Quirky Bonus if Delta Raises the Medallion Bar

According to The Points Guy, Delta Air Lines will increase the amount of Medallion Qualification Dollars (MQD) needed to maintain status for the 2016 year. Disclosure: I am not aware of any announcement from Delta confirming this.

Update: Delta’s official announcement has been made on 10.October.2014. See 2015 / 2016 Medallion Qualification Dollars.

If correct, it means that for the period January 1-December 31, 2015, all Medallion elite levels will need an additional 20% of qualifying spend. Beginning next year, the minimum qualifying amount of airfare for each level will look like this:

  • Silver — $3,000
  • Gold — $6,000
  • Platinum — $9,000
  • Diamond — $15,000

Note that these figures are net qualifying airfare. It does not include taxes and certain fees, as well as other charges paid directly to Delta.

Frankly, this would be no great surprise. Delta has had nine months to gather data on how many of their Medallions will re-qualify based on the current MQD levels. No doubt they have compared this to prior year spending and after adding in the present and projected fare increases, arrived at this new figure.

A throwback to an old Delta Frequent Flyer card

A throwback to an old Delta Frequent Flyer card

So who is hurt and who is helped? Certainly the elites hurt most by this are those who tend to purchase inexpensive fares. By boosting the net amount to .12/mile, the bar is raised for bargain hunters. Those who are mileage runners may feel an even greater pinch.

At the other end are those who purchase late or last minute fares which tend to be higher fare bucket and more expensive. Also, many who purchase certain short-haul flights tend to have fares that exceed this level. These are most often business travelers who probably won’t see any real difference.

For the majority in the middle, there will be some winners and some losers. If the ranks thin, those who remain may be rewarded with more upgrade opportunities and just possibly, Delta’s SkyClub lounges might not be as crowded. But to me, this is not about thinning the herd. It is basic economic carrot and stick. They raise the bar, then watch as most will pay higher airfares to achieve that status. One thing is certain, airfares are projected to increase again next year anyway. It might not be as difficult to hit these higher levels as some believe.

A bit surprising was that Delta did not also increase the American Express Waiver for any elite levels.  A 20% increase here would mean that elites would need $30,000 of qualifying annual spend on a Delta branded AmEx card to have the MQD requirement waived.  Instead, the waiver amount remains at $25,000.  Also, they are keeping in place the waiver for their highest tier, Diamond.  United Airlines pulled the waiver opportunity for their top tier elites, 1k.  For those who meet the criteria with this waiver – as well as those who have an address outside the U.S. – these new MQD levels will have no impact at all.

Shhh, don’t tell Delta but there is actually a quirky hidden bonus in this. Also beginning next year, the amount of redeemable award miles earned are revenue-based. In other words, the more you spend on Delta flights, the more award miles you will earn. For those who decide to pay the higher airfares to achieve their elite levels, they will be partially rewarded with even more award miles. Not saying this is a perfect offset but it does help with the sting.

Then is this much ado about nothing? Not really. It is more about Delta flexing its muscular control over their Medallion program because, well, because they can. As has been said repeatedly, the airlines are in control of this market right now so it is their way or no way. Reduced capacity, reduced competition, and a good economic climate is the perfect mix for airline control. When the economy turns south – and it will, though maybe a few years from now – then the airlines will revisit the impact of their decisions. Until then, or until there is a strong desire for market share again, the airlines rule their frequent flier programs. We are just along for the ride.

 

 

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