Delta’s Mileage Move Provides Little Real Benefit

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Delta Airlines just announced that, effective last month, miles accrued in its SkyMiles frequent flyer program will not expire, regardless of account activity. As far as I know, Delta’s is the only big U.S. airline’s program where miles do not expire. {{{SmarterBuddy|align=left}}}

That’s obviously an improvement, but the true import is less than it seems. Although miles on the other big U.S. lines all expire after a period of 18 months to two years, you can easily reset the expiration clock. Typically, a reset requires earning miles or adding miles to your account and most lines reset the clock if you have any account activity at all—adding miles or using miles. Even if you don’t fly, you can reset the clock by earning miles on an airline credit card, depositing miles from an American Express or Diners Club account with participating lines, buying miles, using miles for an award, transferring miles, or donating miles to a charity. As long as you keep tabs on each program you’re in, you can keep your miles active indefinitely—at worst, you may have to buy miles for a minimum of $50, and the minimum cost on most lines is less. Among the large domestic lines, Southwest’s is the only program that cancels awards after 24 months with no reset provision.

Delta’s move underscores the major shift that has occurred among frequent flyer programs in recent years. The airlines’ main objective for their programs is no longer to promote loyalty; it’s to generate profits:

• The airlines have become very skillful at making sure they follow Cole Porter’s advice from Can-Can: “Never give anything away that you can sell.” That means you won’t get a low-level award seat unless the airline is sure it won’t suffer a revenue loss. Specifically, airlines won’t give you a seat at the lowest mileage level—typically, 25,000 miles for a domestic coach round trip— unless they’re at least 99 percent sure they won’t sell it. That’s one of the reasons you find that the best availability for low-level seats is within a month or so, by which time airlines pretty well know which flights will actually have unsold seats.
• Airlines do potentially suffer a revenue loss when you use a high-mileage “anytime” award. But, in that case, they make more money selling frequent flyer credit to their affiliated credit card issuers and other partners than they can make selling cheap tickets. Conventional wisdom is that airlines sell credit for around 1.2 cents a mile. Thus, when you use an anytime award of 50,000 or more miles to guarantee a domestic coach seat, the airline received $600 or more for those miles—and $600 is well above the average price of a cheap domestic coach ticket. That’s why airlines and their partners can be so lavish with mileage promotions. Partner promotions, especially, are money in the airlines’ banks.

That’s also why accrued miles are no longer the currency of loyalty. Elite frequent flyer status is now the real loyalty hook. The miles may measure the amount of flying you do, but it’s the flying, not the miles, that really matters. Depending on just how elite you are, you enjoy no-cost upgrades, low-cost paid upgrades, improved access to award travel, reduced or waived fees, and a whole bunch of other perks. Upgrades, especially, are the real currency of loyalty: Hardly anyone actually buys first-class seats these days; the first-class cabins are filled with elite frequent flyers on upgraded coach tickets. The main problem now is that most flights depart with far fewer available first-class seats than upgrade-eligible frequent flyers, so that only the elitist of the elite actually get the comfortable seats.

In sum, Delta’s move certainly holds no downside for its frequent travelers. But it’s not much of an upside, either. Delta has a reputation as one of the stingiest of lines for award travel, and until that changes, you won’t see any real benefit.