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Delta is announcing a major overhaul of the SkyMiles program in 2015. The biggest change is that for flights you will earn miles based on how much you pay in airfare, rather than the miles you fly. The mile per dollar earning amounts are listed in the charts below, and start at 5 miles per dollar of airfare for entry level SkyMiles members. When you buy tickets with a Delta American Express you’ll get a 2 mile per dollar bonus.
This earning rate is a fundamental change, and a negative one for many flyers.
We have crunched the numbers in charts below to show what this means for your mile earning based on your typical airfare levels. You can see the cold hard numbers and find out if this is a good or bad change for you on the earning side, because it’s not meant to impact everyone the same way, and in many cases it is a big reduction in the number of miles you’ll bank in your account.
On the mile award redemption side, a traditional award chart will remain, but instead of 3 levels of prices (Saver, Standard, Peak) it will have 5 yet to be determined levels. Few details on what that will look like have been released, and the new award chart will be unveiled in the fall, but Delta does promise the core 25,000 mile roundtrip entry level domestic coach award will remain and that availability at the entry mileage levels should improve (they are explicit about it on their website – and a consultant who seems close to the situation is making it appear the increases to international business class award prices have already happened thanks to previously announced changes that take effect this summer). MileCards.com is hopeful these reductions in miles earned will lead to better availability of awards at the lowest advertised prices, a key concern of Delta SkyMiles members, but Delta’s track record in this regard is not good.. One-way awards and cash plus miles options are customer friendly features that will be added for SkyMiles members.
One note – if you primarily earn miles via a credit card there is no expected change to how you earn miles. You’ll still be able to earn miles for all of your spending like you used to. With the ability to earn miles for flights falling for a lot of flyers under the new program, credit card spending will be a bigger part of mileage earning than before.
Overall anyone who primarily flies the lowest available fare generally earns less with this system, and those who fly the furthest tend to lose the most. Examples include:
Basically, if your airfare divided by miles flown is greater than 0.2, you’ll generally earn more miles under the new system. Examples of this include:
We’ve run the numbers and these are the coach airfares you’ll have to pay under the new SkyMiles program to earn as many miles from flying as you did under the old program. Note for the Amex purchased tickets we assumed you pay $350 per ticket which gives 700 extra miles under the old program. When running the numbers with larger airfare amounts for the old program the trends are similar. Numbers without the Amex bonus will give you a cleaner read of the situation.
An example of reading this chart is for a General member on a flight of 1,000 miles each way (2,000 roundtrip), the airfare needs to be $400 roundtrip to earn the same 2,000 miles in the new program that he earns under the current program.
Some things that stand out…
For flights under 1,000 miles you’ll earn about the same number of miles as today even on the lowest coach airfares of $300-$400, so there’s on real change in earning there. The big hurt comes around 2,000 – 2,500 miles where you’re going to need to spend about $1,000 on airfare to get the same mileage earning that you enjoy today. Most tickets of this distance, which are flights across the U.S., cost under $500 today, so the biggest losers are SkyMiles members who do most of their flying on coast to coast flights.
Longer flights of 3,500 miles or more each way, which are about the distance of a trip from New York to Europe, will require an airfare of about $1,200 – $1,500 to break-even to current earning, but that doesn’t include taxes, so add a couple hundred dollars to that depending on your destination. If you’re flying on a bargain fare of $900 you’ll earn much less than before, but the break-evens here aren’t as shocking as for coast to coast flyers and fuel surcharges are included in your favor in the fare calculation.
If you travel on long international flights (5,000 miles or more each way) on typical $1,500 fares frequently you’ll have a tough time earning at the same rate as before.
Here’s how the break-even chart looks like for paid first class / high end coach fares which currently earn a 50% mileage bonus. These look reasonable compared to typical premium fares for each distance, especially for longer routes. If you’re flying paid international business class you’re going to make out much better in miles earned for your tickets than under today’s program.
If you’re a Medallion level flyer, this chart shows how much you’ll have to spend in airfare in 2015 to earn as many miles as you would under today’s program which is based on flight miles. The big assumption is that you hit your Medallion mileage level on the nose for the purpose of simplicity.
To earn as many miles as before you’ll need to spend about $25,000 at the Diamond level, $17,000 at the Platinum level, $12,500 at the Gold level, and $5,000 at the Silver level, depending on what mix of fares you’re able to pay for with a Delta SkyMiles Amex card, which earns 2 extra miles per dollar.
These aren’t outrageous amounts. Many Medallions are spending this much on airfare each year, and if you’re a big spender who spends over $50,000 a year you’ll earn significantly more. But many other current top tier flyers will see a big reduction in miles earned. It’s not hard to earn top Diamond Medallion status on $15,000 in airfare. Those flyers, who are still quite profitable to Delta, will keep their elite level perks, but see their mileage earning drop about 50% to 165,000 miles per year from nearly 300,000 which is enough to think about switching loyalty.
All in all, these are big changes that will mean many people earn fewer miles than before, and depending on how the award chart shakes out need more miles to redeem.
As a flyer you still have choices. American and United don’t yet appear to be in a position to launch a program like this, so they remain alternatives for now. But within a few years it’s very possible both will move to a similar model and flyers won’t have much choice but to live under these new earning scenarios. Our sense is United is most at risk of following Delta, while American has a big merger to contend with first, though all major airlines have explored this option. They haven’t rolled them out for lack of desire, but cumbersome IT systems and merger priorities can hold up rolling out these changes, so it is a matter of getting the infrastructure and organization in place that has held up implementation until now. Delta, as the first of the big 3 remaining airlines to merge, has put its merger issues behind it, making it natural that it is the first to implement this type of scheme.
In the mean time if these changes are negative for you, vote with your feet and tell both Delta and the new airline of your choice how you prefer to be rewarded. Delta says this will help its most frequent flyers, and the math says some will be helped, but overall this feels like a net loss for most Delta flyers. We won’t know how it really shakes out for American Express credit card holders until Delta releases its updated award chart in the fall. Delta’s lack of transparency in not releasing the chart now is a disservice to its members, as it’s impossible to make a full judgement on the new value of the program without the new award prices and a sense of award availability.
For reference, here are comparison charts of how many miles you’ll earn under the new and old SkyMiles programs based on airfare:
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