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Old Jul 12, 17, 3:34 pm
  #102  
minnyfly
 
Join Date: Apr 2011
Programs: WN, AA, UA, DL
Posts: 1,313
Originally Posted by ruckzac View Post
Award tickets are not simply tied to cash fares – there is still wide variation in award ticket mileage valuations. For example, here are some flights I've gotten with the new chart-less system in the past year:
ATL-ORD RT: 10k (~2 cpm)
ASE-SFO: 5k (~6cpm)
ATL-ANC RT: 25k (~3 com)

Look, I'm not saying that miles haven't been devalued – the evidence is clear that they have been for international (especially J) award tickets. But that's a separate issue of what Delta sets award ticket prices at – if Delta still had a chart-based system, they could just as easily increase chart prices as American recently did.

My point was that removing the simplistic chart-based pricing structure isn't purely bad – it gives Delta more flexibility in pricing, which in fact has increased the number of lower level (as compared to the old chart system) domestic award tickets Delta has been willing to offer. This isn't hypothetical – this has been observed through analyses.

Also, award ticket pricing is not monopolistic because people have a choice in the credit cards they get and the frequent flier programs they use. Especially with how important credit card revenue has become for airlines, airlines have big incentives to demonstrate the value of their miles.
Those "wide" variations - and subsequent "good deals" - are getting fewer and fewer thanks to the variable-priced system without an award chart. By largely tying award tickets to fares, DL can eliminate unfavorable redemption rates in the customer's favor. That ~2cpm is a not a favorable redemption rate. You can buy miles on sale for basically the same price. They will sell you that ticket all day long. If you simply want to burn miles, sure, go ahead and buy it. But for those wanting to gain maximum utility from their miles, it's a poor deal. Even 3cpm isn't a great deal. It's barely a deal at all. Good deals, in particular for premium cabins, are rare, and that's DL's goal. Those "low level" awards are usually only good for burning miles. They're not for maximizing miles, and so they have little to no use for folks in that group. The other negatives vastly outshine their gain.

Award ticket pricing is absolutely monopolistic. You might have a "choice" of which program to use, but once you make that decision, the market and pricing is a monopoly. If you want to buy a ticket with your SkyMiles, you have no choice. There is one seller in that market. Even award miles in general are monopolistic. The sellers set the rate of any product you want to buy. Just because you can use your dollars (miles) to buy different things doesn't mean the market isn't monopolistic. The definition isn't having only one type of product to buy with your "money". The fact that DL and other carriers can universally devalue their miles for an economic gain proves then existence of a monopoly market.
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