Earning Delta miles will be revenue-based starting January 1, 2015. Instead of earning miles based on the distance of your ticket, you will earn based on the price you paid.

 

Screen Shot 2014-02-26 at 7.14.13 PM

Though earning miles is changing drastically for Delta flyers, redeeming them might not change so drastically.

Screen Shot 2014-02-26 at 7.14.03 PM

What do we know so far and what do we still not know?

I stumbled on this change while researching the Delta award chart for another post. The new change is being teased there. I’ve supplemented that information with information from this Wall Street Journal article. (Hat Tip Amol from Hack My Trip)

Changes to Mileage Earning

The page set up for the 2015 SkyMiles program says:

“As part of our ongoing efforts to improve your travel experience on Delta, we’re making updates to the SkyMiles program. Starting January 1, 2015, miles will be earned based on ticket price to better reward customers who spend more with Delta. We’re also creating more redemption options and increasing Award Seat availability at the lowest price points.”

The Wall Street Journal says that “passengers with no elite status in SkyMiles will receive five miles for each dollar spent on tickets, excluding government taxes and fees. Those in the highest elite level will receive 11 miles per dollar spent.”

That leads me to speculate that earning might be:

  • no status: 5 miles per dollar
  • Silver: 7 miles per dollar
  • Gold: 8 miles per dollar
  • Platinum: 9 miles per dollar
  • Diamond: 11 miles per dollar

Previously folks who flew very cheap economy tickets were earning between 10 and 30 miles per dollar spent. So the earnings for those of us who only fly paid tickets when the price is very low are being slashed.

But the earning potential of folks who pay out of pocket for business class fares is going way up.

For readers of this blog–cheap travel connoisseurs–this shift in earnings rules is very bad.

But it’s not the end of the world for me. I can’t remember having flown a paid Delta flight since 2008. I get my Delta miles from credit card spending and bonuses on cards that earn Delta miles, Membership Rewards, and Starpoints.

If you’re in the same boat, earning all of your Delta miles from credit cards, this change in how Delta miles will be earned that was announced today has no effect on us (as far as we know so far.)

Changes to Miles Redemptions

The Delta award chart lists several changes coming January 1, 2015:

  1. More Award Seats available at the lowest price levels.
  2. One-Way Awards at half the price of round-trip tickets.
  3. New Miles + Cash Award options.
  4. An all-new Award Travel shopping experience.

1. More award seats available at the lowest price levels is good.

2. One way awards for half price is good.

3. New Miles + Cash options are probably neutral. I doubt they’ll be a good enough deal to use, but they won’t hurt us.

4. Uh-oh! Four could be the killer. What we don’t want is for Delta’s redemption side to go revenue-based too.

Imagine a roundtrip business class ticket to Europe for $5k–a reasonable cash price at least with the complications I usually include on my award tickets.

You can book a business class roundtrip with Delta miles for summer 2014 for 125k miles.

If Delta’s redemptions went revenue-based at 1 cent-per-mile, now you’d have to spend 500k Delta miles for the same ticket!

But does and “An all-new Award Travel shopping experience” mean a revenue-based experience?

This is what the Wall Street Journal article says:

Delta plans to introduce a system with up to five tiers of redemption choices so customers will have a wider variety of options, including one-way reward tickets and the ability to redeem tickets using both miles and cash, [vice president of Delta’s SkyMiles program] Mr. Robertson said. The new redemption levels will be disclosed in the fourth quarter. Delta intends to introduce functions next year that will allow customers to be able to use miles to purchase ancillary products such as seating in the roomier Economy Comfort coach seats.

As an example, he said, awards tickets to Europe, now priced at 60,000, 90,000 and 125,000 miles, could be broken into five tiers, including tickets for 75,000 and 105,000 miles. He also said the company plans to improve its website to make shopping and redemption simpler.

Did you get that?

  • We’re getting five tiers of mileage prices! Up from the current three. (I can’t wait to see their names.)
  • We’re getting the ability to use miles to book Economy Comfort.
  • The example he used of the five tiers is NOT revenue based!

I’m cautiously optimistic that the five tiered redemption system will NOT be revenue based. We’ll know more in the fourth quarter of 2014 when the changes are fleshed out. Let’s hope we learn closer to October 1 than December 31, but Delta has a bad history of no-notice devaluations.

If redemptions do not become revenue based AND if we see more award space in the lowest priced award space tier, mileage redemptions with Delta will actually get better on January 1, 2015.

That conclusion–that Delta redemptions could get better–goes against everything I know about SkyMiles, so we will have to see whether those ifs come true.

Recap

The number of Delta miles you earn on flights will be based on the price of the ticket you bought, not the distance you flew or the cabin you were in, starting January 1, 2015.

There will be a number of changes to redeeming Delta miles starting January 1, 2015 also. These include the ability to book one way awards, more award space available at the lowest price tiers (I’ll believe it when I see it), and five tiers of mileage prices.

As far as we know, mileage redemptions will NOT be revenue-based, and the SkyMiles boss’s example of how the five tiers will work in the Wall Street Journal article doesn’t sound revenue-based. But we may not know for sure until the fourth quarter of 2014.

I will be all over this story this year as it develops.

My first reaction is that the sky is not falling for me or most of us because we don’t earn many Delta miles from flying and we haven’t heard negative changes about redemptions. What is your first reaction?



Editorial Disclaimer: The editorial content is not provided or commissioned by the credit card issuers. Opinions expressed here are the author’s alone, not those of the credit card issuers, and have not been reviewed, approved or otherwise endorsed by the credit card issuers.

The comments section below is not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved, or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all questions are answered.