New Delta-Northwest Mileage Program Is World's Largest

Yesterday's approval by the Department of Justice of the Delta-Northwest merger was the final hurdle in the long process of creating the world's largest airline: Delta Air Lines, based in Atlanta, with about 75,000 employees.

Travelers won't see any immediate changes. According to Ed Bastian, Delta's chief financial officer, as reported by the Associated Press: "It's probably going to take us two years before we can really operate as a single carrier."

During that transition period—which some expect to take closer to three years—Northwest will do business as a subsidiary of Delta, as the two carriers' various operations are gradually integrated. It will be a complicated process, at times messy, chaotic, and confusing.

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Naturally, there are many questions in the minds of travelers, many of which concern the future of the two airlines' frequent flyer programs, Delta SkyMiles and Northwest WorldPerks.

Here's what we know, and what we don't:

  • First and foremost, no one will lose his miles. Eventually, there will be a single program, SkyMiles. And all current SkyMiles and WorldPerks members will become members of the new program, with their miles and status intact.
  • The timing? According to a FAQ on Delta's website, the two programs will be consolidated "by the end of 2009."
  • So far, there's no word on how the consolidation will be implemented. Based on the techniques used to integrate the America West and US Airways programs, and the American AAdvantage and TWA Aviators programs, the process likely will be mostly automated. So if someone is a member of both programs, and his account information can be computer-matched (same name, address, etc.), the miles will be automatically merged into a single account. Where difficulties arose with other such integrations was in cases where account details didn't exactly match up. So those who participate in both the SkyMiles and WorldPerks programs can preempt such problems by confirming that their accounts are identical.
  • As for the specifics of the new SkyMiles program, they simply aren't known at this point. Generally, since Delta is the acquirer and Northwest the acquired, the new program will look more like Delta's current program than Northwest's. So, for example, the new program will almost certainly carry forward the recently introduced SkyMiles three-tier award structure. But the hope is that some of the best features of Northwest's program—the PerkChoice cash-and-miles option, for instance—will be incorporated into the new SkyMiles as well.

The merger represents an enormous opportunity for Delta to establish itself as the frequent flyer program leader among major airlines.

American, currently the largest program operator and historically the industry leader in loyalty marketing, has lately succumbed to short-term revenue-enhancement and cost-containment tactics, jeopardizing the program's value.

The new Delta program will have more members than American's program, and feature a larger flight network than American's as well. But size isn't enough. Winning the loyalty race requires a relentless consumer focus, sometimes in the face of pressure to take advantage of past loyalty rather than encourage future loyalty. It will require a willingness to innovate and invest, when other airlines are retrenching. It won't be easy.

Such opportunities—to redesign an existing program and get it right—are few and far between. If Delta seizes the opportunity, it could be a real step in the right direction for SkyMiles, and for its members.

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