: $5,000 MQDs + 50,000 MQMs or 60 MQSs
• Platinum: $7,500 MQDs + 75,000 MQMs or 100 MQSs
• Diamond: $12,500 MQDs + 125,000 MQMs or 140 MQSs

What’s new here, of course, is the revenue component, those MQDs. Because of it, when the new policy takes effect, travelers who load up on cheap flights will have a much harder time reaching elite status. Mileage runs will no longer make economic sense.

The FAQ also states that only Delta flights, and partner flights ticketed “through a Delta channel,” will earn MQDs.

According to Delta’s news release, “The changes will ensure that customers who have earned Medallion status—through both flying and dollars spent—reap the rewards of the Delta SkyMiles Medallion program.” I’d put it slightly differently: The changes ensure that those who earn elite status have paid to do so.

That’s both fair and reasonable. Elite status was always intended as a reward for the airlines’ most profitable customers, with miles and segments used as rough proxies for travelers’ actual spend on airfare. Delta is simply putting into practice a more effective mechanism for measuring customers’ revenue contribution to the airline.

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Fairness notwithstanding, the new rule will put elite perks out of reach for some of those who have earned them year in and year out on the strength of lower-priced flights. Sparks will fly. There will be grumbling and name-calling and threats to “take my business elsewhere.” (See this Flyertalk thread for a sampling of reactions from SkyMiles members.)

The flip side is that the ranks of Delta elites will be pared somewhat, resulting in more upgrade opportunities for those who still manage to qualify under the more stringent requirements.

If this is indeed the first move in the direction of a wholly new revenue-driven program, the din from those for and against the changes is just beginning.

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This article originally appeared on FrequentFlier.com.