Delta Devalues: A Paradigm Shift in the SkyMiles Program

That Skyteam logo is pretty useless now.

That Skyteam logo is pretty useless now.

I pretty much never write about Delta on my blog. I currently have zero Delta SkyMiles. It’s been that way for about 2 years now, and the main reason for that is simply that Delta runs the absolute worst frequent flyer program of any major US carrier. They constantly devalue the already difficult-to-use and restrictive program, so much so that their miles are commonly referred to as SkyPesos. Tonight it’s been reported that a major change in the way people can earn and use their miles is soon to be announced, and it’s negative for 99% of travelers.

New Earning Structure

From the Wall Street Journal: “Under Delta’s new rules, scheduled to be announced on Wednesday, passengers with no elite status in SkyMiles will receive five miles for each dollar spent on tickets, excluding government taxes and fees. Those in the highest elite level will receive 11 miles per dollar spent. For fliers redeeming their miles, Delta will continue to award tickets by pricing them in miles, not in actual cash fares, offering different levels of availability as it does today.”

Right now, you earn one Delta SkyMile for every actual mile you fly. A flight from Los Angeles to New York would earn about 4,950 miles round trip for a non-elite. A top-tier elite would earn 125% in bonus miles, so their total would be roughly 10,794 miles. Next year, under the new rules, your mileage earning will depend on the cost of the fare you booked. If it cost you $500 round trip, and $75 of those were taxes (you don’t earn miles on taxes usually), a general member would earn just 2,125 miles…less than half what they would have earned previously. A top-tier elite would earn just 4,675 miles. And the better (cheaper) fare you find, the fewer miles you earn.

This hurts the average leisure traveler that books the cheapest flights available. This essentially eliminates mileage running from the equation. It does, however, heavily favor travelers that book full-fare tickets in premium cabins. If you booked an international Business Class fare for $5K, and say $1.5K of that was taxes, then you’d earn a minimum of 17,500 miles. A top tier elite could earn 38,500. I can’t really think of a scenario where anyone would earn that many miles for a flight on the current program. This clearly favors big spenders.

But…

New Redemption Structure

Again from the Wall Street Journal: “Delta plans to introduce a system with up to five tiers of redemption choices so customers will have a wider variety of options, including one-way reward tickets and the ability to redeem tickets using both miles and cash, Mr. Robertson said. The new redemption levels will be disclosed in the fourth quarter. Delta intends to introduce functions next year that will allow customers to be able to use miles to purchase ancillary products such as seating in the roomier Economy Comfort coach seats.

As an example, he said, awards tickets to Europe, now priced at 60,000, 90,000 and 125,000 miles, could be broken into five tiers, including tickets for 75,000 and 105,000 miles.”

Clearly the current three-tiered program wasn’t confusing enough, so they’re going to introduce a five-tier structure. As the example above indicates, it means the introduction of two new tiers: one between the low and mid tier, and one between the mid and the high tier. You can bet they’ll get inventory from these new tiers from the lower tier – so for example, the new 75,000 tier will probably get inventory from today’s 60,000 tier. That would mean even less award space at the lowest level.

The biggest problem is we still don’t know what the new redemption chart looks like. They haven’t published it. But it’s going to suck…guaranteed.

Thoughts

This sucks if you’re loyal to Delta or live/fly to a Delta hub. It’s not the end of the world, as programs like Southwest, Jetblue, and Virgin America already have revenue-based earning programs in place. This is a big deal because it’s the first major US carrier to go this route and they’re maintaining a reward chart that won’t be based on revenue. Oh, and when one airline makes a change, the others are generally pretty quick to follow.

That means United and American/US (merging soon) will likely be making a similar change in the future. My money is on United going first since AA/US probably don’t want to anger their elites during the merger. But hey…who knows. This is just a guess on my part.

This isn’t too surprising, and I think many in the points world saw it as inevitable. Right now, everyone that flies the same distance is recognized equally by most airlines. Under the new program, you’ll get more recognition for spending more moneyIf you owned a business, you’d probably want to treat your highest-paying customers better than anyone else. That’s what’s happening here, and I’m not sure you can blame them for it.

If you’re a current Delta flyer, I recommend banking your miles in your Alaska Airlines account while the two are still partners. Alaska has one of the most valuable award charts at the moment anyway, so start collecting miles there. If you have a stash of SkyMiles, try to use them soon. If you can’t then hopefully we’ll find some sweet spots on the new award chart whenever it gets released.

Delta is a good airline with a terrible frequent flyer program, and I plan on only giving them my business when no other reasonable option exists. Even if/when I do, those miles are definitely going into another airline’s account. I plan on keeping that zero on my SkyPesos account for a long time.

Comments

  1. On your advice, I never collected any Delta miles. Very glad about that now.

  2. I know I said this before, but I want to say this again. Please note that this is respectful, constructive criticism. It sort of annoys me when bloggers make predictions of devaluations in the future. It might make airlines more willing to actually implement those changes if they get the idea that people are expecting them. Travel Summary, do you feel like that’s a legitimate concern?

    • Travel Summary says:

      I don’t think that’s a legitimate concern. We’re not so much “expecting” those changes as “dreading” them. We write these types of posts to make it clear how bad these changes are, so if another airline makes that change they’ll make it knowing that customers like us prefer the status quo (even though companies like Delta will try to justify it anyway).

      • Even if it was a concern, it is far less of a concern than the proliferation of manufactured spending strategies/tracking hacking that is being shared across the internet. Classic case is flyertalk.com. It’s a fantastic place to learn about the latest strategies and travel hacks, but at the same time the whole site is being monitored by the airlines themselves who are eager to close any gaping loopholes one by one, or reduce benefits to compensate for the surge in travel award redemption.

Trackbacks

  1. […] Travel Summary concludes “This sucks if you’re loyal to Delta or live/fly to a Delta hub.” […]

  2. […] I’m sure you couldn’t go far this morning without coming across it.  Travel-Summary has a good writeup about the changes coming to Delta.  Instead of recapping the news (again) I’m going to instead review how […]

  3. […] some programs, particularly Hilton and United, but also with Southwest, Hyatt, Club Carlson, and Delta in recent months. This is a fact of life for loyalty programs and should be expected by us […]

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