Delta Shakes Up SkyMiles but Fails to Give The Details Needed to Evaluate the Change Properly

Last week, Delta announced a major overhaul of the SkyMiles program that changes points-earning from a mileage-based scheme to a revenue-based one. Even though I’m not a big miles and points guy, I’ve had a lot of people ask me what I think about the change. Considering how many details Delta has left out, my response can only be, “I have no idea.” But I don’t mind the revenue-based idea in theory.

Delta, like most airlines, has two different kinds of miles. Those used for elite status qualification (called Medallion Qualifying Miles, or MQMs at Delta) aren’t changing at all. The elite status earning method announced last year will stay the same.

What’s changing is how you can earn redeemable miles; those which can be used to get award tickets. Starting in 2015, you will earn redeemable miles based on the fare you pay instead of the miles you fly.

Now, I don’t earn Delta miles. When I fly Delta, they all go into my Alaska Mileage Plan account (because I’m smart like that). But if I did earn SkyMiles, we can use last week’s Savannah trip to illustrate an extreme example of why Delta is doing this.

In the existing program, I earn the number of miles I fly. Last week, that was 1,946 miles to Atlanta, 215 to Savannah, and then the same on the return. That means I’d get 4,322 miles for that trip. Had it been booked in a much higher fare class, then I could have earned a 50 percent bonus to reward me for buying a higher fare. But this one was super cheap. And because of that fact, I would earn far less in the new program. Here’s how earning will work.

New Delta SkyMiles Earning Chart

As a general member, I get 5 points per dollar spent. But it’s not total dollars spent. It’s just on the base fare and any airline surcharge. For my absurdly cheap ticket, the base fare was $5.70. So I’d get 30 miles… if they round up.

Of course, this is an extreme example, but it shows why they do this. I paid virtually nothing for my flight so Delta wants to give me virtually no points. Had I paid $1,000 for my flight, then I’d be getting 5,000 points. And if I’m elite member, I get even more. Silver gets 7 points per dollar, Gold gets 8, Platinum gets 9, and Diamond gets 11. Oh, and if you pay with your Delta American Express card, you get 2 extra points per dollar.

What about partners? Glad you asked. This is where things get complicated… I mean, more complicated. This new accrual method only applies for flights booked under the “DL” code or for tickets issued by Delta (or by a travel agent on Delta’s behalf). So in short.

  • A Delta flight operated by Delta or a Delta Connection partner sold under a Delta flight number (like Delta 80) will earn points per dollar spent.
  • A partner flight sold under a Delta flight number (like Delta 9147 operated by Alaska, for however long they remain partners) will earn points per dollar spent.
  • A partner flight sold under a partner flight number (like that same previous example but sold as Alaska 407) on a ticket issued by Delta or by a travel agent on Delta’s behalf will earn points per dollar spent.
  • A Delta flight operated by Delta or a Delta Connection partner sold under a partner flight number (like Alaska 5768 operated by Delta) on a ticket not issued by Delta or on Delta’s behalf will earn some form of points per mile flown.
  • A partner flight sold under a partner flight number (yep, Alaska 407) on a ticket not issued by Delta or on Delta’s behalf will earn some form of points per mile flown.

Get it? Great. You must have your doctorate. But those last two bullets are a little vague. How will they award for partner flights? All we know is that points will be awarded “based on a percentage of distance flown and fare class paid.” That sounds similar to what they do today, but the way Delta is talking about it makes it sound like changes are indeed coming. What those changes are remains a mystery until sometime later this year.

So what’s the bottom line here? Is it good or bad? We have absolutely no idea. What we do know is that on the whole, it seems people are going to be more likely to earn fewer points when they fly unless they’re super elites buying very expensive tickets. That may seem bad, but there’s one big piece missing. How much will it cost to redeem those points?

Delta has failed to tell us what the award chart will look like, but they have confirmed there will be a new award chart. All we know is the general direction, and that is somewhat maddening. There will finally be one way awards at half the price of a roundtrip (whatever that may be). That’s good. There will be a points + cash option. That’s nice for flexibility but we still don’t know how many points or how much cash. There will be more award availability in the lowest redemption category but there will now be a mind-numbing 5 levels for redemption.

That’s all well and good, but how many miles will we need for that “low” category? The only thing we know is that domestic awards will “continue to start at 25,000 miles, and One-Way Award Tickets will be available starting at 12,500 miles.” If that’s true, then this looks like a devaluation, because you’ll earn fewer points but still need the same number of points to get an award ticket. But even that’s murky, because if Delta makes more seats available at the low level, then it could end up being a good thing for a lot of people.

If this is confusing to you, then you’re completely normal. There are so many changes with so many questions unanswered that it’s impossible to really evaluate this fully right now as a traveler. But what about if you’re Delta?

We still don’t know enough, but in general, this move makes sense. Delta wants to make it easier to get free flights for those who buy expensive tickets than for those who buy cheapies, and this will accomplish that goal. But because of the complexity of the partnering system, it can’t go to something like Southwest or JetBlue where redemption is also based on the dollars of the available fare. So it’s a hybrid that will serve its purpose.

Usually when it serves the airline well, the people who get into the mileage game won’t be happy. If that’s the case, then Delta has probably accomplished its goal.

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51 Comments on "Delta Shakes Up SkyMiles but Fails to Give The Details Needed to Evaluate the Change Properly"

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Andrew C
Guest

It wasn’t written as “lowest redemption category,” it was “lowest redemption categories” – I suspect that will make a big difference. But in any case, you’re being too kind – we know how this will turn out, we just don’t yet know where on the scale from bad to awful it is.

Carl
Member

I saw that distinction. I’m sure they are counting at least two of the award price levels (maybe even three) as being the lowest redemption categories.

It could really hurt if only the very lowest level is ever available for partners to redeem, e.g. if you are trying to use Alaska or Air France or Korean but need a connecting DL segment.

Olamide
Guest

Cranky do that many people seek cheap tickets to get miles? It just seems like such a small lost of revenue plus I thought delta was also tough on redeeming those miles?

noahkimmel
Member
there are a good number of mileage runners, but that isn’t really the point to punish them so much as reward others. Mileage programs have changed dramatically over the past few years, and this change is in line with what Jetblue and Southwest have already done. Delta has stated skymiles should be a revenue generator, not a cost center. Back in the old days, distance and price were highly correlated. Today, they are not. Airlines price based on demand. So DL has a lot of people who spend a ton of money each week flying short sectors who contribute to… Read more »
David
Guest
Delta isn’t going far enough on this. Miles flown is a measure of how much it costs Delta to carry you. Fare paid measures revenue. Delta should reward customers based on profitability. Take the fare paid. Multiply by a number based on miles flown. The smaller the number of miles flown, the bigger the multiplier. Then alter the multiplier a bit to reward elite members versus others, and also encourage credit card holders. If Delta have a long term plan, in 3 years time they will ‘adjust to better meet customer demand’ so that only profitability is rewarded and people… Read more »
David
Guest

Alternatively have a loyalty points multiplier that severely penalises deep discount coach fares versus full fare coach

Jim M
Guest

Sky Pesos have just become the Zimbabwe Dollar of the mileage world. My response? Meh. After a while playing the mileage game is more trouble than its worth.

CP
Guest

One thing I don’t yet understand: is it points per dollar spent ON THE ENTIRE TICKET or points per dollar spent on EACH LEG?: e.g., if I buy a roundtrip ticket to LAX for $500, do I get (assuming I’m non-elite, non-AMEX) 5x$500 for each leg, or 5x$250 for each leg?

noahkimmel
Member

Its points per dollar spent on base fare. Not taxes or fees. It doesnt matter if you book as one way or round trip, each dollar is only counted once.

So if your roundtrip is $500 pre-tax and fee, you will earn:
500 x 5 base miles
2500 MQM (assuming NYC)
2 MQS
500 MQD

thor
Guest

Each segment and it’s pay/code is computed separately. If one segment is a Y class and another is K class, award miles and MQM will be different.

Noah, in your example please note that ACTUAL flight miles are.. 4,930.

Delta has deflated ACTUAL (MQM) miles and reward miles by over 1/2 . Unless you suck up and pay for the American express whereby you can get your reward miles at about 2/3 of what it was and your MQM or elite qualifying miles is still at more than 1/2 deflation.

noahkimmel
Member

good catch, my bad

matt weber
Member
I have long believed that the mileage based awards programs were an example of the insanity that is rife in the Airline Industry. Realistically, the Frequent Flyer Program should reward the behaviors that are the most profitable for the carrier, the most. Given that many discounted coach fares yield less than the Available Seat Mile (ASM) cost, rewarding people handsomely for buying tickets that you lose money on is the height of insanity. You really want to incentive your customers to do the things that are going to make you the most money. This is precisely what the Delta changes… Read more »
Ron
Guest

Not so fast. For a profitable flight you need the revenue to be higher than the cost, but if you price each seat above the mean cost per seat-mile then the plane might not fill up. Those cheap fares that are below the mean cost may be the ones which bring the flight above the profitability threshold, if the alternative is for these customers to go elsewhere and for the seats to fly empty. So you do want to reward these customers!

christophe.bottega
Member

Well, you might want to thank them for their business, but not really reward them !…

Ron
Guest
No, no. You do want to incentivize these people. You have a bunch of planes flying domestically with empty seats, so you sell them to mileage runners at a price that’s below the average cost per seat-mile but above the marginal cost, and this creates a small profit. And then you reward these mileage runners with premium seats that would have otherwise gone empty, so the redemption cost is still lower than the profit you made on the mileage running. It is a matter of properly allocating costs — if your revenue management is working right, then mileage running and… Read more »
tharanga
Guest

I had the same reaction – no info on the partner airlines, no details on redemption. I’ll just add that they’re promising a better web interface for redemption – hopefully that’ll include the partner airlines. What they have now couldn’t get any worse.

noahkimmel
Member
For those people who travel regularly, they will still earn more than others. Therefore, they hold a larger share of miles. While earning is down and redemption prices remain, you might think this is a devaluation. What DL hasn’t said is what will happen to inventory and if it will be easier to get low-level award space (other than moving to 5 tier system). I wonder if the long term plan is to peg skymiles redemption to cost of ticket in dollars. Jetblue and Southwest currently do this–a fixed ratio of dollars to points earned, and another fixed ratio of… Read more »
zdcatc12
Member
Noah, I believe that if they did this and used the SWA model of points to dollars, it might not be as bad of a drop and virtually unlimited flights to use your points. I am not a SWA FF by any means, but after 5 or so one-way flights, I have enough points to get a decent ticket somewhere. In addition, using partners on SWA to earn points adds up fast too, compared to other programs. It’s funny how they compare this to the Southwest model of points for dollars, instead of miles, but then don’t follow through with… Read more »
MeanMeosh
Guest
I wouldn’t say that a pure revenue-based redemption system completely eliminates the ability to exploit good awards; it just adds an extra step in that you have to pay attention for fare sales at the same time. As a simple example, WN currently has a fare of $256 for a DAL-SAN roundtrip for a late April departure. Under their redemption system, that equates to a little over 12,000 miles. That’s a pretty good deal if you ask me, since you are getting an award for half the points cost compared to a saver award at one of the legacies (plus… Read more »
TomTX
Guest

All loyalty programs should be based on how much you spend.

Ron
Guest

Cranky: isn’t it the case that your Atlanta–Savannah segments earn a minimum of 500 miles each?

jaybru
Member
Keep it as complicated as you can, like the fare structure. And, make the customers believe they are getting something for free, even if they can’t figure out what is happening. It looks simple, but it isn’t. Base it on something most customers won’t know (the fare and any carrier-imposed fees, but not the total price DOT has tried so hard to make carriers show). And, of course, UA and the rest will copy the program., hook, line, and sinker, plus any more complicated they can think of. So the carrier wants revenues. Wouldn’t it be better to base it… Read more »
thor
Guest
1. Medallion Qualifying Miles will now be Mythical Qualifying Miles. NOT actual flight miles. 2. It’s clear American Express is the puppet master of Delta Mileage program. 3. Your comparison, Noah, to Southwest and Jetblue are like an apple to a banana… both good but definitely not the same. I’ve flown over 1.5 million (ACTUAL) miles with Delta. Platinum last year and either Platinum or Diamond for the past 9 years. Frequent flyer programs are (or were)…. based upon mileage. Now, Delta has discarded this guide, milepost, standard… null and void and supplanted it with the dollar. This may be… Read more »
Jason
Guest

I could very well be wrong ( wouldn’t be the first time), but I’m fairly sure they are not changing the way MQMs are earned. Those will still be mileage based as they are now. I thought it’s only the amount of redeemable Skymiles that is going to be pegged to revenue.

Ron
Guest
Cranky, can you explain a bit more about how airlines determine which tickets are profitable (and thus need to be incentivized)? It’s a difficult problem because it involves a hypothetical alternative — how much this seat would sell for if the current ticket were not sold. To me it seems that more than trying to incentivize high spending, Delta is just trying to reduce costs by not giving out unnecessary incentives: if price-sensitive travelers are mostly ones that don’t care about miles (mileage runners being the exception), then giving them miles is an inefficient way to earn their business. But… Read more »
VC745D
Guest

I’ve had friends spend weekends doing “mileage runs” and thought, “This is how you want to spend your life?” The same is true of FF programs in general, and now, even moreso. Use up your DL miles and forget it, I say. Life is too short. Forget wasting the time to figure out all the changing rules–flying commercially is too unpleasant to waste any more time on it than you have to.

malbarda
Member
I am a DL Diamond Million Miler and I would like to get other readers’ thoughts on the following options before me: 1. I could continue to concentrate on DL, I could probably get to Platinum status annually. As a small business owner I am very cost conscious so I will always book lowest fare. On the other hand, a lot of my flying is international so the length of my flights add up. 2. I am a Lifetime Platinum Elite on KLM/Air France’s Flying Blue, and I could ditch my DL account and pile all my DL and SkyMiles… Read more »
Sanjeev M
Guest
Its tough to determine what loyalty is. Is it the traveler that flies every week for business (even if its on those $99 fares) or is it the once a quarter JFK-LHR J class ticket that’s $4000? My guess is that DL didn’t go to revenue-based for elite status because there’s more to loyalty then immediate spend. The recurrent elite business pays off only in the long run. However in terms of awards the whole thing is complex as it is, so it does simplify things. I have heard comparisons to hotel programs (e.g. Starwood) where elite status is based… Read more »
David SF eastbay
Member

Maybe I should be glad when Delta mergered with Western I was lost in the system and never got my Western miles moved to Delta, I just said the heck with DL and built miles on AA/UA so don’t have to deal with all this since Skymiles never seems to have anything nice said about it.

stan
Guest

delta has converted airline rewards programs to match hotel rewards programs

so, at Marriott status is achieved in hotel programs based on nights stayed, so a stay at the JW Marriott = a stay at the Springhill Suites

however, you’ll earn rewards points based on spend. $400/night at the JW qill get you 4000 points, while $100/night at the SHS will get you $1000

both earn you 1 night toward status

MeanMeosh
Guest
What I don’t really get is how this new system truly adds value for high-dollar FFs, at least until we get more details about how the entire revised program. What I mean by that is, as it currently stands, although you earn more redeemable miles, you don’t earn status any faster by buying up a bunch of full-fare coach/business/first class tickets than you would today, because that’s still based on flight miles. Is a Platinum Medallion really going to be interested in a wheelbarrow full of shinplasters for their SkyPesos account, unless DL is actually serious about improving award availability?… Read more »
letstry2
Member

All of these programs need to be done away with completely. They do very little to improve the travel experience and are pretty much a rip off for most travelers. Delta and the others need to concentrate more on customer service which in the long run will draw more passengers than any so called loyalty plan. The fares really need to be re regulated. Passengers will then look at the best service and routing rather than how many miles they may or may not gain by flying a particular airline.

gpickholz
Member
you seem to be missing the forest for the trees by focusing only on the US airlines in the Big Three mileage programs. For international travelers, each of the Big Three offer partner programs substantially better to the US partner alternative. Substantially better, even for flights originating in the US. More accurately, the US airlines have all but given up on competing for the international business traveler (wise decision) and have restructured their programs to capture medium haul domestic travelers and corporate programs that can be locked away. For the individual traveler, however, less time should be spent focusing on… Read more »
MVM
Guest
Can anyone provide some email address for Delta corporate leaders? I advocate that we put some teeth into our collective complaints by not just talking among ourselves, but making sure the top guns know we mean business (or rather, we mean to pull our business). Also,I encourage everyone to contact Delta (identify yourself as a SkyMiles member) and reiterate TPG’s complaints. ALSO — please send your comments regarding your disgust for Delta TO YOUR LOCAL AIRPORT. In my case, Little Rock is trying to build itself as a modern airport with the coolest airlines. Dissing Delta will make an impression… Read more »
Ron
Guest

You can tell Bill and Hillary Clinton National Airport (yes, that’s the official name) that if they want my business, they’d better get some airline to fly nonstop to Los Angeles. Seriously, I’d visit my relatives in Arkansas more often if there were convenient flights.

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[…] CrankyFlier: Delta Shakes Up SkyMiles but Fails to Give The Details Needed to Evaluate the Change Properly […]

Carl
Member
As much as anything, the recent changes in the mileage programs show the effects of consolidation and lowered competition in the industry. When there were 6 or 7 major network carriers, the mileage program could be a meaningful differentiator for customers, particular on competitive routes. Now that we are down to three network carriers plus Southwest and a few niche carriers, they don’t need to compete as hard, whether on price or rewards. DL has long had the weakest mileage reward program. While many of the elite recognition benefits were good, and DL has the reputation for a superior product… Read more »
malbarda
Member
I think this is a very insightful and good answer/POV. It taps into this conflicting feeling I have, which is that – on the one hand – as a business person I totally understand why DL is doing this. The mileage banks are overflowing, and there aren’t enough seats anymore to award all those award tickets and free upgrades as seat capacity has not grown that much (fewer empty seats in general) and the top tiers have swelled to unmanageable proportions. So I get all of that. DL is also one of the most well run (as a business): they… Read more »
Ron
Guest

Carl, I think the idea is not so much to get people to buy higher fares for the miles, but rather for those people who need to buy a high fare anyway to book their flights on Delta rather than on a competitor. If indeed the extra miles cause the high revenue, last minute crowd to shift their business to Delta, expect the competitors to quickly follow suit.

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[…] The big travel news this week is the fallout from Delta’s bombshell of an announcement last Wednesday that starting January 1, 2015, SkyMiles points will be earned based on the actual cost of a ticket rather than number of miles flown. It’s great news for a small percentage of fliers that spend big money on tickets or fly short distances, but it’s terrible news for rest of us. There have been all kinds of stories written this week, and so I’ve compiled the best of them below. My two favorite so far are ThePointsGuy’s “Top 10 Reasons Why I Dumped Delta” and… Read more »
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[…] press surrounding Delta’s decision to only release the earning and not burning half of its new SkyMiles program got the airline to reverse course. We now have the full 2015 award chart clearly showing […]

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[…] you like it or not, you have to admit that Delta went out on a limb when it decided to let people earn miles based on the amount of money they … instead of the number of miles they flew. Sure, other less complex airlines had done it, but Delta […]

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