Delta Confirms Negative SkyMiles Program Changes Effective January 2015

This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. For an explanation of our Advertising Policy, visit this page.

Earlier this morning, Delta sent out a press release announcing changes that will be made to the SkyMiles program starting January 1, 2015, that they claim will make earning and redeeming easier for SkyMiles members, and in my opinion, they’re all going to be bad news for most Delta flyers.

Screen Shot 2014-02-26 at 9.19.39 AM
Changes to the SkyMiles program will be effective January 1, 2015.

Here are my thoughts and suggestions, then read on below to find out the details of these new changes:

Earning

The major changes here – at least the ones Delta has released details on so far – involve the mileage earning structure. Delta will be transitioning from a traditional distance-based earning program where the miles you earn is based on the miles you fly, to a revenue-based earning structure where you earn miles based on the cost of a ticket and the fare class you purchase. Here’s how it breaks down:

Delta new earningSo General members will earn 5 miles per dollar.
Silver Medallion 7 miles per dollar
Gold Medallion: 8 miles per dollar
Platinum Medallion: 9 miles per dollar
Diamond Medallion: 11 miles per dollar

You can still earn 2 miles per dollar with a Delta co-branded Amex.

To put that in context, let’s say you were a General member and bought a roundtrip ticket from LAX-JFK for $350. Here’s the earning comparison:

Delta exampleThis year, you’d earn 4,950 miles, but next year, you’ll earn just 1,750 miles – just about a third of the miles you’d be earning currently. Even top-tier Diamond Medallions fare no better:

Screen Shot 2014-02-26 at 8.13.48 AM

At this rate as a general member, you’re basically earning miles at 20 cents each – a terrible value and much more than I’d value any mileage currency, let alone Delta SkyMiles.

When traveling on Delta’s partner airlines, you will still  earn a percentage of miles flown based on the fare class of the ticket you purchased, though Delta recently hacked away at partner earning as well, and details on the new earning structure here have not been released yet either. Basically, if you’re flying short-haul/expensive flights you may earn a lot more miles than you would by simply flying the short distance. But for most travelers, you’re probably going to net a lot less miles.

Earning Medallion status will not be affected for now – the mileage/segment and spending requirements will remain in place.

Redeeming

Redeeming for awards will be based on a five-tier structure (details still to be released) where the lowest level, SkyMiles Saver Awards in Economy, will be around the same levels they are now, i.e. 25,000 miles per roundtrip award ticket for travel within the U.S. and Canada, excluding Hawaii. However, the devil will be in the details of this new 5-tier structure (which, again, are yet to be released). Though it doesn’t look like the redemption side will look like other revenue-based programs like Southwest or Virgin America, where the number of points you redeem will depend entirely on the price of your prospective fare, the fact that there will be so many tiers for redemptions leads me to believe that pricing will be on a sliding scale more closely tied to ticket/fare prices.

However, Delta is already starting with an award chart that is undergoing not one, but two devaluations - one that just happened and another larger one in June that will drive award prices sky high, especially compared to competing carriers. You can check out my list of airline award charts here, and compare the charts of various airlines to the destinations you’re interested in.

Additionally, Delta will introduce One-Way Awards – finally! – starting at 12,500 miles for travel with the U.S (excluding Hawaii) and Canada – so at half the level you’d need for a roundtrip award –  as well as the option to use Miles + Cash.

Screen Shot 2014-02-26 at 9.28.33 AM

In the example they give, you’re looking at low-level 25,000-mile roundtrip awards from LAX-JFK based on availability and then higher levels of 35,000 miles, or the option to redeem a cash and miles award at 25,000 miles + $159 – essentially buying 10,000 miles for $159, or 1.59 cents each. That’s not terrible, but not terribly exciting either.

Screen Shot 2014-02-26 at 9.25.04 AM

Finally, Delta promises a new award calendar search function, which hopefully means a long-overdue update to its award search engine, which is among the worst of the major airlines.

Delta claims that this new system will increase flexibility for travelers, free up more low-level award space, and generally make redeeming SkyMiles easier, but it just looks to me like it will make redeeming for decent-value awards that much more unlikely.

Strategies Going Forward

Though these changes are aimed squarely at the premium business traveler market, I think it is shortsighted of Delta to focus solely on these flyers. Granted, they are among the most profitable travel demographics, but there are a lot more flyers out there who are just out to buy economy tickets that get them where they need to go, and mileage programs can incentivize them to choose one airline over another. By effectively dismissing the concerns of the majority of budget and leisure travelers who have to watch their wallets, Delta is potentially alienating a huge swath of its customers.

As for those premium business travelers – they’re going to have a lot less to look forward to, because not only are the new earning and redemption rates dismal, but Delta has also recently increased SkyClub fees and no longer allows basic members and affiliated credit cardholders to bring guests. The airline also blocks international first class awards on partner airlines, and makes upgrading your partner/friend/spouse exorbitant if they want to come along on one of those international business trips. The airline also no longer gives complimentary upgrades on transcontinental flights. I could go on and on, but the bottom line here is that Delta is slapping its flyers in the face and unilaterally introducing a new mileage program that automatically puts most of them (those buying discount tickets) at a disadvantage.

Overall, we’ll have to see how these new earning and redeeming options develop as more details are announced. However, analyzing SkyMiles against other programs brings me to the simple conclusion that this change is overwhelmingly negative despite some positive aspects like one-way awards (after other carriers have been offering them for years) and the possibility (though it remains to be seen) that more low-level award space will free up. All that is counterbalanced and pretty much overwhelmed by the severely reduced mileage-earning opportunities that will be in place that are going to make earning those award tickets a lot more expensive and time-consuming.

So what can we do? Well, I still think there’s time to have our say. Delta can still roll back these changes if it wants to, and in order to make that happen, a lot of people need to understand just how bad these changes are and what it means for them. But then they also have to call, email, write and do anything else possible to get in touch with Delta and complain loudly and often with your thoughts on these changes.

I’ve been saying all year so far that I am reevaluating my elite status strategy with Delta due to all the negative changes recently, and this is just the nail in the coffin. I plan to double down with American since I think Executive Platinum status is the best top-tier elite status out there. For those of you who are stuck flying Delta itself, there are still options to play around with. The airline is partners with Alaska, so you can bank your miles there and use them on Alaska’s fantastic airline partners at decent rates, and you won’t have to worry about Delta’s new Medallion Qualifying Dollar requirements for elite status, either.

These huge changes – the ones we know about so far – are going to affect millions of flyers, and if you’re one of them, you should let Delta know how you feel, and share your thoughts on this move in the comments below.

Maximize your rewards, points and cash back. Get a Personalized Recommendation Now