Why the Value of SkyMiles is So Much Lower Than Other Currencies (and What Delta Can Do About It)

Over the weekend I suggested that Delta had backed off of their 21 day unannounced advance purchase requirement to obtain a domestic saver award. That was technically true, kind of. It so happens I picked the first destinations that came to mind to check and they happened to be among the handful of destinations where the advance purchase rule didn’t apply.

But now the 3 week advance purchase rule is officially part of the program. Delta announced discounted redemptions through the end of the year with a 21 day advance purchase for 2500 miles off each way as a sop.

A Delta spokesman had previously denied 21 day advance purchase requirements for the lowest priced awards. And I guess that was true “from a certain point of view,” as Obi Wan Kenobia said to Luke Skywalker when explaining his previous lie that Luke’s father was dead (rather than the very important piece of information that he was very much alive and, you know, Darth Vader).

See, the 21-day advance purchase requirement was only going into effect, and in effect only for most markets, and wasn’t yet an official rule of the program though it was about to become one.

The tortured truth coming out of Delta this year has been shocking to the conscience.

This isn’t a difference over value propositions or being unhappy with changes to the program. It is their program and they can do with it as they wish. It’s their world and we just live in it. However they are putting out too many falsehoods.

Delta Devaluations Without Notice

They devalued in August 2013 without notice, and then again in the fall without notice — in August they gave travel dates where new higher award prices would go into effect and then a mere three months later they reneged and started the higher prices early.

They eliminated stopovers without notice to members, simply reprogramming the website — charging members higher prices than program rules even stated.

They eliminated extra award availability for elite members without notice. Elite members fly all year for the carrot held out as their benefits for the coming year, so changes without notice to elite benefits are especially egregious.

They Refuse to Just Own Their Changes, Be Honest About Them

The SkyMiles program has a history of ‘creating strained narratives’ as to why they give members no notice of changes. They claimed it would be illegal to comment on future (award travel) pricing, despite the fact that the federal government exercises essentially no oversight of frequent flyer programs and despite the fact that the industry norm is to provide customers with advance notice of award chart changes.

Nearly every other airline gives advance notice of award chart changes. Delta did so when they went to 3-tiered pricing in 2008 (although what they told us it would mean turned out not to be true), and they did so again in the winter of 2014 when they introduced the now-removed award charts for the 2015 program.

I’ve said before that devaluations without notice are the worst thing a program can do. But I hadn’t even contemplated at that point that a program could take down its award charts entirely, so that when it misprices an award or changes prices members wouldn’t even know.

And when they did take down their award charts, the explanations consisted of complete non-sequiturs.

As Bad as Other Airlines Are, None Are This Bad…

When Southwest devalues as it has twice announced since going revenue-based it does so with advance notice. While they’ve undermined belief in the ongoing value proposition of their currency, they haven’t lied about it. (Even now, we don’t know what the value will be — but they’ll at least tell us that it’s ‘less’. This is pretty bad, but even this isn’t as bad as what Delta has pursued.)

While United seems to ‘manage by doing what Delta does’ they do so while consistently giving advance notice.

American seemed to learn its lesson from its April 8, 2014 changes, and has consistently given notice of changes since then as it has proceeded with the US Airways merger and integration of two frequent flyer programs. Over the past year they’ve said what to expect, and they’ve followed through.

Delta Miles are Devalued By The Trust Deficit

However useful SkyMiles may be, you have to apply a credibility discount to their value.

That’s because you are accruing miles in one period, and spending those miles in the future. When you’re accruing miles you’re making a bet on their future value. But the SkyMiles program has demonstrated, to me at least, that it cannot be trusted as a steward of that value. It cannot even be trusted to be straight with customers when it changes that value.

The Path Forward — If They Care to Take It

Trust is built slowly. The beginning is to offer an honest narrative about the direction of the program, lay out clear milestones, and then as they hit those milestones they rebuild credibility. Communicate along the way, remind of progress, and share when they are deviating from that plan.

It’s what all programs, ideally, would do — communicate forthrightly with their members — although it’s far more crucial for Delta because of the position they’ve placed themselves in. Lay out the value proposition, make clear commitments, and stick to those.

They could start by either bringing back their award charts, or declaring their intentions honestly for why they no longer want award charts. As it stands we’re left to believe they don’t want members to have any expectations of value from the currency, that the currency is worth what they say it’s worth, and that value isn’t safe from one period to the next. Their current communications strategy leaves room for little alternative narrative.

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 InsideFlyer.com, 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 »

Pingbacks

Comments

  1. I hardly bother reading most articles about Delta Skymiles since they have become irrelevant to me. But the way you worked in the Star Wars quote made it all worth it.

    The Force is with you, Gary!

  2. Even if DL opts to give advance notice about future changes to SkyMiles, they still will be the least valuable mileage currency in the USA frequent flyer arena. For the same number of miles or even a bit more, you can get actual First Class on some of the world’s best airlines with almost all other currencies, something you cannot do with DL. For about the same number of miles or even a bit less, you can get Business Class on some of the world’s best airlines and best Business Class seating/service, which DL makes harder to do. DL may be NOW increasing the ability to search partner awards, and NOW increasing the ability to actually get partner awards, but it is far easier and more seamless to do that with almost every other airline.

    DL is now the most profitable airline in the USA…and as such, it clearly believes it doesn’t need to allow award redemptions as good or as often as its peers and competitors. For those stuck living in or near a DL hub city, they have no choice but to deal with DL and its SkyMiles. For the rest of us, we’re delighted that we can fly other airlines and DL when necessary–and get better awards when we want them.

  3. I think Bill has it right. Delta’s in a spot (or thinks they’re in a spot) where they don’t have to be generous, so they aren’t. They know how to be generous if they wanted to–this isn’t news to anyone.

    I just don’t think this is actually that interesting a subject for the blog to cover on a daily basis.

  4. To summarize: if you are stuck in a Delta hub with virtually no other airlines available, you are SOL. Otherwise, if you care at all about award tickets, don’t bother with Delta. Nuff said….

  5. How bout a spoiler alert for those of us who are waiting to see the star wars movie? Bloggers ruin everything. 😉

  6. I think it’s great that you’re continuing to highlight how low SkyMiles has fallen, Gary. (And kudos to @Bill for a good analysis as well.) Even if just a drop in the bucket, getting the word out on the program’s continuing decline can’t hurt and can conceivably help a bit in putting pressure on Delta (and on other airlines considering how much they can gut their own frequent flier programs).

    I just wish your Delta posts could pop up every time the Delta Amex card is advertised. The posts have proven useful in steering me away from getting the card. As I believe you’ve noted, it would be interesting to see how Amex is feeling about all of those miles it’s buying from Delta.

  7. They don’t care. If you don’t like it, go elsewhere. To take a page out of your book (i.e., pat myself on the back)…haven’t I been saying that for a while? With airline consolidation, there is less incentive to provide true customer service. There are fewer places to go. And, while some people will leave DL and go to AA, some will leave AA and go to DL.

    You’ve written several posts that have basically said the same thing (i.e., DL is dishonest). Yes, they are. We get it. And, they get it.

  8. I live in a Delta hub and I am stuck with them mainly because I value their non-stop flights to almost anywhere I fly in the US. As many mentioned here the problem resides that Delta does not care about loyal customers because they do not feel the need to have loyal customers. I’ve flown almost 50,000 BIS miles with Delta this year. Every single flight was either oversold or almost full. How about paying over $1K for coach class flights from MSP to OMA, SFO, RDU, GSO? That is what those flights cost me and still they were oversold. Thus, what is the incentive for Delta to provide any value for their miles? I burned almost 1MM SkyPesos in the last 12 months and I am now down to less than 100k miles in my account. I will keep earning Delta miles (not much choice here) but I will keep burning them as fast as I can.

  9. An update from DeltaPoints: folks, wow, an amazing new Delta offering, Starbucks coffee served on all flights!! Wow, forget about everything Delta does and click click click to learn about what an awesome airline they are!! (He heard exclamation points make people click).

  10. the old line that in recent years the Delta awards web-site was “broken” always irritated me … it was never broken, it was always stinking dishonest. the only change is now they’re ‘fessing up about it. Call it honest dishonesty.

  11. By their latest moves, Delta has truly earned the “Skypeso” moniker. Not only is their peso worth less than other airline currencies, but you don’t want to hold any because you have no way of knowing what it’s value will be in the future (but you’re pretty sure it will be less!).

    Of course, the vast majority of their customers don’t understand this. Frequent flyer miles have become a ridiculously complicated game. The average person just isn’t going to invest the time to figure it out. I think that’s the reality Delta is banking on.

  12. So when you need to get to a funeral (in less than three weeks since you generally can’t plan for such things) and the airline wants $1,250+ for a domestic economy ticket, it’s guaranteed to cost more than 25,000 Delta SkyRubles (if you can use SkyRubles at all). Fabulous. They love to fly and it shows.

  13. +1 Santastico. It really sucks to be a hub captive. But, in the unlikely event DL gives a damn what we think, I’m pissed, and tell everyone with a choice to fly anyone BUT DL. I may not have much choice, but a lot of others do, and they should opt for an airline that cares.

  14. I hate these one-way converaations.

    It’s laughable that you think they might care about it when they continue to fill plenes with customers that will fly them regardless of what they do.

    Please refer to the common definition of insanity.

    As a separate entity, what is the value of the Skymiles program and has it changed as they continue to make these changes? I don’t expect you to know that, but if the value of the asset isn’t going down as a result of their behavior, why should they change? The reason it doesn’t go down is because consumers aren’t changing their behavior. If consumers were to get together and stop flying Delta, stop accumulating skymiles via credit card usage etc in a big way, that would have a material affect on their bottom line and the value of their assets at some point. But as long as people keep whipping out their Delta Amex cards when they shop or manufacture spend to get status with Delta then there’s no reason at all for them to think that they should change.

    That is the way it is right now.

    -David

  15. With all this being said and I know Gary doesnt like Delta I would like to point out a few things. I am American Lifetime Plat and currently Delta Plat. I was Delta Diamond for several years and may requalify again. I use the credit card so MQD is not a factor. I am told how great American is. If you want to fly MIA-LHR non stop see what you find on American. Mostly BA flights and for the most part not non stops. Crappy routings. Some American flights will be to NY or RDU and over the water. That stinks. It will stink even more on your flight back from the UK when you are delayed in NY for the last leg home. Previously American non stops were much more available. On a daily basis Delta has Virgin Coach space wide open at 60K WIDE OPEN). I flew Delta ATL-JNB a few months ago business class (2 tix) for 160K each. I have checked American on various routes without finding a single low level saver ticket for every day offered. I can find Delta LAX-SYD for 160K per. What can I find on Quantas? So for all the Skypeso remarks I have dont fairly well with my Delta redmeptions. Delta wants some outrageous redemptions for some flights, but so does American. United not mentioned as much as Delta has outrageous redemption rates on most everything I have checked. Even inter Europe flights are insane with United. American flys the 777W MIA-LHR. See how many tickets you can find for that one at low saver level.
    What can I find from American MIA-DFW-HKG in any class? MIA-DFW-HKG not a single saver seat. Economy is 130-170K miles! Business first anytime is 280. First Anytime is 360K. I know Cathay tix are avialable way out.I checked to Tokyo and saw nothing good on American metal. They have changed plenty. In some cases when they will give saver seating it is on the worst possible routing. For example MIA-DFW-HKG, they will route you to Tampa on the way to DFW. Why? they only have a a ton of flights fll/mia to DFW non stop every day. Why in the world would you fly to Tampa a 30 min flight on the way to DFW. Once you move off the saver level you get to some very high rates.

  16. “Otherwise, if you care at all about award tickets, don’t bother with Delta. Nuff said….”

    Robert, I couldn’t disagree more. I live in south Louisiana, and I needed to get three tickets this summer to Halifax, NS. MSY-YHZ isn’t an easy award booking, as seats were few and far between on AC and non-existent on US. It was crummy to pay the YQ one way on AC and equally crummy to pay 60,000 Skymiles for the three tickets the other way—but it was better than paying cash!

    I recently promised my nephew that I would take him to Iceland next summer. Delta has the only award flights in the three alliances direct from the USA. I don’t want to have to fly AB and connect in Germany, and Star alliance availability to KEF is almost impossible, so I’m really hoping to book those tix with Skymiles.

    If you only fly popular routes, you might be able to ignore DL. Otherwise, there’s still value in the program (just not nearly as much as there used to be).

  17. All they need to do is grandfather existing balances.

    Going forward, they can do (and must be able to do) whatever they please.

  18. Keep ragging on them, Gary. They have earned it. Like the Frequent Miler, I am a Delta captive who flies lots of biz trips on them. As you can imagine, I’ve had fun using their miles to fly to Rome in Alitalia biz and Paris in Delta biz. Seems like a just reward for the thousands and thousands of dollars I spend with them, but it sure seems like Delta does not appreciate me as a customer.

Leave a Reply

Your email address will not be published. Required fields are marked *