When a loyalty program becomes less rewarding, it moves the needle with consumers less. That’s a fairly basic proposition.
It’s not any different than the idea that if you raise prices consumers buy less of your product. There are exceptions of course, where some goods become more desirable because they’re expensive, but those are real outliers.
This works fairly consistently and reliably. Sometimes there’s a lag. Consumers pay attention directly to prices at the supermarket, those are up front, but they may not be aware of reward prices until it comes time to use their currency (redeem for a reward). And they may not fully understand the change in value proposition from a single redemption either. But overall, on the whole, demand for a currency should change when it becomes worth less. Or at least there should be enough people who change their behavior that this shift becomes noticeable at the margin.
The counterexample to all of this is Delta SkyMiles. It’s a challenge to everything we know about how the world works. The more opaque the program becomes, and the less valuable SkyMiles are, the more customers seem to want them.
Delta is now generating $3 billion a year in revenue from its American Express deal.
Delta projects straight-line growth, which seems unlikely because the total volume of charges will vary with the overall performance of the economy — and there seems a reasonable chance of recession in the next 12-18 months (it’s already been one of the longest economic expansions since World War II, the Federal Reserve is raising interest rates, the yield curve is flattening).
Nonetheless the point remains. They charge as much as 100,000 miles one way for business class between the US and Europe on Delta at the saver level.
Just four years ago the price was 100,000 miles roundtrip.
Normally we think there’s some limit to how much a program can devalue. But Delta seems to continue to grow its loyalty program in spite of devaluations, in fact the more they devalue the more they grow. The trust deficit should matter.
One possibility is that Scott Kirby’s theory is right, that all that matters is dominating a market with flights and people will sign up for your credit card. Delta dominates the Southeast and Upper Midwest and is largely the preferred airline in New York.
When Delta give away 60,000 or 70,000 miles as an initial credit card bonus, sure, pick those up — Delta miles do have non-zero value! And it’s a given other programs have devalued too, and even copied Delta because airline executives in the U.S. think Delta executives are smarter than they are and must know something they don’t. But I’m really interested to hear from those of you who collect Delta miles aggressively and not just because you happen to fly Delta, I’d love to know why.
Wanna know why? I just scored a one-way award ticket on KLM from a southern African country (*not* South Africa) to Brussels via Amsterdam just 31 days before travel for a mere $60.96 in taxes and fees. Another great one I found is from Fiji to Seoul on Korean Air.
That’s why.
I don’t collect Sky Miles, I collect AmEx Points. Living in South Florida I find Delta has a lot of convenient flights, sometimes at good value, and when I find such a flight I transfer AmEx points to Delta.
I don’t normally fly delta. I picked up one delta card and redeemed for economy fare roundtrip NY-Colombia. I also had points left over for a recent business class redemption seoul to tokyo on korean air, so the points have some value with flexibility. I would guess the people who actively seek out Delta miles are chained to them because they are based near Delta hubs or their employers mandate they fly Delta.
I’d argue that Delta is the biggest cancer of the industry as an airline and a ff program.
The ultimate greed monger of a company and program who influenced the once great American Advantage program and other FF programs to rape, rob ,murder and kill their members for a buck
Monkey see Monkey Do (pathetic industry)
But Delta still holds the lead over all greed and insult to injury
Want that one way business class ticket to Sydney in a mediocre product?
Just part with 350k to 500 k. Only fools do that
No thank you I’ll fly Qantas in First for 70 K one way to 110 k on average or fly Emirates and others
The Delta effect is still being felt and I for one refuse to fly them even if it sometimes makes sense.I’ll connect through Mongolia,Guam to get to Atlanta whatever just to spite them in principal and have done so for many decades
I started my business career in NYC when i was young and starting out in sales I would hear from my mentors /sales coaches how to handle customers
Brutalize your customers take advantage of them every chance you can by overcharging them anyway you can..I could write the book in what these folks did and would do.Re-box used merchandise and sell as new for over list prices
And the sad thing was many still came back to these sales people and got ripped off over and over again
More oddly the worse and ruder they were treated the happier they were as customers thinking they were actually getting a good deal.
I found out nice and offering above market value didn’t always get me the sale.In fact sometimes they suspected something suspicious be cause I was to generous in my proposal
The interesting thing was the more the company ripped them off the better customer they likely were .They were blind, foolish and built up false trust.Mind you in those days there was no internet so you were essentially trusting some salespersons word!
I would shake my head and was thrilled to leave a company behaving like that and work for one that had principals,CRM skills,values and dare I say customer respect?
Yes I know shocking
I never looked up to the dishonest folks early on in my career as some would literally rob their own mothers and loved ones.It was a world I couldn’t comprehend
Delta represents everything I saw in people/comapnies of immense greed.I have always believed in making a profit and offering people high quality goods and services and value in return for their dollars and trust in me.
I needed to sleep at night make a living but feel good about my business relationships while making a living .Delta has simply motivated me into International FF programs
and flying Middle East Carriers because of gauging on revenue or reward
I didn’t have to deal with ancient aircraft, mediocre experiences and rotten customer service run a rounds and smoke and mirrors
Yes many folks still earn Delta miles because they are there,have run out of choices or no longer believe there are better options out there or simply don’t care enough about value and favor perhaps convenience due to being a prisoner in a hub city like Atlanta or other
Or to lazy to focus on a solution to a better alternative
Quite frankly that customer thankfully creates opportunities to some degree elsewhere for others
We do have to thank Delta as they continue to shoot at fish in a barrel in their hubs
Example Southwest Las Vegas to Detroit 3 PM departure coach 9.500 miles
Delta Las Vegas to Detroit Las Vegas to Detroit 3 PM departure coach 45,000 miles
As a famous philosopher once said
” Let the buyer beware”
I stopped collecting SkyMiles two years ago and cancelled my SkyMiles credit card. If schedule and price are even reasonably close to equal, I’ll take other airlines. If I feel I really have no realistic choice but to take a Delta flight, I’ll put the miles on Korean. I’ve got to think that those flyers still collecting SkyMiles are captives — residents of the Atlanta area or other areas with no or limited air choices. But even they have choices about where they put the miles they earn from flying Delta — that includes those who want to earn elite status after they reach the highest status they believe they can achieve in a year. Wise people to whom miles/points matter do not engage in masochism unless they have a disorder!
Most of the awards on AA in business class to Europe are 220k-270k AA miles. So 200k on Delta to.Europe is a deal!
Every once in a while I find a super miles award deal from Delta. For example, I just flew on excellent China Air business class from San Francisco to Hanoi via Taipei for 95,000 miles and a very small dollar charge. So I grab Delta miles whenever they are free. Amex points, too, since they transfer to Delta.
I only collect Skymiles through credit card sign-up bonuses so that I CAN get a 70,000 mile business class one-way tickets to Europe. It requires planning ahead and checking for free flights regularly, but I’ve gotten a 70K mile ticket every time.
SkyMiles is just utter crap.
Even though I hate collecting Skymiles, I personally spend on my Delta card for two reasons:
1. I have a lot of employee cards to take advantage of the Amex offers and
2. I continue to want Delta Diamond status that can be had without flying by spending on the Delta Reserve and Platinum cards. This year will require $250k to maintain status. Diamond status provides 2 Global Upgrade Certs for International travel which can be valuable.
However, I’m not sure the juice is worth the squeeze anymore and will probably not try and keep status next year. Requires a lot of manufactured spend and the opportunity cost of accumulating other point currencies is steep.
I just did this trip for TWO for under 200,000 skymiles -_- is this a good or bad deal?
ATL > Buenos Aires
Buenos Aires > El Calafate
El Calagate > Mendoza
Mendoza > ATL
I’ve been doing well with 70k each way business class to Europe, usually when there are sales. Other than those I would never use Skymiles because they usually peg at 1% and I get 2.5% on a cashback card. Even if I earn 2x points on the AmEx Blue Business Plus, the cash back card is usually better.
There is value to be found with patience and searching. I understand the frustrations with the rapid devaluation of SkyMiles over the years (Ive lived it).
For me, the balance is that Delta’s operations are quite good. I am captive to their largest hub (the largest hub of any airline anywhere) but that too has its positives. I basically have a nonstop flight to more cities than almost anyone on the planet (minus private jet owners).
So given all that I search for value and am flexible. Delta’s flash sales have come in useful. I’ve recently flown many family members to Hawaii from the east coast rt for 35k, booked an Alaska trip rt for 20k, booked seats up front for a summer European trip for 140k rt. The global upgrades are very valuable but again you must be flexible.
I think the key is to acknowledge that SkyMiles have lost a lot of value but are not worthless. Combine that with solid operations, an airline company that does a lot for my community, and there you have it- how can I just abandon that?
I almost never use SkyMiles for award travel. I use SkyMiles as a way to earn MQMs with the Pay with Miles feature as a result of having one of the Delta Amex cards. 5,000pts gets you $50 toward the ticket price. It’s not the greatest value on paper (but often is comparable or better than the miles price given how exorbitant redemption rates are these days), but I highly value Platinum Medallion status. So, I bank the MQMs by using the Pay with Miles feature, ignore the lack of MQD earning because of hitting the $25k spend waiver, and therefore maintain Platinum medallion status without too much trouble.
My wife, daughter and I love NYC and we fly PBI to LGA for 11,000 Miles round trip per ticket two or three times a year. For 33,000 Miles and $33 in taxes I fly my entire family to NYC for a week.
Skymiles are incredibly useful for people that don’t want to just fly to Europe in business class. Some of you need to realize that just because you they don’t work foe your exact redemption doesn’t mean they’re worthless.
I just booked a one-way main cabin Delta flight for 10,000 SkyMiles PIT-MSP-DEN. They still have great deals on occasion for domestic awards. This flight and competitor direct flights were priced around $175-$225. It was even a desirable time for personal travel – Friday evening.
I’m a captive flyer between Spokane and Fort Wayne. Delta is pretty much it. In the last few years the sky miles value for this flight has been cut in half, now requiring 70k miles. Could get it for 35k three years ago. If I had other options I would give up Delta in a heartbeat.
I’m seeing A LOT of 560,000 business class award levels to Europe. That – to me – is highway robbery. Seems like the middle finger to SkyMiles members trying to redeem internationally.