During Delta’s earnings call the airline’s CEO said miles are worth a penny apiece. He explained the new upgrade upsells they’ll be offering post-purchase, and miles are money: “we’ll have an offer for you that would be 17,000 miles for you or it’s a $170 in cash.”
There was lots of excitement this week over a Delta first class award sale for Thanksgiving starting at 8000 miles or $99. That is a good deal — 1.2 cents per mile.
- Business travelers aren’t flying for work over Thanksgiving, demand for domestic first class drops.
- Only Boston – Buffalo on a regional jet was actually $99 one way for first class.
What Delta has done is adjusted its mileage program so you get more consistent average, low value. Programs with fixed award charts might still charge 25,000 miles for a domestic first class saver award seat even when it’s selling for $99 because it would otherwise go empty. You just pay cash instead of miles when the mileage deal is bad but the fare is cheap.
With Delta you aren’t going to get great value for your miles, but you can still get a penny a mile when fares drop. They don’t have award charts, and they’ve been driving towards a revenue-based program where miles have consistent (low) value.
Don’t confuse that with delivering value to members. Delta will call a 34,000 domestic coach roundtrip a ‘sale’. They call 75,000 miles roundtrip in coach between Atlanta and Honolulu a sale.
When they call 27,000 and 28,000 mile awards a ‘sale’ that just underscores how little sales make sense in the context of Delta which no longer respects members enough to publish regular prices.
They’ll run sales for just 5000 miles one way but you’ll often find these are for flights you can buy for less than $90. In other words you’re still not getting 2 cents a mile in value from Delta even on these 5000 mile sales.
- The ‘sale price’ is 188,000 miles roundtrip. That’s insane.
- This ‘sale’ is only available for travel during off-peak winter months. It requires 60 day advance purchase and a Saturday night stay to get the ‘deal’.
- American’s business class published price is 115,000 miles, United’s is 120,000 miles (for their own flights)
- Air France KLM’s Flying Blue will let you book the same Delta awards for around 125,000 miles roundtrip — one third fewer miles than Delta’s ‘sale’ price. Korean Air charges 80,000 miles roundtrip for the same seats (plus fuel surcharges).
Delta has been driving value to those who:
- want to fly economy as their reward (they still charge as much as 100,000 miles one way for business class to Europe at the saver level)
- will choose where to go based on Delta’s sale
- can act quickly and spontaneously in making their booking whenever a flash sale comes up
Most people start with the destination and look for the reward. They book well ahead, around their lives and schedules. And heaven forbid they want their reward to involve greater comfort..
To be clear these award sales are nice. They provide more value than Delta offers without the sales. That doesn’t mean that they are offering great value, or better value than competitors, overall or for the majority of members.
One way to think about this is the opportunity cost of earning miles. If you fly Delta despite the value of SkyMiles, sure just figure on using them at around a penny apiece. But why on earth would you choose to spend money on a SkyMiles credit card (unless you’re using that spend to help you earn status)? Even a 2% cash back card would get you nearly double the value. Delta ‘sales’ underscore how uncompetitive SkyMiles is in delivering value to members.