Is Delta’s SkyBonus program worth joining?

Dear Tim,

I’d be interested in reading your take on the new Delta SkyBonus program for small business owners. It’s supposed to accumulate points and award benefits above and beyond each individual’s SkyMiles account, but I’m wary. Should I be?

Thanks,

Brian

Dear Brian,

While there’s no guarantee that the SkyBonus program is a good fit with your company’s travel needs, there’s absolutely no downside to participating. In particular, there are no out-of-pocket costs. So the only investment would be the time required to register your company initially, and the time spent administering the program thereafter.

For those who aren’t familiar with SkyBonus, it’s a frequent flyer program, launched by Delta in late November 2001, for companies that spend less than $500,000 per year on travel. Companies with larger travel budgets can negotiate directly with the airlines’ corporate sales teams to receive volume discounts and other considerations.

Like an individual award program, the purpose of SkyBonus is to encourage repeat business. And it does so by rewarding the purchase of tickets with points redeemable for awards. The company earns 50 points for every $1,000 the company spends on Delta tickets (except for flights originating in Atlanta or Salt Lake City, which earn only 20 points). And the points can then be redeemed for flights, upgrades, lounge membership, elite status, or in-flight courtesy coupons.

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For example, a company can redeem 1,250 SkyBonus points for a one-year Delta lounge membership, or 500 points for a round-trip coach trip within North America. Assuming the points were earned at 50 points per $1,000 spent, the
lounge membership is in effect a kickback for spending $25,000?a 1.9 percent rebate given the normal $475 cost of an annual lounge pass.

To earn the 500 points required for a free ticket, a company would have to spend $10,000. If we assume the value of the award ticket to be $500?a reasonable price for advance-purchase tickets?the freebie is only a five percent rebate. On the other hand, if we assume a higher ticket value?consistent with unrestricted walk-up fares often purchased for business travel?the rebate begins to look more attractive.

Administratively, all points earned by employees of participating companies are deposited into a single company account. The company designates a program administrator who will be responsible for managing the program (i.e., signing up employees, monitoring earnings, and redeeming points for awards).

SkyBonus operates in parallel with SkyMiles, the Delta mileage program for individual travelers.This means that an employee of a company participating in SkyBonus would earn both miles in his SkyMiles account and points in the company’s SkyBonus account when flying on Delta. This is important because it allows the individual’s self-interest (in miles redeemable for personal travel) to peacefully coexist with the company’s self-interest (in points redeemable for business travel).

There is one caveat to bear in mind. Officially, SkyBonus is a limited-term program, scheduled to end on December 31, 2003. So if your company doesn’t actively accumulate points, there’s a chance you’ll be stuck with too few points for a meaningful award when the program ends. I would not say that’s a major concern however for two reasons: (1) If the company can’t reach an award threshold in 24 months, it’s not worth joining SkyBonus to begin with; and (2) given Delta’s investment in SkyBonus, it’s highly likely that the program will be extended beyond the current end-date.

As we have come to expect with newly launched programs, there is a bonus (150 points) offered for companies that join SkyBonus by March 31, 2002. Plus, all new enrollees will be entered in a prize drawing to win a cruise.

For more information or to register your company, Delta has put up a dedicated SkyBonus website at https://www.delta-skybonus.com.