The Navigator: Soon, airline loyalty will cost you

Like many frequent travelers, Glenn Haussman recently received an e-mail from Delta Air Lines about an “update” to its SkyMiles loyalty program. It was so understated that some passengers didn’t bother to read it. But Haussman did.

“I was not thrilled,” says Haussman, who works for a hotel industry Web site in New York. “It made me feel less valuable to Delta.”

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How can a loyalty program make passengers feel unappreciated? Delta is the first legacy airline to tie the value of its frequent-flier program to the amount of money you spend, as opposed to the number of miles you fly. Beginning Jan. 1, 2014, the airline’s frequent fliers will earn “elite” status, which gives them access to upgrades and other perks, through a combination of miles or segments flown and annual spending on Delta flights.

It’s the latest in a series of unpopular but necessary reforms that are leaving some travelers questioning the value of the travel industry’s rewards programs. “When they peg a dollar amount to my travel, it seems as though they’re penalizing me for planning my travel well in advance of others,” says Haussman.

The reason for the change is simple: The program as currently constituted is unsustainable.

Jim Knisely, Delta’s general manager for SkyMiles strategy and operations, says that the old rewards program worked when the distance flown aligned with the price of a ticket, as it did three decades ago, when loyalty programs were created. “But that’s no longer the reality of our industry,” he told me.

“The objective here is merely to try and keep a program successfully running as originally designed,” says Krista Paul, founder of UsingMiles.com, a loyalty Web site. Delta had too many elite-level fliers competing for a limited number of perks, and “something needed to be done.”

Airlines can change the terms of their loyalty programs anytime, for any reason, according to their program rules. They can even eliminate their programs, because the fine print says that the miles don’t belong to you; they’re the airline’s property. That may be why some Delta customers feel betrayed by this “update”: They say that the airline is breaking a promise to reward them for their business.

“It’s not a miles program,” says Nancy Dickinson, a Web site editor in Palominas, Ariz. “It’s a money-for-Delta program. At least they’re no longer hiding it.”

Air travelers should get used to it, according to airline loyalty expert Tim Winship. JetBlue Airways, Southwest Airlines and Virgin America already offer frequent-flier programs that reward air travelers based on how much they spend, he says. Delta is the first legacy airline to adopt a similar model. “There’s still some value to be squeezed out of the programs,” he says. “But it’s becoming increasingly difficult.”

Winship and others say that the idea that passengers who spend the most should get the most will be a standard for loyalty programs of the future. US Airways, which is considering a merger with American Airlines, is thought to be considering similar changes, says Winship.