UPDATE 2-Delta to award frequent flier miles based on ticket price
By Karen Jacobs
Feb 26 (Reuters) - Delta Air Lines Inc, making a bigger play for business travelers, said it would change its frequent-flier program to base miles earned toward free flights on how much customers spend rather than the distance traveled.
The move, which will take effect next year, will benefit corporate travelers who are the most profitable for airlines. Those travelers can spend two to three times or more than leisure passengers, who tend to look for bargains. Business travelers also tend to book more flights.
Delta's change will sweeten mileage awards for travelers who pay more for airline tickets.
George Hamlin, an aviation consultant in Fairfax, Virginia, said the frequent-flier plan change comes as airlines look to cater more to most profitable customers.
"It's going to upset a lot of people but it's economic reality," Hamlin said. "Leisure passengers typically seek out price, and carrier loyalty is often a second priority."
As of Jan. 1 of next year, Delta passengers will garner between 5 and 11 miles for each dollar spent on airfares depending on their frequent-flier status, with those at the highest level earning the most, the carrier said. Purchases with a Delta SkyMiles credit card will earn additional miles.
Airline loyalty programs can help increase business among business travelers who fly often. Miles accrued under Delta's loyalty program do not expire.
Brian Kelly, founder of ThePointsGuy.com, a travel website that focuses on frequent-flier issues, said the move could be good for travelers who spend a lot on tickets but don't fly longer distances.
"It hurts consumers who are savvy with their money and go for the most reasonable fares," said Kelly.
JetBlue Airways and Southwest Airlines also tie frequent-flier miles earned to the amount spent on a ticket, and Hamlin said he expects other major U.S. airlines to follow suit.
Delta has taken many moves to draw more business travelers in recent years. It renovated terminals at LaGuardia and John F. Kennedy International airports in New York, a market rich with business customers. It is looking to lure more corporate passengers with a joint venture it began this year with Britain's Virgin Atlantic Airways, a partnership that strengthened Delta's presence at London's Heathrow airport.
Robert Mann, an aviation consultant in Port Washington, New York, said Delta's move made sense and is now technologically feasible since airlines can track travelers' spending.
"The spend, the fares paid and the willingness to buy up are the best approximations of a customer's contribution to carrier profitability, and that's what you want to reward," Mann said. "That's what loyalty is."
American Airlines Group and United Continental Holdings declined to comment on Delta's move or any possible changes to their programs.
Shares of Delta, which have risen about 22 percent so far this year, rose 0.8 percent to $33.51 on Wednesday. Other airlines were mixed, with American Airlines down 0.7 percent at $36.75 and United off nearly 1 percent at $46.81.
- Citing security threat, Obama expands U.S. role fighting Ebola
- Tesla prevails in top Massachusetts court over direct sales
- Russia needs government investment to avoid recession, says former finance minister
- Stocks end higher on bet Fed won't change rate stance
- U.S. general says cannot rule out larger ground role in Iraq