My take on the 2014 Delta Devaluation

I've long argued that Delta is the best legacy US carrier, while having the worst legacy loyalty program.

It's no longer possible to make that argument, since starting January 1, 2015, Delta will no longer have a legacy loyalty program. Instead, they'll be introducing what can for now be called a "hybrid" loyalty program: miles earned for flights will depend completely on the revenue cost of tickets flown and on your elite status, while at the same time you'll — maybe — be able to redeem miles according to a traditional award chart. In other words, you'll earn like in a revenue-based system but redeem like in a traditional legacy program.

As of yet we don't know what that new award chart will look like, so it's still early days to give an overall assessment of the devaluation. Still, we can reach some preliminary conclusions.

Delta loyalty now makes (even) less sense

One long-standing advantage of the Skymiles program over US Airways and United has been that Gold elites, at the 50,000 Medallion Qualifying Miles level, earn 100% bonus redeemable miles on paid flights, while only 100,000 elite qualifying mile elites earn that bonus on the two other carriers. Now that miles are earned on revenue, rather than distance flown, the advantage of being a higher-tier elite is overwhelmed by the disadvantages of booking primarily cheap tickets.

Only Alaska Airlines and American Airlines 50,000-mile elites will now earn 100% bonus redeemable miles.

Mileage running on Delta now makes no sense

Delta has conveniently put a calculator on the website announcing the changes to the program. My mileage run to Lima last November earned me 17,054 redeemable Skymiles. Since it cost just $364, starting January 1 that same trip would earn me just 3,276 Skymiles, assuming I remained a Platinum Medallion — over 80% fewer miles! In other words, valuing Skymiles at just one cent each, I'd be getting $137.78 less in value from the run.

Meanwhile, Frequent Miler says he's relieved because "Miles earned from flying tends to be little more than a rounding error in my account balance." I think that's a minority experience — even among travel hackers, which you can see with the example of a Diamond Medallion with exactly 125,000 Medallion Qualification Miles each year:

  • Carrying one American Express Delta Reserve card, on which she puts $60,000 in spend annually, earning 90,000 redeemable Skymiles;
  • Selecting the Skymiles Elite Choice Benefit at the Platinum and Diamond level, earning 45,000 redeemable Skymiles;
  • And flying 95,000 miles to make up the balance of her 125,000 Medallion Qualification Miles, earning 213,750 redeemable Skymiles.

This hypothetical Diamond medallion is still earning 58% more Skymiles each year through flying than through credit card spend or Elite Choice Benefits. That calculus will vary by hacker, but that's a big initial deficit to make back over the course of a year of portal bonuses.

No one knows what the new award chart will look like

For all the moaning and gnashing of teeth this devaluation will bring on, the single biggest thing to remember for now is that no one knows what the new award chart will look like. The only information Delta has given is that there will be 5 tiers of award availability, and that one-way flights will be allowed at half the cost of round-trips. Beyond that, they are starting from scratch, and anything is possible:

  • Delta could adopt a distance-based chart, and that chart could be based on distance between origin and destination, or distance of each leg (like British Airways Avios);
  • Delta could adopt a revenue-based chart, and that chart could give a fixed value per Skymile in each redemption tier (like Southwest), or fixed "bands" of value, like US Bank Flexperks and some other award currencies;
  • Delta could differentiate between flights to and from hubs, and flights beginning and terminating elsewhere, as they currently do with small-business Skybonus point earning;
  • or Delta could do literally anything else.

Until we know what the award charts — and the new award availability — look like, we won't know the value of our Skymiles, and we won't know the final effect of the devaluation on earning using co-branded Delta credit and debit cards and on miles earned through flying.

Will the devaluation change my loyalty strategy?

Not in the slightest.

For months I've been planning on this being a year of mileage redemptions: this will be my last year as a Platinum Medallion, enjoying free award redeposit and reissue, allowing me to maximize the value I get from my Skymiles by locking in "low"-level award space as it becomes available.

Indeed, I have been maximizing them so much I'm down to only about 2,000 redeemable Skymiles in my account. I hope to get off one or two more redemptions this year, before asking Alaska Airlines to match me to MVP Gold 75K and crediting all my Delta and American flights to Alaska's Mileage Plan.

I still love flying Delta, and I'll remain loyal to them as an airline, in the sense that I'll continue to redeem miles and points to fly them whenever possible. But I'll never again direct a paid flight to Delta in order to secure a higher Medallion status.

Meanwhile, I don't think they'll be terribly sorry to see me go.