There has been a lot of talk recently about Delta’s focus on the Comfort+ product. Enough to make one wonder about the direction of Delta’s marketing with regard to this product. Big news recently, has been that Comfort+ will begin to have a distinct fare class (starting in May 2016), further differentiating the product. Previously, Comfort+ (formerly Economy Comfort) was just a paid supplement to any published coach fare or offered as a perk to Delta Medallions (for free or discount depending on your Medallion Status level).
Jamie Baker, JP Morgan analyst, asked if Delta would consider Comfort+ instead of First Class for medallion upgrades. Currently, Delta Medallions receive complimentary unlimited space available domestic upgrades to First Class based on Medallion status level and fare class.
This could make sense, since Delta currently sells or receives some payment for 57% of domestic upgrades (to first class) and has a target of 70% by 2018. Glen Hauenstein, Chief Revenue Officer, said, “We want our customers to have a lot of miles and use them like currency. Right now, they save them for the one big trip in retirement.” He referenced being able to celebrate (using SkyMiles) by buying a bottle of Dom Pérignon in a SkyClub, or a business traveler who has had a rough week and wanted to upgrade (presumably using SkyMiles).
Let’s focus on that last piece. Specifically, he referred to miles as “live currency,” and stated that their goal is for people to be able to use miles for a much wider variety of purchases.
This correlates with much of what they said earlier. Delta views Comfort+ as an entirely different class of service and they currently sell 36% of Comfort+ tickets. Their target is 50%. In theory, by pricing Comfort+ at a modest premium to regular economy class, Delta can up-sell Medallions to Comfort+ with the hopes of an upgrade to first class. And, frankly, Comfort+ customers would have a much better chance of going to first class as a Medallion than they do currently. After all, most customers have to buy lowest fare available. Thus, instead of upgrading a Delta Platinum Medallion from a $200 coach ticket, they could upgrade the Medallion with a $300 Comfort+ ticket. Why do you think they’re putting a curtain in? They want to give it the exclusivity that first class now has.
Big assumption, but note, there was no outright denial to the question “if Delta would consider Comfort+ instead of First Class for medallion upgrades.” Can we assume that NOT denying this outright, might paint a picture of what to expect in the future? Though, some might disagree with this assumption.
Where is this all leading? Will Medallions getting upgraded to Comfort+ (instead of first class) become the “new norm?” Will only Comfort+ tickets upgrade to first class? So, Medallions who purchase the lowest fare get “free” upgrades to Comfort+. But, in order to move up to first class, you need to purchase Comfort+. “Maximizing The Value of Our Premium Cabins” is definitely a focus for Delta. No longer is it just about up-selling to first class. Maximizing revenue from both up-selling to Comfort+ and “convincing” Medallions to buy-up to Comfort+ for hopes of upgrades to first class could become the new norm. I am not saying this is going to happen overnight. With the new rules for Comfort+ (new fare class, and also Delta Medallion rules) rolling out on the 16th of May 2016 I would not expect another major “shift” until at least 2017.
Right now, you can still request first class upgrades; but it is easy to see how Delta is setting up an upgrade tier system for Comfort+ and Medallion First Class Upgrades.
DELTA COMFORT+ MEDALLION UPGRADES
Complimentary upgrades are obtained by first selecting a Main Cabin ticket. Then, on the Passenger Information screen check the box for a complimentary Delta Comfort+ upgrade. You will be notified of your upgrade via My Trips and email based on availability.
Diamond and Platinum Medallion members receive Delta Comfort+ seat assignments shortly after ticketing.
Gold Medallion members will be notified of an upgrade 72 hours before departure and Silver Medallion members will be notified of an upgrade 24 hours before departure, based on availability.Please note, all seats in Delta Comfort+ are part of our premium experience. Aisle, middle or window seats will be assigned based on availability.
If I was a heavy Delta domestic Medallion who was used to a decent percentage of upgrades to first class I would probably be getting depressed about this potential change. Perhaps, you should just take your Delta SkyMiles and buy a bottle of Dom Pérignon at your favorite SkyClub.
Reference : Delta Presentations, including Investor Day 2015
PDF of presentation from Investor Day 2015
