Questioning Delta loyalty

Over the past two years, Delta has been killing off its loyal following one paper cut at a time:

Things have been so painful that Rapid Travel Chai, who has been earning Delta’s top level Diamond status through flying, has jumped ship to United.  Many others have (probably wisely) declared their free agency and have given up on pursuing loyalty with any program.  That frees them up to always seek the best flight and best price when they travel, regardless of the servicing airline.

What about me?

I live about a half hour drive from the Detroit airport, which is a Delta hub.  With a handful of exceptions, if I want to fly anywhere direct, I have to fly Delta.  And, honestly, I find the experience of flying Delta to be pretty good.  Wi-fi is available on most flights.  Their on-time percentage is good.  And, I’ve experienced 100% success in being routed through the TSA Pre line since they began beta testing it about two years ago.  And, of course, it doesn’t hurt to have high level elite status for early boarding and upgrades.

The Detroit airport has two modern terminals.  The McNamara terminal is all Delta (and a few partners).  The North terminal is the everyone else terminal (American Airlines, United, US Airways, Southwest, etc.).  Even though the North terminal is very nice, it isn’t yet equipped with TSA Pre.  And, the only lounge is Lufthansa’s where even an Amex Platinum card doesn’t grant you admittance (and, its not all that great anyway).

So, part of the reason I like flying Delta is simply because I prefer flying from the McNamara terminal.  However, once the North terminal adds TSA-PRE, most of that preference will go away.

Of course, I could give up my elite status, but still fly Delta when it’s convenient.  Thanks to Global Entry, I would still go through TSA Pre.  And, as long as I hold an Amex Platinum card, I could still enter the Delta SkyClub lounges.  And, if I keep one of my Delta credit cards, I would still get relatively early boarding for those times where I need to ensure available overhead space for my bags; and in the rare instance where I want to check my bag, that would be covered too.

Abandoning status sounds perfect, right?  Then there’s the question of redeeming miles…

Redeeming miles

Delta’s award chart offers three prices for each award: Low, Medium, and High.  I always try to redeem miles at the low level to get the most value from my miles, but low level awards can be extremely difficult to find.  With high level elite status, though, I’ve been able to make it work time and again.  As you move up in the elite tiers, more low level award space becomes available.  And, once you reach Platinum status (which requires 75,000 Medallion Qualifying Miles per year), all award changes are free.  This is terrifically helpful because when I see a low level award that I might like, I snag it just in case. 

Platinum status helps, not just in finding award space, but also in maximizing value from awards.  I’ve written before about options for taking advantage of Delta’s flexible award routing rules to get extra value from your miles.  For examples, please see “Fighting Delta’s devaluation,” “Delta SkyMiles: Value from domestic flights,” and “Delta: two one-way awards for 12,500 miles.”  The tough thing about booking these awards is that they require a lot of up front planning.  If your dates of travel are not yet finalized, you might not be able to take advantage of these tricks.  If you have Platinum or Diamond status, though, you can make changes for free.  I regularly add a free one-way to the end (or beginning) of an award even if I’m not quite sure when I’ll fly.  Once my plans firm up, I look for award availability and then call the Platinum desk to make the necessary changes at no cost.

Opportunity cost

In order to maintain high level elite status with Delta, I spend $110,000 per year on my Delta credit cards (see “Mileage running, from home“).  In exchange, I earn 160,000 SkyMiles and 50,000 Medallion Qualifying miles (MQMs).  If I were to spend $110K on a 2% cash back card instead, I would earn $2,200 cash back.  Even better, if I used a Barclay Arrival card I would earn $2420 towards travel thanks to its 10% rebate in points on travel redemptions.  The cost to manufacture $110K in spend is irrelevant since it would be the same amount with either card.  The fact is that I would be $2200 to $2420 ahead with these cards vs. Delta cards.  But, I would also have 160,000 fewer Delta SkyMiles.  So, the question really is, am I getting significantly more than $2420 in value from those miles?  If not, I should stop playing this loyalty game.

Note that I didn’t include the card annual fees in this analysis because I think that the Delta card fees, while very high, pay for themselves due to benefits such as companion tickets and more.

When I look back at awards I’ve booked in the past couple of years, I see domestic coach round-trip flights booked at 25K miles, first class round-trip flights booked at 45K miles, hybrid trips with coach one way and first class the other for 35K miles, and business class trips to Europe booked at 100K miles (soon to be 125K).  So, let’s estimate the value of each type of award.  I’ve inflated values a bit to account for the fact that I usually get an extra half trip out of each award thanks to flexible routing rules:

  • Coach round trip 25K award. Estimated value: $400.  Value of miles = $400/ 25K = 1.6 cents per mile.
  • First class round trip 45K award. Estimated value: $750.  Value of miles = $750 / 45K = 1.7 cents per mile.
  • Hybrid coach/first 35K award.  Estimated value: $600.  Value of miles = $600 / 35K = 1.7 cents per mile.
  • Business class to Europe 100K award. Estimated value: $2000.  Value of miles = $2000 / 100K = 2 cents per mile.
  • Business class to Europe 125K award.  Estimated value: $2000.  Value of miles = $2000 / 125K = 1.6 cents per mile.

As you can see above, I tried to keep the estimated value of each award quite conservative so as not to overestimate the value of the miles used.  Even so, the estimated value ranges from 1.6 cents per mile to 2 cents per mile.  That means that the value I get from 160,000 Delta SkyMiles should range from $2,560 to $3,200.  That range is higher than I would get from a 2%-ish card, but not by a very large margin.

Refundable ticket premium

The award values I estimated above don’t count a very important aspect: as a Platinum elite member, I can cancel the tickets any time (up to 72 hours before the flight).  So, the tickets I buy with miles are essentially fully refundable tickets and are therefore worth a premium.  Some people I know don’t value refund-ability very highly, but I do.  I have many times scrapped plans within a few weeks of a trip for one reason or another.  So, for me, I think it is fair to value Delta awards 25% higher thanks to this feature.  Given that, 160K miles is, to me, worth $3200 to $4000 in travel.  That’s a very nice premium over what I would get with a 2%-ish cash back card.

Category bonuses

The analysis / rambling above shows that, for me, manufacturing $110K of spend on Delta cards makes sense when compared to spending the same amount on a 2% cash back card.  However, if I spend $110K on Delta cards at merchants where I could have earned a nice category bonus with other cards, then the conclusion goes out the window.  For example, if I earn 2X Ultimate Rewards, $110K of spend would result in 220K points which are easily worth more than 160K SkyMiles + elite status.  Or, if I earn 3X FlexPerks points, I would get a total of 330,000 points.  With a conservative value of 1.5 cents each towards flights, that would equal nearly $5,000 in travel.  Or, if I earn 5X ThankYou points, I would get a total of 550,000 points.  At a value of approximately 1.3 cents each towards flights, that would equal over $7,000 in travel!

Elite perks

While many elite benefits are mimicked simply by carrying the right credit card, there are still some benefits I would miss if I gave up my status.  Probably top of list are the free upgrades to Economy Comfort and the occasional free upgrades to First.  Free “have one on us” snacks and drinks are nice too.  Also, I know it’s irrational, but I simply like the feeling of being Platinum elite.  And so, yes, I’m still willing to go an extra mile or two to keep my status.

Conclusion

Continuing my Delta loyalty through high spend makes sense only if I can accomplish that spend in a way that does not impact my ability to earn category bonuses with other cards.  Even then, it is very likely that Delta will continue to devalue their SkyMiles program over time.  So, in the long run, this is probably a losing game. 

I’ll see this year though by completing my spend targets as previously planned.  At the end of the year, though, I’ll have to re-evaluate this approach.  It might then be time for me to give up on Delta loyalty or at least to map out a different strategy.  If, in the meantime, Delta makes more negative program changes, my decision will be much easier.

About Greg The Frequent Miler

Greg is the owner, founder, and primary author of the Frequent Miler. He earns millions of points and miles each year, mostly without flying, and dedicates this blog to teaching others how to do the same.

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Comments

  1. I think Rapid Traveller Chai is in for a RUDE awakening going from Diamond to 1K and never seeing an upgrade and being treated the equivalent of a DL Gold as a 1K.

  2. Whatever numbers you need to run to justify your decisions and behavior . Your points are only worth as much as you would actually pay with your hard earned money. for more on that, see numerous discussions about this topic by professor emeritus Gary (VFTW). To me, this hobby allows me to enhance my family vacations. Or to see my family at a discounted price. I would never pay a premium to fly in business class so it has the same monetary value as coach.

    • ABC: I agree with that, to an extent, but I would pay more for First/Business. For example, the reason I valued business class to Europe at $2K is that I would absolutely pay that much in cash especially if I could also get a free one way domestic flight in First! In fact, I’d probably be willing to pay more than that. Also note that I would pay a premium for refundable tickets if the premium wasn’t too high. It takes a huge amount of stress off me to know that I’m not too locked in to a particular itinerary.

  3. I mostly agree with ABC. But I would stop short of valuing coach the same as a lie flat Biz seat. While I wouldnt be one to pay 6k for a lie flat seat I certainly value them much higher than their coach equivalent.

  4. Nice analysis as always by the Nate Silver of the miles and points world. That’s what I like most about your blog, Greg — you truly dive into the numbers. Also, that tired old argument by the likes of ABC and Gary above is so silly. If I were able to buy a Mercedes with miles, does that mean I should value those miles as if I bought a Hyundai because that’s all I would actually pay? Of course not. I still got a Mercedes, not a Hyundai! Who cares what I would have paid? I got a whole different car!

  5. @steve – I have had a flurry of domestic and intl flights on UA during my challenge, my first flights with them since my sole prior flight in 1999. I certainly find the Delta flight experience better. UA has even more decrepit planes, ground operations seem very confused and poor especially boarding, in-flight service is inefficient though occasionally very nice, sucks to not have lounge access. I have gotten upgrades on each eligible flight but my flight times were a little off peak due to odd business travel schedule. The ps service where RPUs are needed of course I do not have RPUs, and I drew ancient planes for each of those flights. The ability to SDC on international is awesome, I was able to get out of Beijing 6 hours earlier on my connection back from North Korea, I would have had to wait around with DL.

    The tradeoff is the award program which is why I now more appreciate why so many in the miles and points community prefer them, especially the non-flyers. My Labor Day plans keep changing and with UA the flights are still there at the low price. With Delta, everything is absurd, so my wife and I are both Diamond but the only reasonable options are UA. Delta is trying to convince people to accept mid awards as the base price but I absolutely refuse to redeem for them, my mind tells me the standard price is low and I can’t be shaken from that, so like this past weekend I ended up making other plans even though I was checking DL until the last minute and was ready to fly.

    In short I would prefer to keep flying with Delta, I have 264k MQMs with them at the moment, if all things were equal. But they have abandoned Asia in their partner devaluation, and killed their domestic appeal to me with the SDC changes. I briefly met the DL team at April’s Freddie Awards, the SDC policy was hot off the presses and they just said they were moving closer to UA’s policy (without proactively opening up fare buckets day of travel). My point that if some aspects are going to be much worse than competitors then others should be better was lost on them.

    • Rob: The Delta Platinum card ($150), in my opinion, easily pays for itself with the free companion pass. The Delta Reserve card ($450) pays for itself as long as I keep elite status and fly Delta often: free Skyclub access, free companion pass (even in First), improved chance of upgrades. If I decide not to pursue Delta elite status in the future, I would certainly drop the Reserve card, but I would keep the Platinum card as long as I know I’ll use the companion pass, priority boarding, and free checked bags.

    • ed: haha. Yes, I get jealous of those who live near NYC and LA because of all of the great domestic and especially international options they have. We considered recently moving to Irvine CA when my wife was offered a position there, but we ultimately turned it down. I wanted to move because I would have been able to get to LAX and fly Singapore Suites class whenever I wanted 🙂

  6. Appreciate this blog! I frequently ask myself the same or similar questions. In the end it comes down to I live in Atlanta, probably 90 percent of my biz flights are contracted to Delta, and I’d rather hold status with them than not for the time being. I’ll hit Platinum Medallion on Friday. I’m going to see if I notice the difference…probably want, but it’s worth trying. 🙂 I still wonder if Alaska MileagePlan might be an answer for me.

  7. Greg,

    I feel pretty much the same way as you. I live in Sioux Falls, SD, so I would argue easier for me to move to United or American since I have service from them, too, but the darn MSP hub is just too convenient and so easy to get to with about 7 delta flights a day.

    With Air France availability back, I agree with Ben that it does help the pain of the devaluation since you can snag seats pretty easy. On top of that, I now have a MSP Air France flight to play with…..further, I also mileage run from home…..(just got back from Target for some reason)

  8. Greg, too bad you guys didn’t move to Irvine, CA. That’s where I live. Great place to live, I guarantee it. I’m still baffled you spend $100k+ on your Delta card. You are giving my grandpa a run for his money.

  9. I feel incredibly lucky that Denver is one of Southwest’s focus cities. So basically I can quite easily get a companion pass and now everything becomes at a MINIMUM 50% off for the wife and I. In all reality, it’s about 80% off when you figure how to manufacture UR pts and xfer them into my RR account. Do I get premium seats? Nah…but then again, Denver is quite central in that other than Miami, everything is quite tolerable sitting in a coach seat. I actually can’t remember the last time I flew anything else domestically. Another great thing is that being next to the 12th busiest airport in the world means that we have real competition to choose from as well. Flights are always cheap 😀

  10. Should have moved to Irvine! Used to live near there… I would just consider investing in real estate instead of spending $110K on a Delta card…

  11. Reading thousands of Frequent Traveler blogs and postings over the years, your posting about Delta allowing a free stopover on Domestic Round Trips was the MOST valuable! I live near LAX and was able to book a Skymiles trip LAX-ATL-JFK-LAX for 25,000 miles. Thank you

  12. I am motivated by cards that give you things you can’t buy with money, and you hit on two of three of them.

    I have both delta cards, and am nearing my final MQM bonus spend requirement. When I get the last 25k, that will get me to Diamond by October.

    With the cards I will be diamond by October, 16k to rollover to next year, making it then basically infinite diamond. Without, I might not make it. With diamond, 125% earning bonus over 100.

    Delta is the only out of the big three who has a card that helps earns status (american does not; united does not) Southwest’s technically does, but even the highest status on southwest is achievable without cards.

    As far as Delta service goes, I think they do a substantially better job of filling the first class cabin than anyone.I am upgraded all the time as a plat with the reserve card – like 80% the time. Perhaps I’m just lucky, but as a diamond with the reserve card, I will be at the top of the list starting off every time. I left American because of the upgrade policy and the credit cards, and I am incredibly happy with it.

    As far as the cards, once I hit the spend thresholds I will put them in the storage box till next year. I will use marriott rewards for business (the third of three that gives you something you can’t buy – status through the cards) and chase ink for the recurring charges. I’ll use starwood for a while to pump up the sheraton points another 20k for a nights and flight transaction next year, and perhaps I’ll look and see if anything else is a good choice for the rest of the year after that.

  13. @FrequentMiler, how many actual “rear end in seat” miles do you fly each year to achieve Platinum Status or do you solely achieve this through a 6 figure annual credit card spend?

  14. Andrew in A2: My actual “rear end in seat” miles varies from year to year. Two years ago, I rolled over almost 25K miles, so last year I gained Platinum status with very few paid flights. This year I’ll do about 20K (and since I rolled over 5K from last year, that’ll do it).

  15. Preview of tommorow’s TBB. Exlusive on FM:-)

    Thoughtful post by Frequent Miler about his questioning Delta Loyalty. Well, it’s about time. You are just entrenched in superior elite slut syndrome. Been there, done that. But there comes a breaking point when an airline does not treat you with respect and you get mad as hell and you can’t take it anymore! Remember, this is the company that has not invested a freaking penny in its (deliberately) broken award search engine. I got my award ticket to Greece yesterday. 10 minutes max for 100k Business class on the United site. I did not even dare try Delta’s, could not bear the indignation and mockery of me. Flying coach domestic is not going to kill us, free agency baby. Blow miles internationally flying up front (not always, remember a family of four). All the $110k spend on the Delta cards could get you SOOOOOOO much more bang elsewhere. And glad to see you are not moving to California. Makes our Ann Arbor city real estate taxes look like peanuts!

    Here we go again with that spam comment spam preventer box authentication, grrr.

  16. Once again, I think you made an excellent analysis. I also have come up with the 1.7 cpm figure based on what I would really pay for a ticket, but that may be low depending on how expensive certain domestic airports can be…

    I think the biggest benefit of elite status on DL now are not UG, but changeability of awards, access to better phone agents, bonus miles, and award availability.

    I don’t think you can totally ignore the annual fees though, despite the companion ticket etc.

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