How Can I Protect My Delta Miles?

Dear Tim,

I’m worried about my Delta miles. We have over 250,000, and had planned on continuing to accrue miles and then cash them in later in 2006 for a trip to Italy in the summer of 2007. It seems Delta’s situation is growing more dire, though. What’s the best way for me to protect my miles? Should I go ahead and redeem them for free first-class tickets to Italy for a fictitious date in 2006 so I have them in hand?

Ellen L.

Dear Ellen,

The recent standoff between Delta and its pilots has many SkyMiles members on edge, and for good reason. Although the airline appears to have averted a crippling (and possibly fatal) strike, it’s not out of the woods yet. Still, if I had a substantial number of Delta miles banked (and I don’t, I should disclose), my inclination would be to sit tight.

Even assuming the worst—that the airline is forced to shut its doors—there is reason to expect another carrier would absorb Delta’s program into its own. That’s exactly what happened the last time a major U.S. carrier liquidated. In 2001, when TWA threw in the towel, American stepped up and folded TWA’s Aviators members and their miles into the AAdvantage program.

The bottom line is that the SkyMiles program is an enormous revenue-generator for Delta, and would be an attractive auction item if Delta liquidated and sold off its assets.

If you take a more pessimistic view than mine and believe there’s a high probability both that Delta will fail and that another carrier will not acquire the SkyMiles program, then your idea of cashing in miles for travel on a future date has merit. For those who aren’t familiar with this strategy, the thinking is if an airline ceases operations, it’s better to have an award ticket in hand, which might be honored by another airline, than be left with miles in an account that is terminally frozen.

Unfortunately, there’s no guarantee another airline will honor SkyMiles award tickets. But I would expect that, if Delta were grounded, its partners in the SkyTeam alliance would make a good-faith effort to assist Delta customers on a space-available basis.

The downside in preemptively redeeming miles is that if Delta survives this rough patch, you’ll be left with award tickets issued for dates on which you have no intention of actually traveling. You’ll be forced to pay a fee to have the miles redeposited in your account ($50 per ticket) or pay a fee to have the tickets reissued to reflect details of an award trip you truly intend to take (also $50 per ticket).

Of course, if I’m wrong and everything turns out badly for Delta, the risk of incurring those fees would seem paltry compared with the security of having tickets for a trip to Europe, even if the flights turn out to be standby.