When a loyalty program becomes less rewarding, it moves the needle with consumers less. That’s a fairly basic proposition.
It’s not any different than the idea that if you raise prices consumers buy less of your product. There are exceptions of course, where some goods become more desirable because they’re expensive, but those are real outliers.
This works fairly consistently and reliably. Sometimes there’s a lag. Consumers pay attention directly to prices at the supermarket, those are up front, but they may not be aware of reward prices until it comes time to use their currency (redeem for a reward). And they may not fully understand the change in value proposition from a single redemption either. But overall, on the whole, demand for a currency should change when it becomes worth less. Or at least there should be enough people who change their behavior that this shift becomes noticeable at the margin.
The counterexample to all of this is Delta SkyMiles. It’s a challenge to everything we know about how the world works. The more opaque the program becomes, and the less valuable SkyMiles are, the more customers seem to want them.
Delta is now generating $3 billion a year in revenue from its American Express deal.
Delta projects straight-line growth, which seems unlikely because the total volume of charges will vary with the overall performance of the economy — and there seems a reasonable chance of recession in the next 12-18 months (it’s already been one of the longest economic expansions since World War II, the Federal Reserve is raising interest rates, the yield curve is flattening).
Nonetheless the point remains. They charge as much as 100,000 miles one way for business class between the US and Europe on Delta at the saver level.
Just four years ago the price was 100,000 miles roundtrip.
Normally we think there’s some limit to how much a program can devalue. But Delta seems to continue to grow its loyalty program in spite of devaluations, in fact the more they devalue the more they grow. The trust deficit should matter.
One possibility is that Scott Kirby’s theory is right, that all that matters is dominating a market with flights and people will sign up for your credit card. Delta dominates the Southeast and Upper Midwest and is largely the preferred airline in New York.
When Delta give away 60,000 or 70,000 miles as an initial credit card bonus, sure, pick those up — Delta miles do have non-zero value! And it’s a given other programs have devalued too, and even copied Delta because airline executives in the U.S. think Delta executives are smarter than they are and must know something they don’t. But I’m really interested to hear from those of you who collect Delta miles aggressively and not just because you happen to fly Delta, I’d love to know why.
If not collecting Delta then what would you recommend collecting? Thanks
Quite frankly as my carrier of choice accumulating them is a by-product of flying and using my Delta Reserve card in gaining annual status.
Using AMEX cards and their particular bonus spend categories then transferring to Delta seems more efficient.
But Gary, be clear, all three legacy carriers have few bargains when it comes to using their respective mileage currencies.
As you’ve opined often, flexible points are a better choice in most cases.
I live in NYC, so let’s see what my options are:
1) AA : well, AA has basically given up on this city. And there is rarely, if any, saver-level awards, and even fewer non-stop flights to places that I would actually like to go to. AA miles serve me only for 1W alliance flights, and that is about it
2) AS : good for getting to Asia/South Pacific and beyond with their miles, but useless pretty much for anything other than getting to the west coast
3) B6 : good little airline, but the miles are useless for partner awards
4) UA : has the hub, has the flights, has the partners, but ugh, United. And Newark. Just, no.
Delta may have a trust deficit, but I know that if I want to explore places from America’s heartland to the Caribbean and beyond, Delta is likely to have my flights covered with at most one stop and oftentimes as a non-sop. Operationally they are excellent. The product is decent. So yes, I will focus on collecting my DL miles. Thanks
I agree that international business class takes way too many miles with DL miles but redeeming for coach class domestic is pretty decent on DL in my experience. Maybe that is all it takes to keep most sufficiently happy with the program, enough so that DL doesn;t much care for those of us who want to maximize the value they get from their miles with premium cabin international rewards.
I think people who collect delta miles like flying the product. Delta has a captive product in certain areas of the United States because they dominate certain areas with their flights.
People trust the hard product and may just live with whatever mileage plan delta has.
They will use the mileage they earn to burn on routes that they routinely fly with delta,
Just some reasons delta is showing a revenue increase selling their miles with credit card spend.
You have to shop for value, but it is there. We flew from ATL to MAD in D1 for 140k each round trip. The program is not great but if you live in ATL you do not have a lot of other choices. Also, Delta’s generally better operations and service level balance out the issues with SkyMiles as well. I relearn that lesson almost every time I fly AA or UA.
Last month I booked ATL-MNL (ATL-SFO-TPE-MNL) in business class for 85K Skymiles. The booking wasn’t exactly easy as I had to call and more/less walk the DAL phone rep thru the booking. I don’t find Skymiles totally useless, but they are more challenging to consistently find saver type award value.
Having flown over 2 million miles on United and by now probably would have made 1 K for life – 3 million miles -.it was difficult to give up United for Delta. This is particularly true with my home base if San Francisco. However, it’s a personal decision: fly the better airline or the better program. Delta just makes my life better. While the number of miles necessary to fly Delta Business internationally horified me I find the use of international upgrade certificates is an adequate solution.
@ Gary — I basically collect them because I use my DL Reserve card to maintain my DL status. I find the status more valuable than the miles themselves. Other than this (and flying on Delta, allbeit less.and less), I certainly don’t collect Delta miles. The biggest impact of Delta’s unethical, dishonest devaluations on my behavior has been to drive my business to other airlines whenever possible. Generally, I prefer not to be stolen from by those with whom I do business.
Speak for your self I get good value from skymiles out of DTW.
80k FC/Delta One ATL-SEA-HKG
13k RT ATL-FLL
15k RT ATL-PHL
18k RT ATL-EWR
We live in ATL. These are all this year. If I can get 1.5-2c per mile in economy (and don’t have to fly basic economy), it’s not bad at all. The Delta One 777 isn’t the best, but it was available when I needed to book it and AsiaMiles wasn’t. Most of the miles were from credit card signups (and some from my wife’s biz travel)
Ever since Delta stopped publishing an awards chart, I dropped them like a hot potato. I don’t trust them and their call center agents like to play dumb, real dumb.
Ditto Geoff and Ed re status and flying out of ATL. The miles are mostly incidental and once hit the minimum card spend for status I’ll mostly use other cards with better points or with cash back.
I get FLYING Delta largely in spite of SkyMiles, and getting the most out of the SkyMiles you do earn, what vexes me is ongoing spend on Delta cards and other partner activity – going out of the way to earn SkyMiles over other currencies. That’s what I’m hoping for insight on..
Gary, the question is broader, why do people collect miles from their competitors as well as from hotel programs etc. I like a lot of your readers, am fairly knowledgeable about how to get outsized value in redemptions, as well as in sign up bonuses and other promotions on the earn side. I am also almost addicted to this stuff, irrationally .
It requires me to place a close to zero value on my time for the math to work out, so I guess it must be fun.
I do have a reason than is somewhat unique to my situation. I have had a couple of neurological problems that have led to a marked decline in my cognitive abilities. So I no longer work and have more time available. If I were to try to do some business or play the financial markets, I could get hurt. The downside in the frequent flier world is relatively small.
I like them because they often offer great bargains. I flew RT from Miami to CUN earlier this year for 12,000 miles. I have a RT booked for next spring from CLT to PLS for 18,000 miles. It seems that every year I book one or two trips on Delta that I consider a great bargain. Now these are not the First/business international flights that many folks drool over (hey…..I drool too), but there are often solid values to be had. I collect them with just about the equal passion I have for about a half dozen airlines. United, American, Southwest, Cathay Pacific, etc. They all have there strong and weak points. Delta miles may not be as strong overall as some of the other programs, but they do have their nitch which I think is their special bargains. Also, it can pay to keep lots of eggs in many baskets. Despite having much stronger positions with American and United, on one occasion, Delta ended up being the least costly (points), and only practical option for a family RT to Hawaii, although I will concede that is the exception rather than the rule.
OK, I’ll bite. People are often lazy. Once a card is set up to auto-pay or is fixed in the top of a wallet/purse it becomes habit.
Also, some travelers just want domestic coach tickets. Delta isn’t bad there. Yes, sometimes their mileage requirements are horrifying. Have you seen AA and their 5 am, 3 stop itineraries from smaller east coast cities to London or Hawaii?
Finally, let’s face it not everyone who travels is versed in transferring flexible points to obscure SkyTeam carriers, using call centers in Australia and such. For them, Delta is fine.
Maybe flyers just like and trust Delta. I do.
I assume you know all of this and were looking for some silver bullet as to why people collect SM’s.
There ain’t one.
Gary, they have decent MQM boosts on their AX card (as a few stated above). Obviously you know that’s a big part of the “collecting miles”. Once I hit my MQM spend thresholds, the rest of the year I’m using CSP or CSR or AXP. What other program lets you earn 30k (M)QMs on one card and 20k on another? And if you really want you can add a 3rd card. For a lot of us it’s the only way to maintain top tier status. If AA would make it easier to earn EQMs I might shift more earnings there, as I prefer Advantage Miles.
I feel Delta is running an orderly operation and for the most of it, they treat me fairly well on flights even though I dont hold top-level status with them. Upgrades (at least to comfort+, sometimes to First) on the routes I fly are almost constant. Their app is great. The FA`s seem more friendly than elsewhere. There´s a lot of good to be said about Delta I feel. Skymiles? Just happen to collect them along the way w/o the expectation to do an awful lot with them. Every now and then you see a transatlantic für 60k RT and maybe I will get an upgrade to comfort+ on those.
Delta does more for the customers in their operation and shares less with them when it comes to Skymiles. That´s my impression I guess.
Most people just don’t want to do the math on their credit card returns. I used to work in a restaurant and people would pay with Hilton cards all the time. But I don’t get why people would want to give their loyalty to Delta since SkyPesos and barely any Comfort+ seats on any place. But hey…..not Allegiant, Spirit, Frontier.
Main reason: MQM’s are achievable via their many credit cards. We put substantial spend on 3 of their MQM earning credit cards, achieving elite status each year. But if Amex ever stops issuing MQM bonus miles resulting from manufactured spend, we’ll immediately cancel the cards and stop collecting Skymiles.
I have a Delta Reserve card and keep thinking about getting rid of it but so far have held on in order to get the extra mqm’s and because of the companion cert. I only spend up to the mileage and mqm bonus after that it goes in a drawer. I think a lot of that spending is to get the mqm’s or the $ waiver for status. Not only have the miles become less valuable but it seems like they are harder and harder to use on partners.
The vast majority of people don’t judge the value of a mileage program by their business class reward chart. If you don’t care when you use the miles, or are flexible on destination, they can still offer good value. Especially in markets where competition is limited. Between the MQM bonus on the Platinum, spend bonuses, and retention offers, we average at least 2% back each year. Then when we can book domestic trips for under 20k in coach, it’s a decent deal.
Gary, despite being very low value for premium-cabin flights on intercontinental routes, Delta miles do offer some good deals on shorthaul domestic routes (which may be where family travelers choose to look for award travel). As one example, flights between the NE and Florida can sometimes be had for 15,000 to 20,000 miles RT if booked a month or so in advance. Delta’s dynamic pricing keeps shifting the cost, according to demand….but on shorthaul at least that is sometimes advantageous. So for one subset of flyers it can be an okay return…
I cycle through all the airline cards to collect the bonus miles but after I get the sign up, the cards go in the drawer. I much prefer a transferable currency or cash. 2 cents per dollar is reasonable and easy and you don’t need to think about it.
As for flying, I end up with mid level status on every alliance. (AA
Plat, Delta Plat, JetBlue Mosaic, United * Gold by virtue of 1mm until 2013) I book the best flight that fits my schedule, buy first class when I need it. I rarely get upgrades. I don’t get stuck at hubs connecting on my “must fly” carrier because I’m a free agent. Never have to pay for bags or seats. I’ll hidden city ticket when fares are unreasonable but pay when I’m not being gouged . (Hint: I should have been to Canada a few more times last year than I actually made it)
I’m looking forward to the next recession when air traffic falls and those “dynamic redemptions” get cheap. Trust me, at 70% loads, you won’t have issues redeeming miles.
Am I crazy or rational?
From many replies above, it does not appear too many are going out of their way to collect skypesos, it is more like a by-product of being stuck in a delta city.
In a competitive market, with competent leaders worth the money they’re making, it means opportunity to offer a better product and displace delta, but it’s US airlines we’re talking about…
Following this administration’s example, it’s easier to collude. And if push comes to shove, there’s always the presidential self-pardon option.
I cancelled my DL Reserve and now Amex/DL doesn’t get that $60k spend. That was $300k in spend over 5 years and they didn’t even try to keep me with a retention bonus
And now with the MQD requirements they are driving me away as a flying customer.
I’ve switched to simply buying my biz class seats or using award points with more valuable currencies.
I’d estimate that Delta lost at least $4k in revenue from me so far this year b/c I don’t trust their currency.
I get great value domestically on my DL awards. Availability is also always THERE at one rate or another which at this point is better than AA or UA or most other providers who don’t include massive fuel surcharges (eg BA). I’d rather fly JFK-Europe on AA for 57.5k miles than JFK-Europe on DL for 80k, but if the 57.5k mile award isn’t available for even one day during the three months I want to travel, DL miles come in handy.
I’ve flown in first class and in coach. First class, to me, is a marginally more comfortable and enjoyable product/service, but not so much that I want to pay the difference in either dollars, miles, or reward points..
So, I am primarily a coach flyer and am reasonably comfortable sitting there. I travel internationally a few times per year but most of my flying is domestic. Delta offers a solid product. If you are looking for award seats in coach, their prices are often on par and often higher than what is offered by competitors. Yet, I find that on the routes that I frequently fly, Delta often has reduced mileage offers amounting to a solid value. Sometimes they offer award availability at “normal” pricing levels when others do not and when cash prices for tickets are more than I care to pay.
Granted, this experience is anecdotal and it may be a reflection of the routes I frequently fly. But, it IS a reason for me to continue to collect and value SkyMiles.
(People often sing the virtues of Southwest being a great relatively low cost carrier, but not in my market on the routes I frequently fly. Often, I forget or don’t even bother to check their website when looking to make a reservation.)
Gary sayz, “I Don’t Get It, Why Are People Still Collecting SkyMiles?”
Because many bloggers continue to brag about the wonderful redemptions on Delta or partners attained using said SkyMiles – not to mention that many also make shameful plugs for earning SkyMiles by applying to the various Delta AMEX cards.
1) Delta’s success in NYC (a true competitive market with AA, UA and B6 all operating hubs) suggests that people will pay for airline performance, not mileage programs. Also it’s not just about captive markets
2) People generally have cards for the Airlines they fly. The Delta cards give significant MQM boosts. MQM are arguably more important for regular fliers than redeemable miles
3) Tons of people seem to be getting adequate value out of Skymiles
4) Most fliers (even those on blogs like this) are not “going out of their way” to “ collect” miles. Most people earn miles through what they view as their day to day activities, which can including flying on paid fares and spending normal amounts of money on credit cards. If you are flying a lot of Delta for leisure or business because you enjoy the experience, SkyMiles are a byproduct. At that point, you sign up a card to augment your experience. Whenever you have enough miles to spend for something you want, you redeem. These fliers would have go out of their way to collect points that are not Skymiles.
Going out of my way to collect skypesos? Not so much… Having flown all 4 major US airlines recently, I will continue to pick Delta every time I can. Delta one is superior as is their operations. I usually end up asking myself why I didn’t just deal with the extra connection when flying UA or AA. Same for the boarding process on Southwest. I will continue to pay for quality, even if their loyalty points aren’t the best best in the industry. That’s what an upgrade certificate is for.
1 1/2 years ago I was able to get 11 RT award tickets on the same day, direct MSP to Jamaica for a family vacation, on the same flights over New Years vacation at I believe 35K/ticket. Used VA miles for most of the tickets, which also allowed me to book well in advance at low cost of cancellation. Actually needed to cancel one for $35 charge as I recall. VA miles were from 92K cc sign ups
American, on the other hand I have 1.4M for years and have a hard time trying to figure out how to use them. Always horrendous travel time and stop overs.
But, ya, I sure wish Delta wouldn’t devalue further. They have been the most valuable for me.
Delta (and airlines as a whole) relies on the fact that the vast majority of passengers don’t know or don’t care about devaluations of and changes to ff programs and are oblivious to the opportunity cost of acquiring stymiles. Even for many top-tier elites collecting miles is a mere by product of travel and nowhere near the top of their list of concerns.
Delta hides its award charts. That fact alone should raise your Spidey senses about everything Delta does. The less consumers know, the easier it is to take advantage of them or sell them a bill of goods about “enhancements.” Now at least Bastian has dropped the Richard Anderson safety videos where Delta congratulated itself on its “core values” of honesty, integrity and respect. I bet plenty of air sickness bags got used listening to that.
My airports are DFW and DAL. You can’t go anywhere on DL without having to change somewhere and award flights require crazy and long duration routings.
More leisure travelers flying more often and they may be fine with a domestic redemption, which on DL is not outrageous and often readily available.
I don’t use my miles for fancy flights for myself. I fly orchestra and singers to HLN to perform with my chamber chorus.. We have 3 airlines serving our city, only 5 arrivals a day. 2 of them are Delta.
Ooops — I mean THREE of them are Delta — 2 from SLC and one from MSP. My best bet for getting performers here from across the country. (Other flights are to SEA, late afternoon, hopeless except for actual Seattle musicians, and DEN, arriving in the middle of evening rehearsals.) This is the ONLY thing I don’t love about living in Montana. Sigh.
Okay, I’ll take a whack. Yes, the card does make sense for obtaining MQM’s, though I will guarantee you that less than 1% of the 1mm new cards they signed up even had that in mind. Yes, it is possible to occasionally get decent redemption from some cities. But the lion’s share of people signing up for, and using the card for, significant spend are uniformed or irrational. Almost all of them would be significantly better off with a cash back product.
I am flying Delta from RSW to Venice on a 70k business award ticket, and returning from Rome for a $1400 business class revenue ticket because there is zero availability out of Rome to the states on awards at any reasonable price in early August. So for now Delta works for me
P.s. needless to say. Zero award availability on United or American on the same dates.
I agreed that Sky Pesos are basically worthless.
It’s always good to have orphan miles in a program, any program. My orphan miles are with Delta. Every year I’m able to get an award ticket LGA/FLL on the non-stop for my wife to visit her brother. The mileage cost is anywhere from 10,000 – 15,000 points roundtrip. The legacy carriers can’t touch that. While Southwest is in the same category, my wife hates flying through BNA or ATL. She prefers the non stop. 😉
Delta is the Supreme Leader. They control everything. I have no choice but to sing praises to the Supreme Leader, Delta. The alternative to not singing praises to the great leader is to be sent to the gulag of Spirit and Frontier.
Ok, there’s Alaska Airlines but their routes are limited to the West Coast (to and from).
@ Gary — Here’s another reason — my SO and I have 17 million miles in the bank, so it matters little to us at this point which worthless currency we earn. The incremental value of miles has fallen to near zero for us, and after 25 years of chasing miles, I have better things to do with my time.
I’m fascinated to read that people in NYC and ATL and other major conurbations have such limited choices. We out here in flyover country have even fewer.
Why do I continue to collect Delta miles? On EACH of the “legacy” (what legacy?) carriers and SW I take 1-4 flights a year, usually with tortuous routing from here to there. Those are the horrible choices I’m presented: hopscotching across the country, often two hubs going and two hubs returning. Or perhaps via ORD during winter storms or flying east to Houston to get to Oregon or via Orlando in a packed plane to get to Columbus, Ohio.
So I get a little of this and a little of that, bide my time, and hope a flight or upgrade will fall my way. Next week I am taking a flight to Mexico with only one hub stop on award tickets in a mercifully pleasant Embraer. It will get me within a mere five hour drive of my destination. Hey-hey.
In the meantime all you bazillion-miler ultra titanium folks know that your day will come also to be treated like garbage by the airlines.
I haven’t collected or even bothered to sign up for any of the Delta products because it seemed like from the beginning of my points/miles journey about ten years ago, all the blogs talked about Sky Pesos and went on and on about how horrible Delta is to their customers, how the points aren’t very valuable, etc. so I passed on even the higher point cards to save the credit hits for “better” cards.
That said, I am not a business traveler, strictly leisure, but I’ve gotten some good, some great redemption options from what I’ve learned on the blogs and I recently (semi) retired and hope to have more time later in the year to start actually using the 3 million + points and miles I’ve collected while I was too busy to use them but when I look at the redemption charts I see AA is almost always a RIDICULOUS amount of detours to get from point a to b. Flying from BHM or HSV there is no availability, I can drive to ATL but instead of say being able to book ATL to CDG, it wants to route me ATL, , NYC, CLT, CDG or something crazy and it involves 24 hours of flying time even though they could just as easily go ATL to CLT to CDG and in the past when I called them, they said we couldn’t just go that way. Sure they have cheaper awards but trying to get them is like trying to put a girdle on a grandma!
I’ve got BA Companion passes and several hundred thousand BA miles and am considering getting more when I pay upcoming tax bills but the fees on flights are like 2k for to biz class to Europe…cheaper than paying cash obviously but still pretty steep and it HAS TO BE on BA metal.
I’ve got around a half million Amex, Chase and Citi TY points that I can transfer to the programs and I don’t really know which is best. The easiest overseas redemption I ever had was a biz class flight to CDG on Air France but I never really see any credit card offers for them.
Southwest is the absolute easiest to book, you know exactly what the points are, you can look and see the best time to use the lowest amount of points, etc. and they are AWESOME for domestic flights but for international flights they’re mostly to tropical climates (not a fan of the heat) and if they ever start flying to Europe, I’d never bother with anyone else.
IF you don’t have status and are looking for the most straightforward, easiest to book, best points value WHICH AIRLINE SHOULD YOU USE for international flights?
Gary, you’re an expert at booking these flights and can probably do it in your sleep as a professional, but for those of us who just want to take 3 or 4 international flights a year, who would YOU suggest accumulating points with
I sought skymiles and flew Delta until they eliminated the NRT-BKK flights . We flew once the SEA-ICN-BKK route and had a terrible experience on that last segment ( Korean ) . A previous return trip BKK-PVG-NRT-SEA wasn’t quite as bad but still regrettable on MU . No more Delta , no more skymiles .
No status. No paid flights, rewards flights only. Retired, no business to buy flights.
So, I collect the bonuses and put the cards in the sock drawer.
Living in SLC, we only use DL for nonstops, we can’t get with Alaska, AA or SW.
We’ve squandered 240k to fly to Europe, because it was nonstop SLC-CDG. Or, SLC-CUN in coach at more reasonable rates. But, I try not to use them unless I really need or want to.
I canceled my Delta American Express card this year and pocketed the $195 annual fee.
Delta is good for the Las Vegas to New York route, but so are several other carriers.
Capital 1 always gives me to 2 miles/$ of unbonused spend or 2% cash-back. Capital 1 purchase eraser allows me to buy any travel services or products at the best price I can find from the carriers are providers I choose, and then erase the purchases at a rate of 2 cents per dollar of unbonused spend.
So, getting 1.5 to 2 cents per mike value on skyMiles or any other miles tied to only one carrier makes no sense at all.
From NE Wisconsin either fly Delta or fly all CRJ 200 regional jets through O’Hare. So I fly Delta. I have impression that using Delta Reserve card is beneficial in rank on upgrade lists. Does anyone know for sure? Otherwise for $100 more per year i would probably use Amex Platinum card.