Delta Defends Paring of OTA Partners

by Michele McDonald

Delta Air Lines’ marketing chief defended the carrier’s move earlier this year to restrict distribution of its flights to approved websites.

“We have no intention of distributing in places that we don’t think are brand-accretive,” Tim Mapes, senior vice president of marketing, said at the PhoCusWright Conference in Fort Lauderdale.

Over the past four years, Delta has removed its inventory from several online travel agencies, including CheapOair, OneTravel, and BookIt.com.

But when interviewer Peter Greenberg, travel editor of CBS News, suggested that those moves limit consumers’ choices, Mapes said, “I think that’s crap.”

Delta is in 94% of the OTA market and 94% of GDS distribution, he said; “there is almost perfect visibility into our fares, and any suggestion to the contrary is inaccurate.”

Insisting that Delta must distribute its product through every OTA is akin to telling fashion designer Tom Ford he must distribute through every retail outlet, Mapes said.

“Distribution is as strategic as the product itself,” he said. Delta needs to have a lot of shelf space, but it has to be quality shelf space. “We have restricted access and will continue to do so,” he said.

Mapes also discussed the lengths to which Delta has gone to address “the varying degrees of customer value.”

When Delta acquired Northwest, it analyzed customer data from the 90 million members of SkyMiles and WorldPerks programs and found “incredibly distinct segments,” he said, ranging from type of travel to credit card usage.

“There was no reflection of that in the actual experience,” he said. About 5% of Delta’s customers accounted for 26% of its revenue, yet they were having a “collective experience.”

Delta has made significant changes to its loyalty program to reward higher value customers in a more meaningful way. Greenberg noted that it was the first carrier to require a minimum spending threshold for each tier, in addition to a minimum mileage or segment requirement.

“About 70% of our customers buy the three lowest-yielding fare categories,” Mapes said.

Delta wants to accommodate those passengers, providing safety, cleanliness and other basic needs, but “that doesn’t mean that as you move up the value chain the people who pay more should have the same experience,” Mapes said.

Mileage-based programs made sense when fares were regulated, he said, but that doesn’t work anymore.

Now, Mapes said, “when you pay more, you get more.”

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