Delta SkyMiles Going Fully Revenue Based

Early last year Delta announced that they would be introducing a revenue based frequent flyer program as of this year.

The good news is that it wasn’t totally a revenue based program. Instead of awarding miles based on revenue, they instead just added a revenue requirement. That basically means you’d have to spend a certain amount to achieve status. That threshold was an average of ten cents per mile, meaning you’d need to spend $2,500 for Silver Medallion and $12,500 for Diamond Medallion, for example.

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The good news was that the revenue requirement was waived if you had a foreign address on file on your SkyMiles account, or spent $25,000 on one of their co-branded American Express Cards. United quickly followed suit and added a similar revenue requirement, except there was no way to waive the revenue requirement through credit card spend for achieving their top tier Premier 1K status.

Delta just announced a massive change to the SkyMiles program, one which actually changes the industry in my opinion. They’re finally going the way of JetBlue, Southwest, Virgin America, etc., by actually awarding miles based on ticket cost as of next year.

While we don’t have all the details yet, The Wall Street Journal has some information at least:

Under Delta’s new rules, scheduled to be announced on Wednesday, 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. For fliers redeeming their miles, Delta will continue to award tickets by pricing them in miles, not in actual cash fares, offering different levels of availability as it does today.

This is horrible. Lets put this into perspective for a second. With Delta’s revenue requirement that’s in place right now they’re basically requiring you to spend an average of ten cents per mile.

So as a non-elite member you’ll apparently be earning five miles per dollar, which is 20 cents per mile. That cuts earnings rates in half.

As a Diamond Medallion you earn a 125% mileage bonus, meaning at an average of ten cents per flown mile you’re earning 22.5 miles per dollar spent, compared to the new maximum of 11 miles per dollar spent. Again, earnings rates are almost being cut in half. On top of that I bet that taxes and fees don’t count towards ticket cost for the purposes of awarding mileage, so it’s even worse than that.

We should hopefully have more information tomorrow, but unless you consistently book full fare first class tickets you’re going to lose here.

The worst part is the justification by Jeff Robertson, the VP of Delta SkyMiles:

Mr. Robertson said hundreds of customers in focus groups over the past three years indicated that the highest elite fliers felt under-rewarded. Customers also made it clear they wanted it to be easier to redeem miles and to have more lower-mileage award tickets available, he said. Delta has been rapped in recent years for having stingy awards ticket availability at the lowest mileage levels. He said the new program will improve award availability at the lowest levels.

Ah, yes, better award availability by issuing fewer miles to people actually flying!

And the irony here is that it will likely just continue to be easier to earn miles through means other than flying. Punish frequent flyers while increase the earnings opportunities for those accruing miles through other means.

Apparently there will also be some other changes to the program, like the introduction of five award tiers, one-way awards, and the ability to redeem a combination of miles and cash for tickets:

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, 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.

But go figure they’ll only share those details in the fourth quarter.

My favorite part of all of this, though:

He also said the company plans to improve its website to make shopping and redemption simpler.

So this is what it takes for them to finally fix their award calendar?

I mean, at the end of the day we can only give credit to Delta. They’re outrageously profitable, they treat their employees well, and they do absolutely everything they can to drive away customers… but people keep coming back for more.

Counting down the days till United makes a similar announcement now…