Delta President Glen Hauenstein said in the introduction to the airline’s second quarter earnings call yesterday, “We continue to roll out more options that our customers are asking for, including the ability to paying with miles by the end of 2018.”
He didn’t elaborate on what exactly Delta plans to allow customers to pay for in his remarks. However later in the call CEO Ed Bastian explained that mileage upgrades are going to fuel additional demand for premium economy and business class,
[A]s we continue to roll out different ways to buy those products, we will see I think another explosion in demand as other customers will use their miles to sit in the cabins they want.
And I think bringing that ability of our frequent flyers to choose where they want to sit after they buy the ticket is really going to be something that’s going to generate a lot of great products and services for customers as well as revenue for the airline.
Bastian is suggesting that they’ll let customers ‘buy up’ from their purchased ticket to a higher class of service paying with their miles.
This appears to be a revenue-based product, using miles instead of cash to pay whatever Delta happens to be charging. And whenever miles are used directly to pay a cash cost, it’s always going to represent poor value for miles.
Instead of getting 8-10 cents per mile compared to retail price redeeming for premium cabin international saver awards (seats that are expensive to buy but that the airline expects to go empty and so will unload at a discount through the mileage program) you can expect miles to be worth no more than a penny or so or perhaps less when directly displacing revenue the airline expects to earn.
Since the timeline here is this year and we’re already past the halfway point we should learn more details soon — though perhaps not before they actually roll out the product, since Delta seems to offer the least transparent frequent flyer program in the United States.