Delta Skymiles changes – followup / analysis

Yesterday we talked about the recently announced changes to the Delta Skymiles program.  Read that post for the full details, but the basics are that, instead of earning miles based on the number of miles flown, it will be based on the price of the ticket.  There are different multiples based on your status with Delta, from 5 miles / dollar for no status up to 11 for the highest status.  You also get 2 additional miles / dollar if you have the Delta Amex card.  There are changes on the redemption side, but those are still a little up in the air as they haven’t been fully announced by Delta.

Reaction across the Internet

The bloggers were mixed – some were talking about looking for different loyalty programs, and others (including me) thought it wasn’t that big of a deal.  Frequent Miler asked “Am I the only one happy about Delta’s changes?“.  He added

 

For me and, I think, many of my readers, this change is mostly immaterial.  I earn the vast majority of my SkyMiles from creative credit card spend, credit card signups, Elite Choice Benefits, and shopping portal bonuses.  Miles earned from flying tends to be little more than a rounding error in my account balance.

 

I could not agree more.  As I mentioned to several people yesterday, I don’t earn miles by actually flying – I have 6 kids and as such I don’t like to pay for ANYTHING – certainly not airline tickets.  Milenomics had another great post on it – mentioning it along with his #byoe (Be Your Own Elite) progarm.  One of his central tenets is that chasing elite status is not worth it for most travelers, and again, I agree completely.  Especially for large families – it’s much better to spend your time and energy earning and burning miles, on whatever airline happens to have the best deal for any particular travel plans.

Some folks benefitting

Over on Share we had an interesting conversation.  I live in Cincinnati, and have a few friends that work for Procter and Gamble and travel quite a bit, usually on Delta (since CVG is a mini-hub for Delta).  I asked some of them their thoughts.  One of my friends now lives in Portland but used to live in Cincinnati and often traveled to Los Angeles (and other places) for work.

He said his average ticket for CVG-LAX cost $670

In the current model, that earns 3800 miles for a roundtrip ticket.  He mentioned as a Gold medallion member he would earn 9x revenue, or over 5500 miles.  The most expensive ticket was over $1000 which would have earned him 10,000 miles.  His comment was that he “wished they had rolled this out sooner!” He is probably in the minority with that opinion, but it just shows that there ARE people that benefit from this change – mostly people who travel last-minute, shorter distances and have their travel paid for by work.

The other dilemma there is that generally in business, you have a say in what flights you are taking (if not the actual destination).  And Delta is now putting these people in a situation where their interests and the company’s interests are opposite.  What is best for the company (lowest ticket) is worst for the traveler (fewer miles earned).  As well as vice versa – the best deal for the traveler is the ticket that costs the most money.

Okay – this is a SUPER crude graph that I made online for free, but the better deal it is for company, the worse it is for the traveler, and vice versa.  Ignore the numbers – those are just made up 😛

Now while I doubt that many people will just soak the company for the highest possible ticket just to earn more miles, there are already tradeoffs that business travelers have to make.  Do I take a non-stop flight that costs a little more but gives me less time in an airport?  Or do I take a more expensive earlier flight that gets me home to my family a day sooner?  Now this just adds even more choices to the mix

Delta Credit card

If you’re often flying on Delta, it now is pretty much imperative that you have the Delta Amex credit card.  Whereas before it was a nice to have (for the signup bonus and some of the perks like free checked baggage), now you earn an extra 2x on all your flights. So my CVG-LAX flying friend, instead of earning an average of 6030 miles (670 * 9) would earn 7370 miles (670 * 11), on EACH flight.

Redeeming miles

There is still a lot we don’t know about how redeeming miles will work in the new 2015 Delta.  There are a few things we do know and they’re (mostly) positive.

• One way redemptions.  Delta is unique among the larger airlines in only offering roundtrip redemptions.  This will give more flexibility in redeeming miles
• There is supposedly going to be “more” availability and “easier” redemptions, whatever that means.  For me, as long as they fix their website (which honestly is unusable for trying to find award tickets), that would be a plus
• We’ll now have 5 “tiers” for redeeming miles.  Again there aren’t more details on this but it probably doesn’t really matter.

The way “tiers” work on most airlines is a scam. Typically the lowest tier is the one that is the “standard” price and they only release a certain amount of seats at the “regular” tier.  But then you can always spend a crapton more points to fly on that date.

An example from American:

This is for a one-way redemption from Dallas to Cincinnati.  American already offers one-way awards, for 12,500 miles, which is a pretty standard level for intra-US travel.  For this particular flight, most of the month has availability at the Mile SAAver tier, but if you have to travel on the 8th or 9th, you’ll have to pay the AAnytime price of 25K (twice as much).  I would imagine that Delta’s new “tiers” will be more of the same, with only the lowest of the tiers at all worth redeeming.

Types of travelers impacted

Again, for fairly occasional family travel, my recommendation would be to try and not earn miles by flying.  Unless you’re flying fairly regularly, it will take forever before earning enough miles to get anything useful with them.

While business travelers (traveling on someone else’s dime) could be impacted negatively or positively (depending on their travel patterns), the people MOST affected are those who fly fairly regularly but pay for it themselves.

And those would seem to be the people that are MOST likely to shop around, and it seems that Delta would be less likely to earn their business.  I’m sure that Delta has an army of smart people figuring this stuff out, but I’m still trying to figure out how this will be a positive driver of airline flights for them.  I think it does stand to provide a bit of (short-term) gain, but if the airline loses popularity, that doesn’t bode well long term.

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