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Delta Plans to Displace Elites with Paying Passengers in First Class

Delta’s bet that it can increase profits at the same time it undermines the loyalty of its most profitable customers is likely to end badly for all concerned.

Most elite members of Delta ‘s SkyMiles program probably didn’t pore over the airline’s recent Investor Day presentation. And of those that did, only a handful got as far as Slide 37 in the 56-slide deck. For their perseverance, they were rewarded with an ugly truth: First-class upgrades, already in scarce supply, are set to become scarcer still.

As the name suggests, the Investor Day document targets institutional investors and Wall Street analysts. It’s a compendium of performance data and rosy projections boasting of Delta’s operational and financial achievements, many of which are considerable. If you were inclined to invest in an airline company, Delta looks like a solid bet.

For current and aspiring elite SkyMiles members, however, the takeaway is decidedly negative, what investors would call a sell signal. The aforementioned Slide 37, entitled “Maximizing the Value of Our Premium Cabins,” simply depicts Delta’s current and projected paid load factors in both first class and Delta Comfort+ class. What the data portend is nothing less than the all-but-elimination of first-class upgrades.

Consider:

  • The first-class paid load factor will increase from 57 percent at the end of 2015 to 70 percent in 2018.
  • Over the same period, the paid load factor in Comfort+ will increase from 36 percent to 50 percent.

On a B757-200, the most-flown jet in Delta’s fleet, the typical first-class cabin is fitted with either 22 or 24 seats. That means the number of unsold first-class seats available for elite upgrades will decrease from nine or 10 seats to six or seven per flight. That’s conservatively described as a change from bad to worse.

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As difficult as first-class upgrades are to come by today, there’s at least a degree of certainty that an upgrade to Comfort+ is a realistic backup expectation. But with the targeted increase in paid Comfort+ load factors, that option will become significantly less viable as well.

As any good business must, Delta is simply maximizing the revenue potential of its assets, in this case its premium seats. But if it’s successful in selling 70 percent of its first-class seats, and 50 percent of its Comfort+ seats, it will be at the expense of complimentary elite upgrades, the signature perk enjoyed by the airline’s best customers.

Delta is betting it can increase profits at the same time as it undermines the loyalty of its most profitable customers. It’s hard to imagine this strategy ending well for either Delta or for SkyMiles members.

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After 20 years working in the travel industry, and 15 years writing about it, Tim Winship knows a thing or two about travel. Follow him on Twitter @twinship.

By Tim Winship

After 20 years working in the travel industry, and 15 years writing about it, Tim Winship knows a thing or two about travel. Follow him on Twitter @twinship.