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Things Delta told the SEC about its SkyMiles program
- PascLeRasc 5y ago> 10% of flying is paid for with SkyMiles I think I live under a rock. I've never paid for a flight with miles and I'm one of the only people I know who uses credit cards at all.
- antiterra 5y agoThe majority of the miles I’ve earned have been through my employer flying me places, not my credit cards. I would guess a good portion of flights come from those who fly frequently and therefore have miles to fly on their own with.
- nikanj 5y agoFortunately Delta can fix this with a single ”Dear members”-email. The skymiles-to-travel conversion rate is completely arbitrary, and points can be devalued simply by adjusting the amounts needed for various services
- tasha0663 5y agoWe're pleased to announce these exciting new options for redeeming your skymiles!
- easton 5y agoOr, as AA calls it “Hey! Want some magazines?”
- tommiegannert 5y agoTangentially related: I just got a letter from my Visa card supplier here in Switzerland saying they've changed the Priority Pass (airport lounges) benefit to be unlimited. Previously it was only four free visits per year. I thought for sure they would make it worse when I opened it, but I guess last year was a great time to re-negotiate group discounts for travel.
- MattGaiser 5y agoCredit card signup bonuses are also getting more aggressive in general. Many of them are at or near record all time highs.
- paulcole 5y agoWhat’s the best one you know of right now?
- alex_sikora 5y agoDepends on what you're looking for, cash back, hotel or airline miles. Here's a great list of the best sign up bonuses right now. https://www.doctorofcredit.com/best-current-credit-card-sign-bonuses/ https://www.doctorofcredit.com/best-current-credit-card-sign...
- csdvrx 5y agoThe Capital One mastercard, $200 cash, no fee, minimal payments for 1.5 year at 0% (ideal to take advantage of inflation), various warranties thrown in for rentals etc https://money.slickdeals.net/credit-score/capital-one-quicksilver-rewards-credit-card/ https://money.slickdeals.net/credit-score/capital-one-quicks...
- ceejayoz 5y agoThere’s way better out there. Citi’s Premier just had a $800 signup bonus for a $95 annual fee. Easy money. Lots of these out there.
- csdvrx 5y agoI could only find references to gift cards, not cash bonus. Funny thing is I considered citi recently, but figured out it wasn't worth it. I ended up with capital one. Now if you can recommend Visa cards with cash signup bonus, I'm still looking for one :)
- tehwebguy 5y agoNot even necessary anymore, Delta no longer publishes an award chart so they have flexibility to charge any point amount they wish for any flight!
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- random3 5y agoGiven the strategy that they won't be redeemed + infinite lifetime and potentially some barriers to convert/transfer, that liabiltiy will keep balooning. I wonder if they are assuming a write-off.
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- toomuchtodo 5y agoYou devalue the currency like a central bank.
- forrestthewoods 5y agoHow many passenger miles does Delta per day / year?
- Scoundreller 5y ago74 billion per year in FY2020. Was approaching 250 billion/year pre-covid: https://www.statista.com/statistics/221076/revenue-of-passenger-miles-of-delta-air-lines/ https://www.statista.com/statistics/221076/revenue-of-passen...
- hourislate 5y agoWendover Productions has a video on how airlines are banks now. Their Loyalty Programs are worth several times more than the Airlines and flying is basically a secondary business for them. How Airlines Quietly Became Banks https://www.youtube.com/watch?v=ggUduBmvQ_4 https://www.youtube.com/watch?v=ggUduBmvQ_4
- nexuist 5y agoAirlines have historically been cash poor. It's extremely difficult to make an airline profitable, and demand fluctuates wildly due to weather, oil prices, world conflicts, etc. "If you want to be a millionaire, start with a billion dollars and launch a new airline." - Richard Branson
- rplnt 5y agoedit at the bottom, my question has a simple answer: no That seems like an interesting topic. Wasn't Wendower Productions just reading Wikipedia articles over stock footage and blueprint graphs? Or am I mistaking that with some other channel(s)? edit: Well that was easy to search for, it was Real Engineering channel.
- brk 5y agoThis is particularly obvious on American Airlines. EVERY flight I took last year had the FA's telling how this one special flight qualified for a very rare offer... to open a credit card and get some base miles for free. I feel bad for them having to hawk this stupid credit card constantly, though I bet they get some kind of extra bonus for suckering people into signing up.
- tommiegannert 5y agoNumbers for context: $30B revenue, $16B current assets in 2021. $4.8B profit on $47B revenue in 2019.
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- smsm42 5y agoSo, we're talking about a debt of 20% of one-year revenue? Substantial, but not a huge deal, and given the redemption speed not too concerning. Comparing to a personal budget, it's like buying a car with a loan - not even an expensive one, if US medial salary is ~60K, then it'd be a 12K car. If I learned somebody making 60K has a 12K car loan, I wouldn't be too worried, if they can afford the payments. And this one is basically negative interest, since they can devalue miles with time (some even have expiration dates!)
- forgingahead 5y agoThis isn't unusual - maybe the quantum is (though I have no idea if "$7.6B worth of travel" is large or small in whatever context the article is trying to make), but airmiles are awarded now with the expectation that the airline must fulfill them later. Maybe 30k miles gets you a 1 way trip now, normally valued at $200. In the future, they could devalue the miles and a 1 way trip costs 35k miles. Either way, they must be accounted for so yes it's normal to see this on a balance sheet. Is it alarming if you're an investor? Perhaps only if you think there will be a "run on miles" where nobody buys tickets suddenly and they all use miles to fly instead. But the airline will never allow that, plus these are all magic tokens any way, so not sure what the relevance of this in the article is.
- nikanj 5y agoA run on the miles is easily stopped by a simple ”I’m sorry sir, but currently there are no award-redemption eligible seats available for those dates”
- forgingahead 5y agoExactly right - 2 years of pandemic and I had completely forgotten that this was a thing!
- smegma2 5y agoYeah, you could just as well say "the world owes Warren Buffett 100B in goods and services". Yes, Delta owes it in a sense but it's really just a statement of how many outstanding points there are.
- reincarnate0x14 5y agoThey already limit the number of point-only seat sales and upgrades on most flights, my various United point schemes will get me "upgrade waitlisted" on flights with 20 empty seats left in first/business until sometimes the day of departure as they try to get cash payments instead. Maybe it's better if you're in the magical invite-only programs but even at 1K, their top regular-people loyalty tier (which is something like 15000 USD in flights each year) it's gotten pretty bad. How many point-only seats they'll sell seems more variable but I've seen the rates jump from like 35k miles to 75k miles for the same seats for no apparent reason on flights.
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- kadabra9 5y agoThis is why I always, always tell people to burn and churn those miles and points as they accrue them. Airline and hotel partners will NEVER make miles more valuable, they only get less valuable over time. Miles and points don’t earn interest. Use them.
- asiachick 5y agoI thought it was well known that free miles are a scam. You'll end up flying the same airline just to get more miles when if you just chose the best fare you'd save way more than what you earn in miles. Even if you don't chose by fare, you also end up limiting your options. You want to arrive at 5pm but the airline you've signed up for only arrives at 9pm but you talk yourself into it "for the miles" etc...
- vanattab 5y agoYour error is assuming people care about spending more money. Most people serious about collecting sky miles are spending someone else's money to build up their personal miles balance. And this is precisely what makes skylines so valuable to airlines.
- throwoutway 5y agoNot every program is like this. Most are though, so I agree in principal. But rarely there are programs that don’t have restrictions and are direct point to cent conversion
- reaperducer 5y agoAirline and hotel partners will NEVER make miles more valuable I don't think "NEVER" is accurate. It's just very very very very rare. I looked up awards flights on the airline I have miles with at the beginning of COVID, and it was offering crazy discounts just to get people in seats. North America to Japan for something like 10,000 points and ~$200 in fees.
- dehrmann 5y agoI only use them for upgrades because I worry that, when overbooked, airlines are more likely to bump people on cheap tickets. I have no idea if this is true.
- supernova87a 5y agoExcept, Delta (and every airline) can arbitrarily control the redemption rate (speed) of their currency being used, and the conversion rate. And have been devaluing that currency steadily over the years. Don't hoard FF miles, it's a losing game.
- sersi 5y agoYup, and unfortunately with covid, it's very very difficult to use miles :)
- coolspot 5y agoYou can stop mile inflation by redeeming them for dollar-denominated delta gift cards. They never expire.
- choeger 5y agoAirberlin issued Amazon gift cards back in the day. They were essentially as good as cash. In an unrelated story, airberlin went bankrupt shortly afterwards...
- nostromo 5y agoThe dollar is losing 8% a year of purchasing power at the moment.
- reaperducer 5y agoI wonder what the percentage loss was from previous points devaluation. If dollar purchasing power is down 8%, but the points devaluation is 50%, then turning the points into coupons makes a lot of sense.
- kube-system 5y agoIt already has devalued 8% (well, 7.5%). There aren't official numbers for what it is doing currently; it's an observation of history, technically speaking. Most economists believe this was the peak and that 2022 will bring significant declines closer to the Fed's target. And if not, the expectation is that the Fed will take action.
- oneoff786 5y agoProbably fine. I would imagine most sky miles are accumulated by business travelers not paying for it, and very sparsely used for the occasional personal trip.
- drpgq 5y agoI’ve always wanted someone to calculate inflation in frequent flyer miles
- ethbr0 5y agohttps://thepointsguy.com/guide/monthly-valuations/ https://thepointsguy.com/guide/monthly-valuations/
- simonebrunozzi 5y agoThe SEC should start suing and penalizing airlines for the scam that airmiles is, before even getting started with crypto.
- bushbaba 5y agoScam? It’s a business travel incentive to continue traveling on the same airline even if it’s more expensive.