Delta Opens The Curtain On SkyMiles As It Prepares To Mortgage The Program For $6.5 Billion

Delta announced that they’ve split out the SkyMiles frequent flyer program into a new structure, ‘SMIP’ in order to take out a $6.5 billion mortgage on the program. The associated SEC filings are a treasure trove of data about the program.

In 2019, revenue from the SkyMiles program and its more than 100 million members looks like this:

  • $3.9 billion from American Express
  • $1.9 billion from Delta (portion of ticket sales to program members for miles earned)
  • $100 million in sales to ’40+’ partners
  • $161 million in mileage sales to members

The airline claims $2.4 billion net cash, which strikes me as low but they’re the ones determining their own costs. Only 3% of redemptions are for things other than air travel. Cash paid for redemptions grew 12.4% in 2019, that outpaced the 10.7% increase in miles redeemed – so Delta charged itself more for awards.

Delta even wants investors to know they can always devalue the program, “In 2019, 97% of redemptions were on Delta allowing the flexibiltiy to manage costs by modifying inventory levels and value.” They add, “SkyMiles can adjust the redemption value of mile based on demand on any given day, for example, by reducing the redemption value on a peak demand day prior to a holiday.”

Since members haven’t been redeeming much this year, the SkyMiles program costs have gone down and net revenue has grown since American Express revenue hasn’t dropped as much as ticket sales. Delta represents 8% of American Express billings, and 22% of its loans.

Some interesting demographic facts about the program:

  • SkyMiles members contributed 60% of Delta ticket revenue, elites pay a 1.5x premium vs non-members

  • Elites have been members of the program an average of 16 years

  • In contrast to United which says 48% of their members live in the airline’s hubs, Delta reports that 68% of SkyMiles members live in non-hubs. The distribution of members by hubs: 6% in Atlanta, 4% Minneapolis, 8% New York, 5% LAX, 3% Detroit, 2% Salt Lake City, 2% Boston, 2% Seattle.

Delta and United are raising money in private markets against their loyalty programs. American Airlines is using its AAdvantage program to securitize a subsidized government CARES Act loan. These moves underscore that the frequent flyer programs remain one of the most attractive assets held by airlines, even during the pandemic. Raising money on the programs though means disclosing much more information than they’re using to offering.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

More articles by Gary Leff »



  1. And yet they devalue loyalty. No meals in first class. No coffee. Now is not the time to be penny wise and pound foolish. How about bringing back service and returning value to Sky Miles like with a published award chart or around-the-world ticketing? Something.

  2. Did anyone else notice the new Sky Miles spin-off is a Cayman Islands (aka tax haven) company? That’s kind of shady. What happened to protecting American workers?

  3. @ FNT Delta has no particular loyalty to American workers, except when making the case to regulate against the ME3 airlines. “The big 3 being subsidized is an affront costing American jobs” but don’t mind all the tax breaks we’ve strong armed state and local governments into giving us, or the fact that we are purchasing Airbus planes over Boeing…

  4. @ Gary — Now that they’ve already devalued to less than 1 cpm for most redemptions (and this is NOT for peak dates), I guess there is no limit besides zero. Do you still value DL at 1.1 cpm? Based on Delta’s latest devaluation, I have lowered my valuation from 1.2 cpm to 1.0 cpm, which will impact my credit card spend (ARE YOU LISTENING DELTA???). For me, the AMEX Blue Business card is now better than the DL AMEX Reserve, even at exactly $30k spend for 30k DL Miles + 15k MQMs. Hopefully, I already have enough rollover MQM so I can just close my Delta AMEX cards.

  5. Delta has been on it’s way to learning the most important lesson in business. Your customers are your business and when you forget that in America well we find a way to remind you. We ban together and bring you to your knees by hitting you where we get your attention most your money. So i say go ahead over charge us for a plane ride and pave the way for a go ol American boy to step in and get richer than delta and their board ever dreamed. I think they made a movie showing a guy smart enough to treat people like the money spend earning that treatment.

  6. Some service on board would be nice! Maybe a bottled water at your seat in FC?? United and AA seem to be able to serve food and alcoholic beverages in at least FC????I guess DL is really saving alot of $$$ serving the “snack” bag with stale Cheez-its

  7. Having been a Delta customer for over 20 years it saddens me that loyal long time customers are treated the same as once a year travelers. Yes, our business and personal travel is down but it won’t be this way forever.

  8. Can someone explain how Delta can have 6 million accounts in Atlanta? The Metro area is no more than 5 million of people, max.

Comments are closed.