Airlines Unlikely to Follow Delta's Mileage Plan

Delta eliminated expiration dates on its frequent flier program mileage this week, a step experts say would create goodwill for the airline.

However, the real impact of this change on travelers is expected to be limited, experts say, because it will affect only infrequent travelers whose mileage was in danger of expiring. Nor do experts uniformly believe that other major carriers will follow Delta — which merged with Northwest in 2008 — and eliminate expiration dates on their loyalty program miles.

“Now that our massive frequent flyer program integration is complete, we are focused on smart ways to improve the SkyMiles program for all members,” said Jeff Robertson, vice president of SkyMiles, upon announcing Tuesday that the new policy is retroactive to Jan. 1, 2011. “We know how much customers value their miles, so eliminating mileage expiration is a major win for them.”

Delta — which is now the world’s second largest airline, after the combined United and Continental — is currently the only major U.S. carrier whose frequent flier miles do not expire.

Although frequent flier miles did not expire when the programs were introduced in the early 1980s, expiration dates were set at the end of that decade because of concerns about carriers’ liability for unredeemed miles, especially after Delta introduced a triple-mileage promotion in 1988. Currently, industry policies vary from a 12-month expiration date with no air travel or other activity, such as affinity card charges, to expiration after 24 months of inactivity. Previously, SkyMiles mileage expired 24 months after a member’s last qualifying activity, which required the member to earn or redeem miles during that period.

A customer-friendly move
Tim Winship, publisher of FrequentFlier.com, said Delta eliminated mileage expiration because of the black eye it received last year when a widely publicized survey suggested its three-tier loyalty program awards structure had reduced the availability of lower-priced awards and forced members to pay more for awards.

“Delta was looking for some goodwill,” he said. “It suffered a PR setback with the recent problem with limited award availability. It felt it needed to do something to move the needle back into its favor.”

Winship also said the new policy was Delta’s attempt to counter United’s recent, aggressive advertising campaign touting the Chicago-based carrier as “the airline that wants you to use your miles.”

Delta’s SkyMiles program is currently the world’s largest, though it will be eclipsed when the United and Continental programs are combined later this year: Frequent Flyer Services, which publishes InsideFlyer magazine, estimates SkyMiles has 81 million members, in the wake of the Delta-Northwest merger, while it says the merged United and Continental programs will have 94 million members.

Delta’s policy switch created “a chance for the carrier to be a leader among frequent flier programs,” suggested Randy Petersen, editor of InsideFlyer. “It’s a great move by Delta, very customer-friendly, something we haven’t seen in a long time.” Nor is the change coming at a high price for Delta, he said, since it will affect “very, very few people.”

Getting passengers onto planes
Frequent travelers will not be affected, and the impact on business travelers “under a managed travel program of any kind, where loyalty is secondary to policy in making brand decisions,” could be limited, said Mike McCormick, executive director of the Global Business Travel Association, a trade group for corporate travel managers.

Petersen expects whatever additional costs Delta ultimately may incur redeeming more mileage than before likely will be made up if the airline starts charging for flight upgrades, as many of its rivals now do. Petersen predicted Delta could “go that way, which would be a way to monetize its first-class and premium benefits.”

Henry Harteveldt, travel analyst for Forrester Research, said Delta also wanted “to make sure no one ignores it for any reason. It wants to make sure there are as few obstacles as possible in the way of getting customers onto its planes.”

Business travelers who are SkyMiles members but relatively infrequent Delta travelers lauded the new policy.

Mark Goldner, chief executive of Createch Marketing, a marketing technology company in Montvale, N.J., and a frequent traveler on Continental, said Delta’s new policy was “nice for someone who doesn’t fly on Delta that frequently. You can build up and use your miles a few years down the road, as opposed to losing them and not getting any benefit.”

In fact, Goldner said he had forfeited “quite a few” miles in his SkyMiles account recently when he lost track of them and they expired.

“It was upsetting, but it was bound to happen, since I don’t fly Delta often,” he explained.

The new policy, he added, “definitely casts Delta in a more positive light, whether I choose them or not. I’m more comfortable having them in the mix.”

Paul White, a human resources manager who moved recently from Philadelphia to Cincinnati, where Delta has a hub, said that although he had favored US Airways — which has a major presence in Philadelphia — and other Star Alliance carriers, Delta’s announcement might sway his loyalty toward SkyMiles. Until Delta’s announcement, he said, “I was on the fence. The announcement is one more reason for me to make the change.”

Will other airlines follow suit?
Loyalty program experts and observers disagree whether other airlines will adopt Delta’s new policy.

Jim Strong, president of Strong Travel Services, a Dallas-based luxury travel agency, predicted Delta’s move “will force the others over time to review their policy of expiration of miles. In the end, all will have the same policy.”

Forrester’s Harteveldt, on the other hand, said it was unclear other airlines would match Delta. “We don’t always see airlines do lockstep in loyalty programs,” he said, pointing to their differing mileage expiration policies and redemption tiers.

“By virtue of its sheer size, Delta is a force to be reckoned with,” said Winship. “But whether other airlines feel this is a battle they should be engaged in remains to be seen. The principal benefit will be for less frequent travelers, who are less profitable customers. Maybe the other airlines will let it slide.”

Delta’s new policy, added Michael Steiner, executive vice president of Ovation Travel Group, a New York-based corporate travel management company, “doesn’t balance the ever-increasing ancillary fee issue. But it’s a positive for Delta from a PR standpoint.”