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Bad news for fans of Delta SkyMiles. Out of the blue this week, Delta devalued SkyMiles partner awards. Now, awards between the United States and Europe or Asia are up to 40% more expensive than before.
Let's take a look at the new rates to see how bad the damage is.
Partner Award Changes
Delta Air Lines (yup, two words) is part of the SkyTeam alliance. That means that its award currency, Delta SkyMiles, can be used to book award flights operated by other SkyTeam airlines—as well as with several other non-alliance partners. Some of the most popular partners include Air France, KLM, Korean Air, Virgin Atlantic, and Aeromexico.
While Delta implemented dynamic award pricing in 2016, the airline continued to offer a relatively predictable baseline price for every itinerary type. These represent the lowest award price per route, regardless of how low the cash fare drops. Unfortunately, as originally caught by Thrifty Traveler, it appears that Delta has raised its baseline price for partner awards between the U.S. and Europe & Asia.
Partner Awards Between the U.S. and Europe
If you were to search award availability last week, these were the base award prices you'd find for partner itineraries:
- Economy — 25,000 miles one-way
- Business — 75,000–86,000 miles one-way
Now, when you do the same searches today, the best award prices you'll find are:
- Economy — 35,000 miles one-way
- Business — 95,000 miles one-way
Yikes. That's a 40% price increase for partner economy awards, which I think is absolutely ridiculous.
For business class awards, that's a 10–27% increase:
But wait, it gets worse.
It seems that Delta has also implemented even higher partner award prices the closer you get to your departure date. For example, a Los Angeles (LAX) to London (LHR) itinerary on Virgin Atlantic booked 21–60 days before departure now costs:
- Economy — 40,000 miles one-way
- Premium Economy — 75,000 miles one-way
- Business — 170,000 miles one-way
Even worse, if you book the same itinerary less than 21 days before departure, the prices are:
- Economy — 55,000 miles one-way
- Premium Economy — 105,000 miles one-way
- Business — 195,000 miles one-way
I don't know about you, but I'm certainly not keen to pay almost 200,000 miles for one “saver” award flight to Europe.
You may have noticed that I didn't include any close-in booking examples flying Air France or KLM. That's because I couldn't find any close-in availability on those carriers through Delta's search engine. So while I'm guessing the close-in prices will mirror those on Virgin Atlantic, I can't be sure until I find an example.
Partner Awards Between the U.S. and Asia
Unfortunately, the story for itineraries between the U.S. and Asia is much the same.
Before this Delta devaluation, baseline award pricing on a partner flight between the U.S. and Korea was:
- Economy — 32,500 miles one-way
- Business — 85,000 miles one-way
Now, these same awards cost up to 23% more:
- Economy — 40,000 miles one-way
- Business — 102,500 miles one-way
That's a brutal price increase, especially considering cash fares are currently at record lows.
Poor Timing for a Devaluation
United also increased award prices on partners in April. I feel like I'm having a horrible case of deja-vu.
I understand that it's natural for frequent flyer programs to devalue over time. What I don't understand is the timing. We're currently in the middle of an international pandemic, and cash fares are at record lows. So, it seems to me that loyalty programs should be doing everything possible to entice passengers to book travel again—not raising award prices to un-bookable levels. Am I crazy?
The only thing I can come up with is that Delta simply didn't think the price change would affect anyone enough to care. Or maybe the airline hoped loyalists wouldn't notice. After all, the major blow here is really to premium-class bookings, which already required a hefty account balance. Now they're simply more expensive. Meanwhile, the vast majority of Delta fliers (who only book occasional economy awards) may not even realize that the pricing has changed.
The other possibility I've considered is whether this Delta devaluation — like the recent United one — is due to the pandemic itself. With award travelers stuck at home, many have found their point and mile balances reaching all-time highs from co-branded card spending. Do airlines like Delta and United see these growing balances as growing liabilities? If so, perhaps these devaluations are a way for airlines to clear these liabilities faster, once travel resumes. I really hope this isn't the case.
The one redeeming factor (if you can call it that) is that Delta wasn't a go-to program for these redemptions anyway. You were often better off booking SkyTeam awards via Flying Blue or Virgin Atlantic. So while this devaluation is disappointing, it's not entirely disheartening.
Further thickening the plot is the fact that just last month, Delta pledged to not devalue the program… sort of. As noted by View from the Wing, Delta recently raised $9 billion by leveraging its SkyMiles program. One interesting clause of the corresponding SEC filings includes:
“…Delta and its subsidiaries are prohibited from changing the policies and procedures of the SkyMiles program in a manner that would reasonably be expected to have a Payment Material Adverse Effect…”
Essentially, the airline (or in this case ‘Air Line') pledged that it wouldn't enact any changes that could adversely affect the profitability of the program. Obviously, Delta can claim that suddenly raising award rates isn't material. But I'm willing to bet that its frequent fliers would disagree.
Delta's devaluation may discourage program members from collecting SkyMiles as the miles have effectively lost value. Also, it erodes member confidence in the SkyMiles program when Delta makes unannounced changes with no advanced notice.
In this way, Delta's lenders and Delta's consumers share the same interests. If Delta loyalists subsequently take their loyalty elsewhere, or Delta co-branded cardholders stop spending on their cards, it's easy to see how hiking award rates could quickly go from ‘immaterial' to ‘material' in the eyes of Delta's lenders.
This week, Delta devalued SkyMiles partner redemptions to/from Europe and Asia. Now, award bookings between these destinations cost up to 40% more miles than before.
While the most significant increases (percentage-wise) are to economy awards, they're still priced competitively enough for some to book. Conversely, partner business class awards are all but un-bookable now. It'd be hard to justify dropping 100k miles or more on one flight in business class.
If you're a Delta loyalist who often uses SkyMiles for premium partner redemptions, you may want to consider looking for a new airline for your loyalty. Here's how to avoid Delta's high partner award rates by using other SkyTeam partners.
Are there other justifications for Delta's devaluation that I'm missing? Let me know in the comments.
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