As part of its shift to becoming a more ‘revenue-based’ program, Delta SkyMiles has made many changes that make inexpensive awards (where it used to not even be worth bothering to use your miles) cheaper, and pricier tickets much more expensive.
Some of those changes:
- Unwritten 3 week advance purchase requirements for many saver awards
- lower mileage requirements for super cheap flights, and much more expensive redemptions on pricey tickets
- Additive pricing — if you’re willing to pay extra miles for a level 3 or level 4 award on Delta, and one of the flights miraculously has saver award space, you can’t include that flight at the higher pricing. You get charged level 3 or 4 pricing for the expensive flight plus saver award pricing for the connection.
- Changes implemented without notice
- Elimination of award charts
- Upgrades more expensive than award tickets even
- Previously unheard-of award pricing (over 800,000 miles per person roundtrip!)
Yet the way to get value out of SkyMiles remains to use them for international business class awards on partner airlines. And the funny thing is, that’s how you’d usually get value out of SkyMiles even before.
You can spend 160,000 miles roundtrip for a business class ticket on Virgin Australia between the US and Australia, even if options flying Delta might look like this:
Finding award seats on Delta to connect to Virgin Australia flights out of Los Angeles can be a trick. Getting doemstic travel to your international gateway city generally can be a challenge. I go in assuming I have to buy that domestic portion of the ticket, which I mentally equate with fuel surcharges.
Delta doesn’t otherwise add fuel surcharges except:
- On certain partners, like China Eastern and China Southern
- On award travel which originates in Europe
Delta adds fuel surcharges to trips originating in Europe because they see no reason not to stick it to those members. European programs generally add fuel surcharges, so they see their European members as having ‘no way out’. Just like Kevin Costner as a Russian spy working in the Pentagon.
Of course this policy went into effect before the introduction of one-way awards at half the cost of roundtrip, where it can now make sense for even US-based flyers to redeem a trip one way to Europe, and later book one way back. Except for those pesky fuel surcharges.
Still, it continues to work in Delta’s favor even now, since a member could find their one way to Europe at the saver level and they might think about waiting to redeem the return until saver space opens up. But they’ll probably just spend more miles because if they book one way Europe – US later they’ll pay hundreds of dollars in junk surcharges.
Nonetheless, there remains good value in partner awards whether with real fuel surcharges, or effective surcharges resulting from having to buy a domestic ticket to connect up to the available award.
The question is — how much longer can the huge disparity in pricing between Delta and partners exist?
And there are two competing hypotheses:
- Partner awards are only available at the saver level. Delta is buying these at a deep discount. Indeed, it’s often cheaper for Delta to buy great value partner awards than it is to buy seats on their own flights when those seats might have otherwise been sold. There’s no economic reason they need to raise the price of partner awards.
- Partner awards remain too good a deal relative to travel on Delta. The discrepancy in pricing is stark and embarrassing. That’s not sustainable.
Both arguments are likely true. So I still think that where Delta eventually goes is to change the pricing model for travel on partners.
At least for their closest joint venture partners, and as contracts are up to be renegotiated, Delta could gain access to more available seats at higher prices and pass those along to members.
Delta would pay their partners a percentage of the lowest price for a ticket to their partners in exchange for any available seat, and the idea was they’d price the award accordingly. (For instance, I imagine a $2500 ticket might cost Delta $2000 and cost members 200,000 miles or likely materially more).
There may be terms that include some saver space at a lower price point, or Delta may be required to make a minimum amount of Air France inventory available to its members as part of Skyteam.
I don’t think we’ll see such a great disparity between partner award pricing and Delta award pricing over time.
But if Delta is going to raise partner award prices, my guess is that it will be in the context of greater availability on partner airlines.
Overall we’ll see the program going in the same direction, which is squeezing out any great opportunities and turning points into a relatively fixed (low) value currency that can be spent for travel on Delta and its partners.