Seat 2B By Joe Brancatelli
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Delta Lives and Dies on the Narrative
August 6, 2015 --Delta Air Lines wants you to believe that it's the best thing to happen to business travelers since the Wright Brothers, but it is learning a hard lesson: live by the narrative, die by the narrative.
In the eight years since it appointed Richard Anderson as chief executive, Delta has been on a mission to convince the world that it is a different kind of airline: profitable, efficient, innovative, responsive and, most of all, an investment-grade market play.
In ways that were unimaginable when Anderson took on the then newly combined Delta and Northwest Airlines, the new Delta Air Lines has become the very model of a modern major commercial air carrier.
It laps the global airline field in profitability, racking up nearly $15 billion in profits during the last 10 quarters. It leads the nation in on-time performance, often operating 10 percent above the industry average. It sometimes goes days without cancelling a flight, a remarkable feat given the vagaries of airline travel. Delta retired hundreds of costly, passenger-repellant small regional jets and replaced many of them with Boeing 717s that once flew for AirTran Airways. It even got Southwest Airlines, which purchased AirTran, to pay to retrofit the planes in Delta's colors and configuration. It bulled its way into the lucrative New York market via a canny asset swap at LaGuardia Airport and a concerted build-up at Kennedy Airport. It is refocusing its Asia network on fast-growing Seattle-Tacoma rather than at Northwest's former Japan hub at Tokyo's Narita Airport. It has taken minority stakes in GOL of Brazil and China Eastern to bulk up its global presence and augment its transatlantic alliance with Air France-KLM. Even while its larger effort to blunt the growth of the three large Gulf carriers has met with substantial derision, Delta has won at least a temporary victory by delaying Congressional reauthorization of the Export-Import Bank.
Perhaps most important of all, Delta has worked assiduously to control the narrative and spout its we're-better-than-the industry mantra. A new chief communications officer — hired, by Delta's own admission, because he was "an expert storyteller" — has stocked his department with former journalists who repeat carefully honed talking points rather than answer questions. Line executives are difficult to reach on the record and increasingly reluctant to speak off it. And if it doesn't like what the media says, Delta responds with professionally written spin at its own "news" outlet.
But Delta's exquisite narrative is running right smack against the wall of one irrefutable reality: SkyMiles, its frequent flyer program, is offensively, aggressively awful. And the general public and business travelers in specific are beginning to judge everything the airline does through the lens of the carrier's parsimonious, disingenuous and disreputable management of SkyMiles.
As explained in this column several times in recent years, Delta has converted its plan from a traditional mileage-based plan into one based on the amount of revenue you contribute to the carrier. There's nothing wrong with that and, properly managed, should have benefitted higher-spending business travelers. But Delta buried a nasty devaluation into the conversion and now every flyer earns less — a lot less — for any loyalty they give to Delta.
The airline followed its initial cutback with other devaluations: fewer elite benefits; fewer upgrades; more onerous award prices; and cheats such as unannounced advance-purchase restrictions.
Then several months ago it dropped the ultimate hammer: It eliminated its award chart entirely. Now you have no idea what your SkyMiles are worth until you try to claim a ticket. In some cases, award prices, especially for premium-class seats to the most desired international destinations, have more than doubled. Any highly valued award has run up in price precipitously. (A few low-value awards have gone down in price, as Delta's publicity machine has been at pains to point out.)
Delta doesn't even deny that its goal with SkyMiles to is deal from the bottom of the deck, squeeze SkyMiles players for more revenue and renege on any promise it is no longer interested in honoring. No one can "superimpose a duty of good faith and fair dealing" on Delta's handling of SkyMiles, the airline recently argued before the U.S. Supreme Court.
The Court agreed with Delta, but an increasing number of vocal SkyMiles players have not. About half of my email from business travelers these days involves some gripe about Delta's handling of SkyMiles. On an Aer Lingus flight from New York to Dublin last week, my Florida-based seatmate in business class volunteered that she was trying Aer Lingus for the first time because she was fed up with Delta after 27 years of loyalty.
The FlyerTalk.com message boards are rife with complaints. Delta Points, a blog originally started by a fan of SkyMiles, has turned increasingly negative as Delta has repeatedly devalued. The influential blogger Gary Leff, best-known for coining the dismissive sobriquet "SkyPesos" for SkyMiles, has relentlessly covered Delta's shenanigans.
Leff's critiques caught the eye of Ron Lieber, the savvy personal-finance columnist for The New York Times. His blast at Delta went viral, even earning Delta a derisive retweet from CNN correspondent and frequent flyer Jake Tapper.
Does bad press about one awful component of an otherwise well-run airline impact the carrier's reputation and ability to become the "investment-grade" company Anderson so wants Delta to be? A half-dozen branding experts I consulted in recent days think so. More telling, five responded with some variation of "awful frequent flyer program" when I asked them for the first thing they thought of when they considered Delta.
Even before Delta's recent SkyMiles devaluations and changes, a now-retired Delta C-suite executive told me that the airline's management knew SkyMiles was the least-liked aspect of the carrier. "We know its reputation and we do want to change it," he said.
Silly me. I thought he meant SkyMiles would get better. It hasn't and it'll be fascinating to see if Delta can ignore the shade being thrown in its direction while the carrier's merry band of "storytellers" keep plugging an entirely different narrative.
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