Will Delta’s Partner Awards Become Crazy Expensive Too?

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:

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:

  1. 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.

  2. 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.

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 »

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Comments

  1. Jeez massive spoilers for No Way Out 😀

    Just kidding. This is concerning me greatly too. For all the “sky is falling” talk about Skymiles, the status quo for a smart member is essentially the same as it was a couple years ago — count on the partner airlines, and if you find anything on Delta metal for the same price great, but don’t expect it at all. But — BUT — that all could come tumbling down if Delta sees people like us redeeming on Virgins Atlantic and Australia, Air France, KLM, etc.

    We shall see I suppose

  2. I’m guessing that we won’t know the whole story until some disenchanted employee spills their guts to someone with connections to the media. Which may never happen….

  3. @James K – “BUT — that all could come tumbling down if Delta sees people like us redeeming on Virgins Atlantic and Australia, Air France, KLM, etc.”

    Not sure why DL would care. It seems their goal in destroying SkyMiles is to cut cost. As long as partner redemption doesn’t go up in cost FOR THEM, they should maintain and even embrace it as good PR. Of course, if there is significant money to be made by making it worse, then it’s fair game.

  4. Delta miles on Al Italia and Air France is one of the very few remaining reliable opportunities for TATL from LAX. Blew all my Delta miles on 3 RT TATLs in J for 2. Happy with the value o gpt, happy that I have almost none left.

  5. Last week I booked O (biz class) on Aeromexico JFK/MEX/EZE and SCL/MEX/JFK (open jaw, layover in MEX) for my parents and me on their new Dreamliner in Oct at 125K SkyMiles/person. Not too bad for availability and the saver level to South America.

  6. For all the negative talk re: Delta’s program, as the post indicates, I recently booked JFK-DEL on Virgin Atlantic upper class for 70k Skymiles points + $46.

    That route is on a 747 and the new 787-9… Almost a $7k ticket and far more miles are required on Virgin’s system.

    This was an amazing deal and I’m giddy about experiencing the 787!

  7. @Alexander Ceremony, I thought Virgin imposed fuel surcharges? (And that US-India was 80k one way in business… but without an award chart who knows.)

  8. @without bacon – I did not have fuel surcharges on this booking and it was definitely 70k points (booked for this October). The same booking on other airlines with less favorable routing was indeed more, even above 100k.

  9. @Without Bacon – VS imposes fuel surcharges through THEIR OWN program, not through DL’s.

  10. I agree that the disparity is not sustainable, so some form of devaluation of international business class awards is coming. For now, however, Sky Pesos are the best for international travel. I’ve blown all my Delta miles, and I miss them dearly.

    Two things.

    1. It might be possible to try and get them add a domestic add-on to the international destination even if there are no saver awards. I’ve done it once (no status). Had to call more than once, that’s for sure.

    2. To avoid YQ from Europe when you don’t have the first leg available, fly open jaw, as in JFK-LHR-CDG-JFK. No YQ, as long as the flight does not originate in Europe.

  11. How do you book partner flights using Sky Miles? Do you use Delta’s website or the partners? I’m sure this is a dumb question for most of you. But thanks for listening.

  12. @Dan many partners are available on Delta’s website, but not all are, so for those that aren’t I usually search AirFrance.us and then call Delta to book

  13. I just booked JFK-LHR-DEL roundtrip for 140,000 and $180 in taxes. There’s a lot of availability on Virgin, AF, Aeroflot and one of the Chinese airlines. AF doesn’t have lie flat so I chose Virgin. No fuel charges.

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