Delta Air Lines’ merger with Northwest Airlines has the potential to bring together 74 million frequent fliers, as well as attract new ones drawn to their combined collection of global routes.
But there’s no guarantee.
Delta is now in the midst of a critically important effort to win the continued loyalty of Northwest frequent fliers and attract others who typically fly competing airlines. The result could play a key role in whether the merger is ultimately a success.
Delta’s window of time is starting to dwindle as the two carriers move ahead in merging operations. By next year, the Northwest name will largely be gone, and some of its customers could turn to other airlines for their travel.
“There is perhaps a moment here in time where a member can reassess what they want to do because you’re about to leap into a new relationship with a mileage program,” said Jay Sorensen, president of IdeaWorks, an airline consulting company.
Members may pause “and say, hmmm, should I start flying American and throw my allegiance that way?”
Two prime targets for Delta are elite-level frequent fliers from Northwest, who are among the most profitable customers, and Northwest WorldPerks mileage credit card holders, who deepen their ties to the airline every time they use the card.
Other targets are customers loyal to other airlines like AirTran Airways; American Airlines, Delta’s largest competitor nationally; and United Airlines, whose strong presence in Asia makes it a significant competitor on Asian routes Delta acquired from Northwest.
“AirTran is the competitor in Atlanta that we fight with daily to win Atlanta customers over, and East Coast customers in general,” said Jeff Robertson, Delta’s vice president of loyalty programs and head of SkyMiles. “American probably has the most to lose as a result of our merger.”
In cities where several carriers have a strong presence, such as in Washington, New York or Boston, frequent fliers could be up for grabs.
Robertson said “it’s really tough to tell, to be honest,” if Delta has gained frequent-flier market share from other carriers. “We’re still in a year of transition.”
Any significant shift may also be masked by the recession-fueled decline in travel this year.
As it seeks more business, Delta is targeting other airlines’ passengers using customer intelligence —- in Atlanta, for example, it tracks corporate customers linked to AirTran, customers that fly on routes where AirTran competes with Delta and those who have stopped flying Delta in those markets.
“Certainly some AirTran customers are probably going to reassess their relationship to AirTran and say, ‘You know what, I may not like everything about Delta, but boy it is so convenient for me as an Atlanta resident. With the new route network, geez, I can get anywhere on Delta,’ ” said Tim Winship, editor-at-large for smartertravel.com.
AirTran recently lowered its threshold to reach elite status in its own frequent-flier program.
“If you want to fly to Africa, Delta’s your airline. If you want to fly to Tampa, AirTran is probably your best pick,” said AirTran spokesman Christopher White.
In the Northwest hubs of Detroit, Minneapolis and Memphis, Delta is focusing much of its energy on trying to get holders of Northwest’s WorldPerks Visa card to switch to its American Express SkyMiles card.
Northwest’s Visa card issuer, U.S. Bank, is fighting to keep those customers by offering a travel rewards card not tied to any carrier.
“Those card members are extremely valuable to us,” as they are some of Northwest’s best WorldPerks customers, Delta’s Robertson said.
Besides boosting flier loyalty, affinity credit cards are big business. Delta gets about $1 billion a year through its credit card partnership, much of it from the sale of miles to American Express.
Robertson hopes to convert many of the US Bank card holders, and get new American Express cardholders by mining the WorldPerks member list.
Delta plans to soon announce a combined SkyMiles program, and its more prominent industry position could set off an arms race of frequent-flier inducements.
American Airlines recently said it will start allowing redemptions for one-way flights. Robertson said Delta is analyzing American’s actions. “In the very near future, we don’t have any plans to change any of those rules.”
But over time, Winship said, a face-off between Delta and American “can actually result in consumer benefits that we might not have seen were it not for two companies going at it head-to-head.”