Late in 2018, Delta began experimenting with basic economy on award tickets for a select number of routes. Now, it looks like Delta has gone full speed ahead with basic economy awards on most U.S. and Canadian flights.
Breaking It Down:
Delta Basic Economy Restrictions
As you can see, basic economy fares restrict Delta passengers from seat selection, make them board last, and further block Medallion members from potential complimentary upgrades. Award redemptions which restrict seat selection and potential upgrades are a form of reverse incentive economics.
Reverse Incentive Economics
Delta CEO Ed Bastian (along with CEOs of American and United) seem to be proud of the fact that basic economy is such a poor product that people would be willing to buy up. Keep pricing the same, make the product worse, and naturally, customers will pay more to get what they were accustomed to previously.
Delta President Glen Hauenstein has echoed this sentiment in interviews.
Many customers don’t want basic economy when they see what exactly it is. Really, the success of that product isn’t how many people buy it, in our mind. But it’s how many people don’t buy it and choose another product.
Now, Delta feels the time is right, as summer peak travel season approaches, to put basic economy as the lowest award level for many more routes.
Delta Expands Basic Economy Awards
The Thrifty Traveler has reported a Delta spokesperson as saying that basic economy now applies to the cheapest awards for most Delta flights within the U.S. and Canada, effective March 5.
What This Really Means
With these changes, Delta will makes its cheapest awards a basic economy offering. That means more restrictions at the same award pricing. This will apply to domestic and Canadian routes, including Hawaii.
Hawaii is a route where awards have been historically held to higher redemption levels compared to the rest of the U.S. Delta faces more competition to Hawaii and fare pressure coming from Southwest Airlines’ entrance in the market.
Delta will likely use their basic economy strategies for both revenue and award tickets to more aggressively counter Southwest’s low fares.
Example: Delta Awards to Hawaii
I looked at flights to Hawaii, from Atlanta (ATL) to see what the rates are for award redemptions.
The lowest roundtrip award fares are 44,000 SkyMiles and $11.20 in fees.
For the 44,000 you get basic economy and there is a connection. A Main Cabin award will run you 60,000 SkyMiles, a whopping 16,000 miles more for simple comforts like seat selection.
74,000 SkyMiles will get you a basic economy award and a Main Cabin award will run you 80,000 SkyMiles.
Will Delta Launch Basic Economy Awards For International Routes Next?
It’s probably just a matter of time before we see Delta force basic economy into the transatlantic award ticket landscape and beyond. Loyalty to Delta means having to pay more to avoid basic economy, exactly what Delta is betting on. More SkyMiles mean less potential liability on the books for future redemptions.
If you want to book award travel and leave the details (and stress) to someone else, contact Juicy Miles. They can assist you in getting the best redemption rates.
Delta continues to squeeze their loyal frequent flyer members for more miles. However, the in-flight experience is arguably better than both American and United. Both Bastian and Hauenstein seem okay with a business model where flight experience trumps loyalty program value.
What happens when loyal flyers have used up their SkyMiles? Credit card rewards are a more liquid commodity, and Delta may find its loyal fanbase jumping ship to cards which provide more redemption options. At least in that way, consumers could respond immediately to devaluations and take their business elsewhere.
Some credit card products that allow points transfers to various airline programs and have portals for points redemption for travel:
Will you pay the difference in miles to avoid basic economy on award tickets?
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