Halloran: SkyMiles Changes Big for Consumer

Atlanta-based Delta Air Lines announced last week SkyMiles — the airline’s equivalent to frequent user reward points — will no longer have an expiration date. According to the Atlanta Journal-Constitution, customers’ miles previously lapsed after 24 months of inactivity.

Delta spokeswoman Chris Kelly told the AJC the airline was “talking a lot with our customers to get their ideas on things that kind of mean the most to them, and add the most value to their miles, and the expiration policy was an item that kept coming up.”

Tim Halloran, Goizueta marketing instructor and director of the EmoryMAC Initiative, said the move likely took flight because of Delta’s increased competition.

“Inevitably, Delta is seeing some changes in the competitive landscape with the United-Continental merger and the acquisition of AirTran by Southwest and, consequently, the influx of Southwest into Delta’s primary hub Atlanta.

“As a proactive measure to prevent customers from getting ‘a bad taste in their mouth’ about Delta, they are trying to keep those ‘less frequent’ flyers within the fold in the hopes that, when they do fly, they will choose Delta. ”

Delta, a founding partner of EmoryMAC, relies heavily on analytics. With that, Halloran said he expects the company did its homework comparing the relative costs of not letting miles expire against negative consumer feedback.

“We’re talking about one particular segment of Delta’s overall business model, and I’m guessing, one that makes up a small percentage of its revenue,” Halloran added. “However, if Delta loses those folks out of their franchise altogether because of miles expiration, not only do they lose the revenue that these folks may provide in taking their infrequent trips, but they also lose the potential that these flyers represent.

“But, they need to beware of unintended consequences; it will not be good if they do not increase the number of frequent flyer seats commenserate with the expected increase in free tickets being given away. The last thing they will want to do is make it even tougher for the super frequent flyer to get free seats and upgrades because they are being taken up by the new batch of infrequent flyers who will now be able to use old miles for free travel when, previously, this would have expired. They will have to meet this new demand.”