Delta filed its annual 10-K with the SEC and released it publicly at the end of the day on Friday. Buried in the 272 pages are interesting tidbits about the SkyMiles program – although they’re less transparent about it than you might expect given the $6 billion they’ve borrowed against the program.
- The Points Guy Says SkyMiles Are The Best. That’s what you’d think reading this sentence at least,
SkyMiles has been widely recognized as a top loyalty program by external reviewers such as U.S. News and World Report and The Points Guy.
What’s always bothered me the most about Delta is their disingenuous communications. For instance the U.S. News ranking hasn’t claimed SkyMiles is the best program. They haven’t said “our top X programs are among the best.” Instead when U.S. News has inexplicably ranked them number two, Delta trumpets this achievement using the weasel word that they’re “a” top program.
- 10% of flying is paid for with SkyMiles. This is up compared to pre-pandemic times, reflecting both the dominance of leisure travel (people spending their miles) and the large number of accrued miles, people kept earning even when they weren’t burning earlier in the pandemic. They’re often not getting great value for these miles, but they’re using them now.
In 2021, 10% of revenue miles flown on Delta were from award travel, as program members redeemed miles in the loyalty program for approximately 23 million award tickets
- American Express revenue is almost back to pre-pandemic levels. American Express and Delta entered into a deal extension through 2029 during 2019 that involves American Express paying Delta more for its products. Revenue to Delta nearly hit 2019 levels in 2021, but bear in mind that at a higher per-unit cost that doesn’t mean actual miles sold to Amex reached that level.
During the years ended December 31, 2021, 2020 and 2019, total cash sales from marketing agreements related to our loyalty program were $4.1 billion, $2.9 billion and $4.2 billion, respectively, which are allocated to travel and other performance obligations, as discussed below.
- Delta owes SkyMiles members $7.6 billion worth of travel. They owe taxpayers more than that (you’re not getting bailout money back, and Ed Bastian says the government has effectively committed to future bailouts too). However SkyMiles are sitting on the balance sheet to cover future travel at a value of $7.6 billion.
At December 31, 2021, the aggregate deferred revenue balance associated with the SkyMiles program was $7.6 billion.
- Miles don’t expire, but they’re still betting many miles will never be redeemed. And your not using your miles is big money to them:
A hypothetical 10% change in the number of outstanding miles estimated to be redeemed would result in an impact of approximately $140 million on total operating revenue recognized for the year ended December 31, 2021.