Fuel Surcharges Hit Delta's Frequent Flier Program

Delta informed their beloved frequent fliers yesterday that effective August 15, all flights booked with SkyMiles will carry up to a $50 fuel surcharge. The airline also announced the impending release of an exciting “new multi-tiered Award program.”

Delta’s dispatch:

Escalating fuel prices continue to impact our world economy, everyday life and the airline industry. Due to continued, unprecedented fuel costs, we will add the following fuel surcharge to Award Tickets originating from the U.S. and Canada, effective August 15, 2008:

  • $25 for Award Travel between the 50 states and Canada
  • $50 for Award Travel between the 50 states/Canada and all international destinations

This was a difficult but essential decision to ensure we are doing everything possible to offset the cost of fuel which has nearly doubled in the last year. This fuel surcharge will not impact any existing ticketed Award itineraries or any future Award Tickets issued prior to August 15, 2008, regardless of the date of travel. We hope this is temporary, and should fuel prices subside from current levels, we will reevaluate this surcharge.

We are committed to making SkyMiles® the best frequent flyer program in the industry and providing you with the most benefits and rewards. We will continue to expand the destinations and opportunities for Award Travel and strengthen the program as we prepare for our proposed merger with Northwest Airlines®. Additionally, we will keep you updated on the launch of our new multi-tiered Award program and other key initiatives over the next 60 days.

Thank you for your continued loyalty and support of Delta and the SkyMiles Program—now and always.

JEFF

J. W. Robertson

Managing Director, SkyMiles

The announcement coincides nicely with the release of the 20th fare hike this year.

We are intrigued by the “new multi-tiered Award program” J.W. mentioned. Details are scarce, but we imagine it will work out something like this: there will be two impermeable tiers. In one tier, there will be awards. In the other tier, frequent fliers.

(AP Photo/Al Behrman)

(Thank to everyone who forwarded the announcement!)

Comments

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  1. Shut up and pay up. The solvency of airlines requires adapting prices to fuel prices. Gas and labor is their balance sheet, and I’m sure nobody wants staff cuts.

  2. famousmortimer78 says:

    Sorry, I got confused. I thought a rewards program was supposed to reward you for choosing to fly frequently with that carrier, and that any such reward would already have the cost of fuel calculated into the miles traveled/ miles rewarded ratio. My bad.

  3. Consumerist Moderator - ACAMBRAS says:

    PLUS: it seems like you need quite a few more miles accumulated to even THINK about redeeming them for a rewards ticket these days. I’ve run into that problem on Delta myself — I wouldn’t be shocked if the same were true on other airlines. :-(

  4. s35flyer says:

    adismalscience – dont make commitments you can’t live up too. Who cares about their business problems, thats their problem. They made a “contract” with customers, now carry-through.

  5. azntg says:

    Change is: More fees! Delta Skyteam.

  6. balthisar says:

    @Consumerist Moderator – ACAMBRAS: As of two weeks ago, American’s Aadvantage was the same as always. Got my tickets to Mexico, and only had to pay the taxes. Same miles cost as always, zero black out dates, no seat limitations, and being that it’s international, we can each check two bags with no additional cost.

    That’s not to say that I’m thrilled about American’s current level of service in the airport and on the airplane, but at least they’re living up to their rewards program promises.

  7. packetsniffer says:

    @s35flyer:
    You can’t expect them to eat so much loss that they run themselves into the ground (no pun intended) from a non-contractual perks program because of something completely unexpected and out of their control.

  8. one800higgins says:

    I agree with packetsniffer and adismalscience. The economy is changing… Just because they offered a benefits (non-contractual) program doesn’t mean that they should be taking a bullet and putting their company further in the red.

    Working for FedEx I get to hear the blunt from customers as our prices rise… But the problem is that us (along with airlines) have one MAJOR cost… Fuel. Fuel for planes, fuel for trucks. We, just like them, are in a business that relies on transportation… So when transportation costs skyrocket, adjustments will be made. Sadly those adjustments will be felt from the top all the way down to the bottom.

    It’s life, it happens. There’s nothing you can do about it… Bitching won’t help.

  9. Noris159 says:

    @1800higgins: Don’t bother arguing with these people. A good portion of people who read Consumerist respond in such a way that they can’t possibly believe that companies should make money, you know, so they can grow, pay its employees, and be rewarded for its success.

    Consumerist posters also hate rich people (omg frequent fliers) as can be seen in the Bugaboo stroller post and Philharmonic posts because they believe you’re not entitled to be irritated in life unless you’re dumpster diving or starving in Africa. Go back and look at those posts. Sadly, I’m not exaggerating.

  10. camman68 says:

    Some carriers prepared for this, others didn’t.

    I have no problem with a company making a profit. I do have a problem with companies making promises they don’t keep. I guess no one in their accounting office was aware of the fact that fuel prices have been increasing since fuel was invented.

    These airlines “suckered” customers into flying by offering certain rewards. Then they decided that they wouldn’t honor their commitment. I realize it will cost them money to “keep-their-word”, but why isn’t this part of the cost of doing business.

    When fuel prices were lower than their pencil-pushers predicted, did they refund any money to the customers or did they pocket the difference?

  11. Kounji says:

    Someone in the upper end of the finance department should have really pushed for hedging .

  12. beatofhawaii.com says:

    The airlines can not devise a way for prices to move in relation to oil. That is, in any way that works for them and doesn’t further alienate their clients. Until appropriate contraction of the industry occurs and prices align with costs, we can likely only expect to see more frustrating and disjointed price adjustments.

    Aloha, [beatofhawaii.com]

  13. JennQPublic says:

    I just find the whole idea of a “fuel surcharge” ridiculous. Yes, fuel has gone up in price. It’s reasonable for ticket prices to increase. But all of the “surcharges” are outrageous. Next we’ll be paying a seat surcharge, and an air surcharge. “Fuel” should be included in the ticket price!

    @Noris159: I have no problem with rich people, but I did think $700 for a stroller was over the top. Among other things, you’re assuming that the people buying these strollers are, in fact, rich. Many of them probably don’t have a large net worth, they just have a large income (currently). I’m not talking about the couple in the article specifically, but in general, just because someone is willing and able to spend large amounts of money on things that can reasonably be purchased much cheaper, does not make them “rich.”

  14. MoCo says:

    Delta could have hedged fuel prices like Southwest did. Instead, they are passing on the cost of their lousy business practices to their customers.

  15. toddy33 says:

    @Noris159: Congratulations on one of the most useless posts ever on Consumerist. Of course corporations are allowed to–and should–make money in a Capitalist system. Even one such as ours, which is far from perfectly free market. BUT…when the corporations do it in such a way as to renege on promises, tack on sneaky “extras”, and deliver progressively less while hoping we won’t notice, and then expect that we can just be patted on the head like good little sheep is ridiculous. I agree with much of what’s been said here. Work on your business practices and your customer service and for heaven’s sake, just be up front about increasing your prices. But don’t patronize me and assume that I’m an idiot.

  16. jamar0303 says:

    @1800higgins: So, for example, Southwest doesn’t feel the need to do this because…?

  17. dink23 says:

    @balthisar: Exactly why I have American Aadvantage…Only a $5 per ticket to book online ($20 via phone), no extra surcharges, 2 free pieces of luggage per passenger. Domestic coach tickets have never been more that 25,000 miles at that includes multi-destination travel (I went from LA to DC to Miami back to LA for $20). Spent 30,000 miles and $5 for an $800 ticket to Barbados. My parents used to have a Miles One card, but flights were nearly double the miles so they switched to a Citibank AA card and get a free vacation about once every 2-3 months. I know every airline has it’s issues, but AA has treated me right when it comes to rewards.

  18. Mykro says:

    Our airline just won Regional Airline of the Year this year, and on our CEO’s weekly email, this week hes talking about possibly cutting back… not just planes, but time, then employees..
    It sucks, but if they dont’ charge these surcharges (to keep up enough money to maintain an airline), then you wouldn’t be flying at all, now would you?
    I’m in the maintenance department, and parts for airpanes are extremely retarded in value. Friggin ORings cost up to 100s of dollars.. A FRIGGIN ORING! Lets not even ask what a windshield, radome, or heat exchanger costs… Any 1 of those cost more than I make in a year.. some 2 or 3 years

  19. kepler11 says:

    everyone says that the major airlines should have done more hedging, but that is not so straightforward. Fuel options cost something, and certainly financial analysts for every major airline were considering it. They did hedge, just not to the extent that Southwest did.

    Also, I have heard reasonable commentary that takes the view that essentially Southwest became a fuel hedging firm, that also ran an airline. And that is not a sustainable model of business — i.e. airlines should be planning on how they can operate in a variety of fuel circumstances without having to bet on the price of oil.

  20. kepler11 says:

    @Mykro:
    There was a very good story in the WSJ about 2 years ago about how many airlines are now “in-sourcing” their parts, and having their own shops manufacture bits that are otherwise way overpriced from the original manufacturer. Things like bathroom doors/mirrors, simple fasteners, oven latches, and non-critical things where it is sometimes 10x cheaper just to make it themselves. Not a bad idea.

  21. LUV2CattleCall says:

    Delta scolds me for flying with them enough for a free r/t by charging a fee

    Southwest gives me 2 free drink coupons when I get 16 RR credits (Tip: For anyone between 18-24, you get double RR credits, and 4 bonus for signing up, so 3 round-trips and you get one free! Plus, if you call them, and get through the thick Texas accents, they’ll retroactively give you credits for flights in the past 2 years – [www.southwest.com])

    Guess who I “luv” to fly?