Delta Working on SkyMiles Redemption for Airline Fees. All Your Miles Are Worth Is a Checked Bag?

Delta is testing redemption of miles for airline fees. The more fees they charge, the more miles they can claw back from you!

[Delta President Glen] Hauenstein said: “People who fly us all year round on business and then they take their family to Hawaii and they want to stay an extra day and we charge them those $150 change fees — We want them to be able to pay with their miles.”

Reading this sentence it’s almost like he’s going to say “we charge them $150, that’s absurd.” But no, he says we’re going to charge the $150, we just allow payment in a foreign currency (SkyMiles) at a presumably terrible exchange rate.

Put another way, ‘we want to take away the sting of the change fees from people who think their SkyMiles aren’t real money and don’t think they’re worth much’. Hauenstein doesn’t want you to use your miles for free trips.

Delta’s goal is “to allow this to be a living currency” rather than to make SkyMiles a currency that can be leveraged for aspirational redemptions.

Delta has told us the future of SkyMiles is 1 cent per point in value — but only that much when you’re buying products from them.

  • Delta wants you to redeem miles at a penny apiece for Stella Artois beer. Never mind that what they’re telling you is that beer that’s free in their clubs — the clubs whose membership prices they raised — isn’t as good as Stella Artois.

  • They want you to redeem miles for Dom Perignon in the club, for a penny apiece against Delta’s inflated prices. A $140 bottle has a $250 sticker price and costs 25,000 miles. Make no mistake, that’s really less than 6/10ths of a cent per point.

  • You may be able to spend miles for a haircut in the future.

The problem here, for Delta, is that if miles aren’t worth much — just a penny apiece — why use their co-brand credit card to earn 1 mile per dollar on most spend?

Delta may reduce costs by $50 million or even $100 million at a time with these changes, but reducing the income stream from their co-brand credit card deal would be a $200 million hit to the bottom line. There’s a limit to how far a program can devalue before it shoots itself in the foot.

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. This is equivalent of removing a raisin to save a few million per month.

    Number crunchers making quality of product decision. It’s the same cycle all over again.

  2. @gary, why is this a problem? Who really cares if DL makes it possible to redeem miles for anything they offer? Then the onus is on me as to whether or not I want to pay them or shell out miles for them. I think you’re being too hard on DL for finding creative uses to keep its customers happy; if a customer wants to redeem miles for change fees then I think it’s great that that customer is able to do that.

    Seems like you’ve got two issues with DL. 1)they are focused on business first rather than customer first and 2)you have trouble redeeming Skymiles for much that you like.

  3. I’ve found a credit card that earns a currency which can already be redeemed for airline fees on Delta. Also on other airlines. It’s called Citi Double Cash. Check it out sometime.

  4. Delta will only change when Amex decides the money it spends is not worth it anymore. The customer is secondary in that equation and, if delta can get you to “waste” miles on over-priced products, so much the better. You are correct that delta does not want you to use your miles for anything other than a seat that would otherwise go unused which is happening less and less as planes fly closer to capacity. I just priced a ticket using both money and miles. The flight was $350 yet delta wanted 50000 miles for an economy ticket. Needless to say, that discrepancy made me so mad I checked with southwest and the flight was $250. I’ll be flying southwest.

  5. Airlines would be wise to not take advantage of their customers just because they have the upper hand. Greed may be good… filled up airplanes, nonrefundable tickets, baggage fees, etc, but greedy is bad… high ticket change costs, made worse for family’s, combined with paying the difference in current fares comes to mind.
    Personally, I don’t care how well the airline employees treat me if a last minute change in plans adds 1,000 to 2,000 $ to my family of four vacation, or even family of two, I avoid that airline next time, and every time.
    I can understand if airlines don’t want that type of clientele, i.e. they prefer business travellers and people that don’t change their plans. But I doubt that is the whole story since they do market to family’s and secretly prefer a wide range of customers.
    Personally, for my family, we will not fly again due to the inflexibility of the airlines on our first (and last) trip to Hawaii. A similar ticket change on KAL cost…Zero change fees and zero fare difference. Maybe that experience was unique, but the contrast is stark.
    We will just drive or carefully plan around airline constraints next time, but mostly just drive. And that should keep the airlines happy with all of their NEW, STUFFED, COMFY planes and SPEEDY service, right Delta? and American/USAir?

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