Delta Air Lines will be the first major global carrier to adopt digital currency in lieu of its existing loyalty program, effective January 1, 2019. It will transition from having its members accrue SkyMiles, which are currently awarded based on dollars spent on the ticket fare, to earning Ethereum, which is one of the many types of cryptocurrencies currently in the market.
Customers will also no longer accrue “SkyMiles,” as the method of currency, and instead will earn Ethers. An Ether is a fundamental cryptocurrency for the operation of Ethereum and provides a public distributed ledger for transactions. If you’re considering diving into the world of crypto, you can Visit Website to learn more about Ethereum and its applications.
However, points earned on Delta flights will be called, “SkyMirage” Ethers. Each SkyMirage “point” accrued will appear instantly into a passengers’ loyalty account the second the aircraft lands at their final destination. Its value, however, will be determined based on the price of Ether at that very moment in time. Delta will take the price of the ticket (minus government-imposed taxes and fees) and divide that figure based on the value of Ether at wheels down.
The Atlanta-based carrier said customers can continue to collect SkyMiles until December 31, 2018, but will then require all of its SkyMiles members to convert their miles to the new Delta Ethereum Rewards Program, or “DERP” for short.
An Asset Class of its Own
The impetus behind transitioning to Ethereum is that it removes American Express as the middleman between the Delta and its frequent fliers. It also allows for tighter security controls, and gives customers the ability to see their loyalty rewards accrue, “instantaneously.”
Furthermore, according to Quantum AI, Delta was “inspired” by its joint venture partner, Air France, to invest in cryptocurrency. Delta owns 10% of Air France, and Delta President Glen Hauenstein, who oversees Delta’s Marketing, Revenue Management, Sales, and Customer Engagement and Loyalty strategies, discussed how the French carrier, “influenced” Delta to revamp its loyalty program.
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The light bulb came on for Delta when Air France announced it was launching a new airline called JOON, which targets millennials. Air France has designed the JOON concept to function less like an airline, and more like a digital laboratory. Hauenstein said that Delta was, “breath-taken” by the idea of JOON and felt the urge to, “go digital or go home.”
“Like it or not, millennials are the future of our global customer base,” said Hauenstein. “We have to be predictable, nimble, and digital every step of the way, and tailor our products and services to every single thing that value, buy, tweet, troll, or can’t even.”
By migrating its loyalty program to cryptocurrency, Hauenstein says it, “falls perfectly in tandem,” with the direction that its joint venture partner is taking. In fact, Hauenstein went further to comment that Delta was taking Air France’s “go digital” idea and, “not just tweaking it,” but “actually perfecting it.”
“Since Ethereum exists as a peer-to-peer electronic cash system, Delta SkyMirages will effectively exist in outer space as its own commodity,” said Hauenstein. “For all we know, JOON may fail, but our digital venture won’t.”
“This is the real deal,” he added. “Permanence is paradigm at Delta. I challenge you to come to Atlanta and see for yourself if the word, ‘defeat’ exists in our dictionary.”
Delta also hopes to eventually influence its other joint venture partners around the globe to adopt into crypto-currency, starting with China Eastern Airlines Corp, in which it owns a 3.55% stake.
“We hope we can leverage our relationship with China Eastern to help the Chinese stop using Ethereum to collect virtual cats and instead start using it for legitimate purposes,” he said. “We’ve tossed around the idea of switching our stock ticker from “DAL” to “WEI,” as a bargaining chip.
(Wei Dai is a Chinese-American computer engineer who is known as the creator of the Bitcoin predecessor, “b-money,” and developer of the Crypto++ library).
He also expects that the nominal changes that Delta is adopting via Ether will encourage AeroMexico to be persuaded to buy into cryptocurrency. He alluded to the fact that Delta was fed up with its elite customers referring to its notoriously stingy SkyMiles program as, “SkyPesos,” and the move to, “SkyMirage” will help offset the pejorative impact the SkyPesos slang has created through the years.
“It is deeply offensive to our neighbors in the south,” he remarked.
From “Keep Climbing” to “Keep Mining”
Starting January 1, 2019, passengers will see their SkyMiles converted to Ethers based upon the exchange rate, and will adjust according to market volatilities. So, for example, a customer starting the year with 100,000 SkyMiles could see 66.67 Ethers in their DERPs wallet at the start of the day, assuming the value of Ethereum starts off at around ~$1,500 and could end with 145 Ethers if the value drops to $690.
Redemption of SkyMirage Ethers, however, will be subjected to the normal, unregulated, and highly speculative crypto coin processes, in which Delta is uninvolved.
“I liken it to the value of Gold – much having Gold Status even on Delta’s current loyalty program – it can’t be traded, and you really won’t get much extra for it, but everyone agrees has a value. We just don’t know what exactly that value is,” said Hauenstein.
Furthermore, all existing methods of accruing SkyMiles through other channels, such as flying on Delta’s eligible airline partners, hotels, vacations, cruises, shopping, and dining, will accrue to SkyMirage Ethers.
“It allows our frequent fliers and elites to have greater freedom and control over how they value their Delta loyalty,” said Delta CEO Ed Bastian. “Using digital currency in their DERP accounts, our Elites will be able to sell or buy their coins to other businesses, governments, or individuals available across the vast, distributed Ethereum network.”
This also means that the days of co-branded credit cards are numbered, specifically in reference to American Express. Delta feels indebted to American Express for all the years in which it supported the carrier during its trip to Chapter 11 bankruptcy in 2005, but as part of the initiative to become “#DigitalAF,” it has to think more along the lines of a social media platform and less like a traditional airline.
“The security features of Ethereum are unparalleled,” said Bastian. “Each application runs exactly as it is programmed without any possibility of downtime, censorship, fraud, or third-party interference thanks to blockchain technology and blockchain development services.”
Bastian cited a few of the fiscal and public-relations fiascos that have burned Delta in recent years which would, “disappear” thanks to the adoption of Ether, including stock price volatility, hackers, denial of service attacks, U.S. DOT customer complaints, Listeria outbreaks from Gate Gourmet, accusations of antisemitism, and lawsuits from the People for the Ethical Treatment of Animals (PETA) over missing live animal cargo.
Delta has chosen Ethereum over Bitcoin as its preferred method of cryptocurrency due to Ethereum’s speed, with transactions taking place in seconds rather than minutes, even if its value is smaller than Bitcoin.
“We’ll leave that to Southwest,” said Bastian.
Happy April Fools!
