Delta Leveraging SkyMiles Program To Raise Billions

That 97% redemption rate on Delta is fascinating!

A strong majority of redemptions across all frequent flier programs are domestic, right? And probably even more for Delta? For domestic redemptions, are American and United miles much better than Delta miles?

The most popular frequent flier program, i think, is Southwest, because it provides clear and consistent value on the most useful and frequent redemptions, which are on domestic flights. Delta is probably similar.

Your next response would be “then people should just use cashback cards,” but spending money on miles earnings cards also adds to miles you earn through flying and other activity.

I dabble in most of the mileage programs but switched mainly to Delta because I fly them for business travel.

"While many of us may have a negative perception of the SkyMiles program, and especially the direction it has taken over the past few years, it's clear that a majority of consumers don't feel that way. After all, people are spending more on SkyMiles credit cards,"

Because we have no other way, but suck it up and use it even for the little value we get out it. It is still better than nothing.

@lucky

Practically speaking what would happen if Delta defaulted and the creditors took control of SkyMiles? Would that mean that the frequent flyer program and the airline would be owned by two separate groups? In that case couldn't Delta just refuse to honor SkyMiles? I get that having to start a new frequent flyer program would be difficult but without being owned by Delta what value would SkyMiles have?

Most people are not strategic about how they use SkyMiles unlike many of us. They don't think about the value of 1 SkyMile. They simply think "I've got SkyMiles. They were free. Let's use them!"

So many people will then use SkyMiles to buy high-priced domestic redemptions a few months before travel (at which point, the coach ticket costs 75k+ return), when they could have instead flown Air France biz class from Paris to Dubai for the same price if they had purchased it 330 days in advance.

Khati - that assumes people have an interest in flying from Paris to Dubai. Some may want to fly the family from Minneapolis to San Diego or something.

@Endre - You’re right. It’s better than nothing, but only marginally better.

I enjoy flying Delta but generally I avoid using them because of the basically worthless value of SkyMiles. Anyone who thinks 75k miles for a round trip domestic ticket is bat crap crazy. There are better options in the marketplace.

Yes, because incorporating in the Cayman Islands is what everyone does, not because it’s a dodgy set-up designed primarily to avoid corporate tax liabilities or process dodgy money (the Caymans is one of 3 British Overseas Territories which enable the world’s richest criminals to launder all their money, and some of the world’s biggest corporations to avoid tax. The other two are the British Virgin Islands — so beloved of everyone’s cuddliest billionaire, Richard Branson — and Bermuda).

Why is Delta messing around in the Cayman Islands? Is there not a single state in the USA where they’d be happy to incorporate?

I signed up for the sign up bonus recently. But when the times comes I'm cancelling it. There was no way I would actively stay trying to get consistent points with skypesos. This 60k bonus was one time exception.

"In 2019, Delta contributed a total of 8% of Amex billings, and 22% of card member loans (which is interesting, since it suggests those with SkyMiles are significantly more likely than average to finance purchases)"

Another data point that there are plenty of Americans who shouldn't have credit cards. "Yeah, let's finance some purchases but don't worry honey, at least we're earning SkyPesos!" The cigarette of the financial services industry, at least for the majority of Americans.

"97% of SkyMiles redemptions are on Delta, while only 3% are on partners and for non-flying redemptions"

And a data point on how sooooo many flyers are probably getting shit value for their miles. I suppose this data point bodes well for us travel blogger types who learn tips and such for getting out-sized value from our redemptions.

Jay - just because you get “out-sized value” from miles doesn’t mean a family of four that is redeeming miles to take the kids to a fun domestic vacation by flying Delta metal isn’t also getting great “value.” I love premium flight redemptions and much as anyone, but we shouldn’t be snobs about how many people get use out of miles...

What is scary is that when Kirby and Parker get a look at this, the "devaluation" electric charge will light up in their Pavlovian brains.

So, Delta peeled off the most valuable part of the airline and moved it into an offshore corporation, right after accepting a massive bailout from American taxpayers. Got it.

@AI
Its happened before Air canada aeroplan, Gol smiles and, Aeromexicos rewards program have been at various times owned in whole or in part by different business then the airline, realistically they sign a multiyear contract and then hope to sell it back to the airline

Delta often does have some useful and reasonable domestic unadvertised special offers. My last Delta redemption was so that my in-law's family of four could come down to Florida for a visit. 22.5K per round trip ticket for C+ at a time when cash fares were close to $500 per ticket. (C- would have been, IIRC, 17.5 k per ticket) So better than 2 cents per mile, which is a reasonably good value even if it doesn't have the cache of international business class.