Another Way to Burn: Delta Adding In-App SkyMiles Seat Upgrades This Month
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Got a few Delta SkyMiles burning a hole in your (virtual) pocket? By the end of January, you’ll be able to spend them in a new way with far less effort. Delta CEO Ed Bastian has become a vocal proponent of engineering more ways for Delta flyers to burn their miles, and during the company’s Q4 2018 earnings call he announced that in-app SkyMiles upgrades would be live “later this month.”
Previously, Delta indicated that the new functionality would be live at some point in Q1 2019, but evidently things are looking good from the development side. What may also be pushing the timeline is the positive reaction to SkyMiles seat upgrades on the web. Since launching on Dec. 7, 2018, Bastian confirmed to analysts and reporters that “over 30,000” upgrades were purchased using SkyMiles. Said another way, that’s 30,000 passengers who would’ve been sitting in coach, but instead parted ways with SkyMiles to sit in Comfort+, Premium Select, first class or business class.
It’s tough to say whether that’s high or low in comparison to cash buy-ups, but Delta seems pleased with the initial uptake. Financially, it’s easy to understand why. For each SkyMile used to upgrade into a premium cabin, that’s one less SkyMile available to redeem for a completely free award ticket. All things considered, Delta would rather sell premium cabin seats (by cash or SkyMiles) than give away seats.
Delta has pegged the value of a SkyMile at a single cent when redeeming for a seat upgrade, which is an objectively terrible value. Here at TPG, we would encourage Delta flyers to exchange SkyMiles for an award ticket — ideally during a SkyMiles award sale — where you can receive outsized value for each mile. For example, those who jumped on a recent deal to the Maldives were able to exchange 100,000 SkyMiles for a business class ticket that sells for between $5,000 and $10,000, representing a value of 5+ cents per SkyMile.
Passengers are also earning more through sign-ups and continued spend on cobranded American Express credit cards. After posting “record acquisitions of our cobranded American Express cards with double-digit increases in spend” in Q3 2018, Delta’s Q4 story is even rosier. The airline saw “double-digit growth in cobranded spend, helping drive $3.4 billion of incremental value from Delta’s American Express relationship for the full year.” In fact, new card acquisitions reached 1 million for the second year in a row and Delta “expanded new SkyMiles Members by a record number in one year.”
The above has no doubt been bolstered by sustained welcome bonuses across all of Delta’s cobranded Amex cards, including the Gold Delta SkyMiles® Credit Card from American Express, Delta Reserve for Business Credit Card and Platinum Delta SkyMiles® Business Credit Card from American Express. These cards help offset the lack of elite status, with some offering free checked baggage and even complimentary access to Delta’s network of Sky Club airport lounges with the Delta Reserve and Reserve for Business cards.
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