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Delta made a huge announcement last week that its SkyMiles program would institute a new revenue-based mileage-earning structure aimed at frequent business travelers and those customers who purchase premium fares. As a reminder, here are the new rules.
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:
You can still earn 2 additional miles per dollar with a Delta co-branded Amex. Basically this translates to the following fact: the higher the fares you buy, the more miles you earn. What might not be so obvious, however, is just what a mileage-earning hit the vast majority of flyers who buy your regular old discount economy fares are going to take. That’s why I priced out a few sample routes at various levels of elite status just to start giving you an idea.
*Keep in mind that the current figures on these business class fares aren’t accurate since Delta’s new Mileage Calculator does its math solely on airfare rather than on fare classes so fares that should earn a 50% class of service bonus aren’t necessarily credited with it below. Also, you do not earn miles on taxes on tickets. While US domestic tickets tend to carry low taxes (under $50 on transcons), some international routes may be higher, so when making your own calculations be sure to check the taxes on your fares. Still, the contrasts are stark.
Let’s say you’re heading from Seattle (Delta’s new hub) to Boston. Airfares are around $448 in economy and $1,410 in business class.
As a low-level Silver Medallion, you do just slightly better:
Even as a top-tier Diamond elite, earning 11 miles per dollar, you will earn just 44% of the miles you would earn in 2014.
This is actually not quite accurate. Your actual mileage earning on this route right now would be 7,488 thanks to a 50% business class-of-service bonus. So you’ll be doing just about the same come 2015. As a Gold Medallion, which you would be if you flew this route once a month, the earning would look like this:
So it looks like you’re doing a lot better. Well, your earning in 2014 would actually be 12,480 thanks to a 50% class of service bonus and a 100% elite status mileage bonus. So you’re still not doing as well in 2015 as you would be in 2014, though it’s becoming clear that the new system is weighted towards these expensive fares.
Let’s look at the popular JFK-LHR route.
You’re still losing out on about a third of the miles you would have earned in 2014! Where the equation starts to change is in business class. As a regular SkyMiles member, here’s what the calculator says:
With the more accurate figure with the class-of-service bonus thrown in, you’re earning 10,356 miles on this route in 2014, but you’re still way ahead under the new system because it favors spending so heavily.
As an upper-middle-tier Platinum Medallion (which you would be if you flew this route once a month, here’s what the earning looks like:
The new model is also geared toward premium travelers on short-hauls. Here’s a sample route from Atlanta to Detroit, two Delta hubs:
So clearly if you buy expensive premium tickets all the time or you fly high-priced short-hauls, the new system is going to hold some allure for you – though you have to be buying those high-priced premium or last-minute fares for this all to make sense, and the rest of us who search for a bargain (even within the reasonable parameter of remaining loyal to the same airline or two whenever possible) are going to see a huge cut in our mileage earning.
THE NEW MILEAGE EARNING SCENARIO
To figure out just what this means for the flyers Delta claims it is targeting with these new policies – those premium business travelers and elites on highly lucrative routes like the transcontinental ones between New York JFK and Los Angeles LAX, I wanted to sketch out a sample flying/spending scenario. I calculated out a typical roundtrip itinerary on this route leaving Sunday evening and returning during the day on Thursday. The total came to:
BusinessElite (in discount business C class): $2,945
So at the very base level, here’s how many miles you’d earn per roundtrip now versus the new system based on those fares and roundtrip mileage of 4,950.
Regular: 4,950 miles and 4,950 MQM’s
Silver: 6,187 miles and 4,950 MQM’s
Gold: 9,900 miles and 4,950 MQM’s
Platinum: 9,900 miles and 4,950 MQM’s
Diamond: 11,137 miles and 4,950 MQM’s
In 2015 you’d earn the following miles per trip per elite level in economy and $408 Medallion Qualifying Dollars:
Regular: 2,040 miles and 4,950 MQM’s
Silver: 2,856 miles and 4,950 MQM’s
Gold: 3,264 miles and 4,950 MQM’s
Platinum: 3,672 miles and 4,950 MQM’s
Diamond: 4,488 miles and 4,950 MQM’s
So the break-even point with your regular discounted economy fares for 2015 earning to equal 2014 earning would be:
So we’re talking about some very high-priced economy fares here once these changes go through!
Currently you’d earn the following miles per trip per elite level in business (including the 50% class of service bonus) and $2,945 Medallion Qualifying Dollars:
Regular: 7,425 miles and 7,425 MQM’s
Silver: 8,663 miles and 7,425 MQM’s
Gold: 12,375 miles and 7,425 MQM’s
Platinum: 12,375 miles and 7,425 MQM’s
Diamond: 18,383 miles and 7,425 MQM’s
In 2015 you’d earn the following miles per trip per elite level in business and $2,945 Medallion Qualifying Dollars:
Regular: 14,725 miles and 7,425 MQM’s
Silver: 20,615 miles and 7,425 MQM’s
Gold: 23,560 miles and 7,425 MQM’s
Platinum: 26,505 miles and 7,425 MQM’s
Diamond: 32,395 miles and 7,425 MQM’s
JFK-LAX Once a Month
So based on those numbers, here’s how many miles you’d earn in a year and what you’d end up with mileage-wise and elite-wise if you were just a road warrior who bought economy tickets. Let’s say you’ve been doing this for a year now already – you’d have Gold Medallion status and would be earning the following on economy tickets:
Award Miles: 118,800
MQD’s: $4,896 (spend the extra $4 one month to squeak by for Gold status MQD’s!)
In 2015, here’s what your earning would look like:
Award Miles: 39,168
So your real difference here is in those award miles. For now, Delta is keeping the MQM-earning and MQD process the same, so you’ll still make Gold, but you’ll have a lot fewer miles to show for it.
JFK-LAX Twice a Month
And for the uber-business flyers out there, here’s how many miles you’d earn in a year and what you’d end up with mileage-wise and elite-wise. You’d end up with Platinum status, so let’s say you’ve already done this for at least a year and are Platinum Medallion.
Award Miles: 237,600
And for 2015, you’d be earning the following on the same amount of flying:
Award Miles: 88,128
Once again, your award-mileage earning is drastically reduced.
That’s a lot of numbers to throw at you for now – and quite frankly, my calculator is about to explode, but I think that the results are far from a mixed bag. What’s clear is that you are going to have to spend a lot more money on airfares, even as a top-tier Diamond Medallion to break even on award miles once the new program is put in place. Just how bad that news is remains to be seen since Delta has yet to announce details of the new five-tier award system it says it will be putting in place, but I’m not holding my breath for a positive development on that front.
I don’t want to be too doom-and-gloom about all this. While I’m definitely disappointed in Delta and I am already completely revamping my own airline loyalty and elite status strategy, there are plenty of other options out there and I’ll be exploring those myself as well as in future posts, so keep checking back for ideas about how you can cope and continue to get the most from your flight activity.