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Dealing with Delta’s New Frequent-Flyer Program

Next year, Delta will switch its Skymiles frequent-flyer program from a mileage base to a dollar base. You’ve probably already read about that, so the question becomes one of how to deal with it. Overall, the new rules will be good for business travelers and bad for vacation travelers—so bad that vacation travelers might want to reconsider loyalty to Delta, if other lines don’t follow suit.

The Basics: Starting January 1, mileage earning will be based on (1) how much you spend and (2) your Skymiles status.

  • At the lowest status level, you earn five miles per dollar spent on base fare, excluding fees and taxes; as you go up the chain to diamond status, you earn up to 11 miles per dollar spent.
  • Miles earned through credit cards will remain the same: one mile per dollar on general charges; two miles on purchase of Delta tickets and services.
  • Qualification for elite “Medallion” status will remain based on miles flown—at least for now.
  • Delta has not changed the award chart—yet.
  • And Delta promises to allocate more seats to the lowest mileage level—a big sticking point with flyers who currently find that low-level award seats are almost impossible to find—and to add additional redemption levels.

The Math: Let’s take a look at some sample trips, at prices for round-trips in mid-March of this year:

  • Transcon, Los Angeles to New York, 4,950 miles round-trip. Under the old system, everyone earns 4,950 miles. Under the new system, a vacation traveler paying $266 in base fare would earn 1,330 miles; a business traveler buying a refundable ticket for $1,367 in base fare would rack up from 6,835 to 17,771 miles, depending on status and credit card use.
  • Midrange, Atlanta to Boston, 1,896 miles round-trip. Old system, everyone earns 1,896 miles. New system: A vacation traveler paying $246 would earn 1,230 miles; a business traveler paying $848 would earn 4,240 to 11,024 miles.
  • Short haul, Los Angeles to San Francisco, 674 miles round-trip. Old system, everyone earns, 1,000 miles (500-mile per-flight minimum). New system: A vacation traveler paying $87 would earn 435 miles (no more 500-mile minimum); a business traveler paying $380 would earn 1,900 to 4,940 miles.

Obviously specific values depend on routes, dates, itineraries, advance-purchase period, and such. But you get the picture: Business travelers win big time, vacation travelers lose big time.

Dealing with It: As a vacation traveler, how you deal with the new program depends on your travel patterns.

  • If you earn most of your miles by flying, the new program will be a disaster. Abandon Delta if at all possible and look for Plan B.
  • But if you earn most of your miles through credit card purchases, the new program could be a winner—provided Delta keeps its promise of more low-level award seats.
  • If you’re a business traveler on an expense account, you will quickly learn to game the system by arranging your travel so the only alternative is a top-dollar ticket.

The Big Unknowns: Delta’s announcement is just the first shoe—perhaps of more—to drop.

  • Will Delta really open up more low-level frequent-flyer seats?
  • Will Delta decide to devalue its award chart again?
  • Will American and United—and maybe some smaller lines—quickly copy Delta? They probably will, because the new Delta pattern so strongly favors big-ticket buyers. As I’ve noted before, “me, too” is the airline industry’s favorite corporate strategy, and nothing catches on in the airline business faster than a bad idea.

However implemented, dollar-based frequent-flyer programs seem to be the “next big thing.” JetBlue, Southwest, and Virgin America already use different approaches to dollar-basing, as do most big foreign lines. The sad fact is that, for the most part, big airlines don’t value the loyalty of vacation travelers who typically base airline choice on fares. So there are decreasing reasons for you to be loyal to any one airline.

Ed Perkins on Travel is copyright (c) 2014 Tribune Media Services, Inc.

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