SkyMiles Program to Change Based on Revenue Instead of Miles for 2015

Jeff Robertson — vice president of the SkyMiles frequent flier loyalty program at Delta Air Lines — speaks to FlyerTalk members at the world headquarters of Delta Air Lines on Thursday, October 21, 2010 as part of the executive session during the 2010 Delta Air Lines FlyerTalk event. Photograph courtesy of Greg Johnston.

The SkyMiles frequent flier loyalty program will change to base rewards on the airfares paid by customers of Delta Air Lines rather than the miles — more accurately, “butt-in-seat” miles — being traveled.

Paul Skrbec — who is manager of corporate communications at Delta Air Lines — contacted me directly to let me know that I will receive the full press release at 5:00 in the morning Eastern Standard Time — and I now have it.

The new redemption structure supposedly will create more flexibility and expand on ways to use SkyMiles — but many FlyerTalk members are skeptical.

One FlyerTalk discussion in particular has already been popular, with FlyerTalk members threatening to leave Delta Air Lines and defect to competitors.

Generally, the change is expected to be effective as of January 1, 2015 where members of the SkyMiles frequent flier loyalty program can earn anywhere from five to as many as thirteen SkyMiles per United States dollar paid for the base airfare and surcharges imposed by the airline, depending on your Medallion elite status level:

SkyMiles Program Medallion Elite Status Level
SkyMiles Per United States Dollar Earned
SkyMiles Earned Per Dollar With Credit Card on Delta Spend
Total SkyMiles Per United States Dollar Earned
General Five SkyMiles Plus Two SkyMiles
Seven SkyMiles
Silver Seven SkyMiles Plus Two SkyMiles Nine SkyMiles
Gold Eight SkyMiles Plus Two SkyMiles
Ten SkyMiles
Platinum Nine SkyMiles Plus Two SkyMiles Eleven SkyMiles
Diamond Eleven SkyMiles Plus Two SkyMiles
Thirteen SkyMiles

 

As shown in the chart above, if you use a credit card affiliated with Delta Air Lines, you can earn an additional two SkyMiles per dollar spent in addition to the SkyMiles you will have earned from using the credit card itself.

This means that on an airline ticket whose base airfare is $1,000.00, a General member of the SkyMiles frequent flier loyalty program without an affiliated credit card would earn 5,000 SkyMiles; whereas a Diamond Medallion member using an affiliated credit card would earn 13,000 SkyMiles.

For travel marketed and ticketed by partner airlines of Delta Air Lines, members of the SkyMiles frequent flier loyalty program will earn a percentage of SkyMiles flown as determined by the fare class purchased; and will also earn Medallion mileage bonuses on eligible fares.

As for the redemption of Delta Air Lines SkyMiles, a structure of five tiers — an increase from the current three tiers in order to offer “a wider variety of awards and improve overall availability at the lowest price points” — will be implemented where the lowest level will remain at 25,000 SkyMiles for an award ticket in the economy class cabin for domestic travel within the United States and Canada — excluding Hawaii.

Charts for the redemption of SkyMiles for award travel worldwide are expected to be updated sometime during the fourth quarter of 2014 to be effective as of January 1, 2015 — but the exact redemption levels are still unknown at this time.

Keep in mind that the concept of Medallion Qualification Dollars towards earning elite status — introduced last year — is unaffected by the latest announcement.

Unfortunately for many FlyerTalk members, this portends the end of what is being called the “extreme mileage runner” — as coined by FlyerTalk member javabytes — as FlyerTalk is the largest Internet web site in the world where the main topic of many discussions is on how to get the most for your money using frequent travel loyalty program miles and points.

The practice known as “mileage running” by many FlyerTalk members will be completely destroyed, according to FlyerTalk member TheBOSman — but will other frequent travel loyalty programs follow the lead of Delta Air Lines?

FlyerTalk member steveholt bids farewell to Delta Air Lines: “Well, bye Delta. I’ve defended the SkyMiles program plenty, but this is a brutal devaluation.”

Forecasting that frequent flier loyalty programs will eventually “rest in peace”, FlyerTalk member andymo99 posts: “When there were as many as 6 legacy carriers, neither DL nor any other single legacy could pull off a move like this. Why? Because others wouldn’t ALL follow, and it would thus fall apart. However, with just 3 legacies, the world is changed. All 3 have much better discipline in managing the business cooperatively. For example, look at how they are no longer flooding markets with capacity… which while good for the flooder in the short term is worse for all in the medium to long term. Same with this. It is a prisoners’ dilemma. So long as everyone plays along, they are all better off with less generous programs. This has always been the case. All that is different now is that it is much easier to get everyone to play along.”

However, some FlyerTalk members are cautiously optimistic. For example, FlyerTalk members who primarily travel on flights with a duration of one hour or shorter — “segment fliers”, as they are know, with this FlyerTalk discussion as one of many examples — and have felt alienated may benefit. Consider FlyerTalk member CPMaverick, who posts that it “is nice for me as I fly short expensive direct flights a lot. But as a program it is worse.”

The good news is that you will finally be able to redeem SkyMiles for one-way award tickets — something which FlyerTalk members have been requesting from Delta Air Lines for years; and the lowest level will be at 12,500 SkyMiles for an award ticket in the economy class cabin for domestic travel within the United States and Canada — excluding Hawaii. A “miles and cash” options will also be introduced to the Delta Air Lines SkyMiles frequent flier loyalty program.

For what it is worth, the tools to search for award tickets at the official Internet web site of Delta Air Lines will finally be improved — about which FlyerTalk members have been complaining for years.

As of right now, there seems to be more questions than answers pertaining to what some are calling a “radical” change of the Delta Air Lines SkyMiles frequent flier loyalty program from a mileage-based model to a revenue-based model. For example, how expensive will the redemption levels be for using your SkyMiles on rewards — especially with the possibility that certain routes may possibly shift tiers during times of the year when those routes are more popular? What will the different earning rates be for flights operated by carriers other than Delta Air Lines? Will redemption rates of SkyMiles for seats in the premium class cabin of an airplane become significantly more expensive?

One thing is for certain: Delta Air Lines is seeking to reward its highest-value customers with generous redemption earnings of SkyMiles; while those customers who travel on a budget are expected to “feel the most pain” as a result of the impending changes. “The introduction of a new model for earning miles will increase rewards for those who spend more as well as differentiate the SkyMiles frequent flyer program for our premium travelers,” said Jeff Robertson, who is the vice president of the SkyMiles frequent flier loyalty program at Delta Air Lines.

Even then, I am not sure at this time that the news is all “doom and gloom” until I find out additional information…

Comments (Showing 17 of 17)

  • tonyu12 at 8:57am February 26, 2014

    Money Money more for Delta i am a Plat 2 million flyer bad deal great for Delta

  • diburning at 9:40am February 26, 2014

    That’s not an “improvement” Here’s an example.

    JFK-LAX nonstop roundtrip. Lets conservatively estimate that trip to be $300.

    300 x 5 is 1500. So, a general member would receive 1500 miles.
    300 x 11 is 3300. So, a diamond member would receive 3300 miles.

    Actual mileage between the two cities doubled for the roundtrip is 4950 miles.

    I can picture a mass exodus to AA soon. UA doesn’t award PQDs on bulk fares, so they’re going to bleed business travelers as well.

  • tfung at 10:04am February 26, 2014

    On the flip side… I can see business travelers will love this:

    JFK-LAX nonstop on a Business class ticket is around $2000…. 2000×11 is 22,000 miles… seems like they will really attract premium flyers….

  • ethanwa at 10:41am February 26, 2014

    Bg surprise…. a company wants to reward the rich who spend tons of money on First Class, and ignore the budget traveler completely.

    20% of your customers make you 80% of your money. Now we know who Delta REALLY cares about.

  • DaddyRabbit at 10:42am February 26, 2014

    I hate to say it, but this is the right thing for DL to do: stop the MRs.

    Jump to another carrier. Do what you wish, but AA and UA will soon do the same thing.

    “Yesterday is history… tomorrow is a mystery… and today is a gift: that’s why they call it the present.”

    Eleanor Roosevelt (wife of President Franklin D. Roosevelt)

  • twardy at 10:54am February 26, 2014

    As a Delta Platinum member, this is a bad deal for the ordinary business travel that doesn’t want to screw his company/client. Will see if UAL/US will follow suit, aybe not and offer a status match to boot, I’d switch.

  • YYBGrinder at 11:26am February 26, 2014

    I buy business class fares for the most part, and usually last minute. To me this is an improvement. Just looking at my last 4 flights, I would have 11000 miles instead of 6000

  • UATYS at 1:18pm February 26, 2014

    So now it really is SkyPesos!

  • zcat18 at 2:28pm February 26, 2014

    Hmm..I’m a bit confused here. So they will still track BIS miles for the sake of determining level of status, but the BIS miles you fly are not redeemable. Instead, the redeemable miles you earn come directly and exclusively from your spend?

    • Brian Cohen at 2:54pm February 26, 2014

      The combination of earning Medallion Qualification Miles and Medallion Qualification Dollars is what will determine your level of Medallion elite status, zcat18, and has nothing to do with this latest announcement.

      The news today is that you will earn a multiple of SkyMiles — “butt-in-seat” miles — depending on how much you spend on the base airfare of your airline ticket. Many FlyerTalk members are reporting that they will earn fewer SkyMiles under the proposed scheme when compared to what they currently earn.

  • laggers at 3:27pm February 26, 2014

    Is it possible to ask Delta to cancel your FF account, rather than let it die?

    This would give them a better pulse reading in a very short time.

  • DLroads at 5:41pm February 26, 2014

    It will rise and fall on the redemption rates. I wonder why Delta refuses to disclose the new redemption rates for awards. If they believe it is equal or better, bring it on! so we’d know to expect the goodies… If not, fair game. Let us know now and we’d decide what to do with our dollars.

  • hfink99 at 10:55am February 27, 2014

    One figure I’m seeing thrown about with wild abandon is that the top 2% of Delta frequent flyers generate 20% of the revenue. They will certainly build a batter top 2%, but at the expense of the remaining 80% of their revenue. Delta will certainly take an earnings hit with this new program, until the BOTH of the other two follow suit. Delta is very aware of this, which is why they have diffused their transition over a few years to lessen the pain to themselves.

    • Brian Cohen at 11:27am February 27, 2014

      Your comment provoked a thought for me, hfink99: let us say that United Airlines and American Airlines followed suit and implemented policies similar to Delta Air Lines. Does this mean that there is a market of frequent fliers up for grabs which both the legacy airlines and the ultra-low-cost airlines are not optimally serving? Could this open the door to such commercial airlines as Southwest Airlines, Alaska Airlines, Virgin America and jetBlue Airways to benefit from this market of those customers who comprise of that remaining 80 percent of revenue you discuss?

      Are there enough high-value customers over which Delta Air Lines, United Airlines and American Airlines can compete and yet have all of them be profitable enough? Although Delta Air Lines is profitable now, could at least some of the policies being implemented be too much to sustain long-term profitability?

  • dliesse at 11:44am March 11, 2014

    Actually, I see this as a step in the right direction but it’s incomplete.

    I’ve given considerable thought over the years to the question of what would be an ideal loyalty program that benefits both the airline and the passenger. The problem with the current system is that miles flown are a reflection of absolutely nothing meaningful.

    There are really two components to existing programs: rewards and perks. On most airlines, those with traditional programs, both are based on miles credited — rewards on miles collected, perks on miles collected in one calendar year. This is a faulty premise because someone making a single trip a third of the way around the world will collect more miles, for less money, than someone who travels a shorter distance every other week.

    I believe the answer is to base rewards on the amount of money spent, returned in the form of a rebate. Ignoring the calculation rate for the time being, say you’ve earned $100 in credits. Those should get you $100 worth of airfare, buy-on-board, or whatever. One side benefit of doing things this way is it puts to rest the question of whether these awards should be subject to income tax; rebates are non-taxable!

    Perks — the benefits of elite status — should be based on the number of actual trips. Not segments, but one-way trips. One of the biggest perks would be getting rebates at a higher rate (for example, getting 2% back instead of 1%). This method recognizes the “frequent” flyer, which is what the programs were designed to do in the first place. The businessman choosing airline A for 60 trips (30 round trips) per year deserves more in return than the person who buys a discount ticket SFO-SYD once every 5 years.

    I don’t expect to see my plan adopted by any airline, but it makes sense to me!

  • nusiax at 12:05pm March 11, 2014

    There is something everyone has missed. The Mileage will be based on the Base Fare of the ticket. And that is usually not a great deal. I fly to and from Europe a great deal. The last ticket I purchased via Delta, AMS to FLL was almost $800, however, the fare was only $195, the rest was taxes and fees.

    So if the mileage calculation is on Base Fare then it would be calculated on the $195 not the $800 Total. So it is not a good deal. Read the words. Base Fare it not Total Ticket Price.

  • BJNOYES at 4:41pm March 11, 2014

    I am totally amazed that Delta would even come up with yet ANOTHER complicated gimmick. Their AMeX card had me scrabbling to understand.. and this is even worse..
    But Each time I buy a ticket I will prove my values and ethics and be SURE that I am flying at the lowest fare.. AND ANOTHER AIRLINE This is cruel and awful customer relations.. I will make every effort to change airlines as some other reviewers have commented…!!

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