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Home  >  Delta Air Lines  >  Delta SkyMiles Chief Defends Higher Prices For Premium Awards
Delta Air Lines

Delta SkyMiles Chief Defends Higher Prices For Premium Awards

Matthew Klint Posted onMay 16, 2022May 16, 2022 37 Comments

If you want to use your Delta SkyMiles to book a premium cabin award, you can generally expect to pay a lot more than on most other airlines for a comparable flight. Hardly an oversight on Delta’s part, that is the plan and Delta believes it can continue to get away with it thanks to continued strong demand for its loyalty program and credit card.

Delta SkyMiles Chief Explains Why Flight Awards Cost So Much Compared To Other Airlines

Last month, Skift’s Biran Sumers sat down with Prashant Sharma, Delta’s Vice President of Loyalty.

Sumers zeroed in on the relative lack of value in using SkyMiles to secure premium cabin flights versus other airline programs and asked, “Why does Delta charge so many more miles for the best awards than other airlines?” Sharma, who has overseen a number of redemption devaluations during his tenure, argued that as long as consumers keep signing up for Delta credit cards and engaging with the SkyMiles program, there is no need to make changes:

“We take very seriously that the customers see value in the program, and the value is very holistic. A large portion of that, for sure, is using your miles to fly, which is the promise of joining the program. And we feel confident that as we look at where customers are flying and their ability to use the miles, we are actually seeing that actually approach 2019 in terms of how customers are using their miles to fly so demand remains high. It’s also validated by the fact that customers are not only joining the program at record levels but also taking up co-brand at record levels which is further faith that this is a currency they want to earn.

“So we looked at the value holistically. We feel very good that what we’re offering to customers. We continue to solicit feedback and satisfaction with the ability to redeem miles and the value of redeeming miles.”

This is hardly an unexpected answer. It’s also not so illogical, because as long as passengers keeping signing up for credit cards or crediting flights to SkyMiles, Sharma can really say with a straight face that Delta can charge 2-3X more for a premium cabin ticket than its competition.

Sharma recognizes that passengers appreciate reasonably-priced redemption options and uses two examples of economy class redemptions to argue that Delta still offers great value to its premium cabin customers:

“We had offers for customers living in New York where they could do a roundtrip to Europe for 34,000 miles in Main Cabin or they could go to Miami for 15,000 miles roundtrip in Main Cabin. So we continue to have a portion of these for customers depending on when they want to go and where they want to go.”

But Sumers pushes back. Noting the innovation of the Air Canada Aeroplan program, which offers outsized value (still presumably well below actual costs to Air Canada) and captures discretionary passengers at the margins, why would Delta not do the same thing? Why is Delta effectively ceding this market segment by charging disproportionate prices for premium cabin seats, even on its own flights compared to some partners?  Sharma falls back on Delta’s operational reliability and generally above-average in-flight experience.

“Our focus here is to provide consistent and sustainable value…so we are not necessarily trying to play the game with customers or with bloggers. We listen to what customers want and we try to offer that on a compelling value across the board and that’s been our focus and we look at value more holistically as well. Mileage redemption is a big portion of it, but also just everything else that Delta can provide in terms of experience and making them come back to us.”

Before the pandemic, Delta’s operational reliability was impeccable and a major selling points. These days, Delta has shown vulnerability and its stellar operational performance is not a given. Sharma uses the “holistic” term twice but really fails to explain what he means. Yes, passengers will generally have a great experience on Delta. But does that mean they will be willing to pay 300K for a one-way award from New York to Amsterdam on Delta using SkyMiles versus 55K for a one-way award on the same route in KLM business class using Flying Blue miles? As more passengers learn there are actually attractive alternatives to Delta, SkyMiles will lose customers.

You can listen to the full interview here.

CONCLUSION

It all boils down to this: Delta Air Lines believes it can charge higher prices for premium cabins awards than other airlines because it can get away with it.

That’s a hubristic position which may work for now, but could greatly backfire as consumers discover more valuable alternatives. That’s what many are doing already. Yet carriers like America and United are also catching on that they can charge a lot more miles for their premium product than they are now, which could diminish the delta, if you’ll pardon the pun, between Delta and its competitors.

(image: Delta // H/T: View From The Wing)

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About Author

Matthew Klint

Matthew is an avid traveler who calls Los Angeles home. Each year he travels more than 200,000 miles by air and has visited more than 135 countries. Working both in the aviation industry and as a travel consultant, Matthew has been featured in major media outlets around the world and uses his Live and Let's Fly blog to share the latest news in the airline industry, commentary on frequent flyer programs, and detailed reports of his worldwide travel.

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37 Comments

  1. john Reply
    May 16, 2022 at 11:03 am

    Why not?

    Their data clearly shows they can continue to do this and people will continue to PepegaSwipe their credit card.

    AA and United both moved to this model, so it’s not like they provide outsized value.

  2. Scott Reply
    May 16, 2022 at 11:22 am

    Over time, people will realize that the programmes don’t provide value any longer, except at an elite benefits level and that they are better off with a 2% cashback card.

    68,000 miles r/t plus taxes to Europe is equal to 1450 with taxes, for a ticket they could buy for $700. It’s a horrible value at $0.01 per mile

    • Mr. Marcus Reply
      May 17, 2022 at 10:32 am

      I agree that the programs have lost a lot of their value, but I’m not so sure that many folks will figure that out over time.

    • DeltaValueDown Reply
      May 17, 2022 at 12:56 pm

      This is the way.

    • Jill Zizzi Reply
      June 3, 2022 at 1:28 am

      You are spot on. I couldn’t agree with you anymore. I feel the airlines have gotten very cocky. I’ve always valued using my credit card to accrue miles but with this pompous attitude I feel like 2% cashback would be the way to go and forget they airline snotty attitude about using free miles. Don’t know what else to stay at this point but I am extremely disappointed and I’m not going to use my SkyMiles American Express any longer ! I’d rather fly different airlines who will be fair and reasonable. Thank you for your post

  3. anonymous Reply
    May 16, 2022 at 11:26 am

    Does Sharma speak actual English? His sentences seem like a swirling cloud of random platitudes and buzzwords.

    I…just…want…reasonable…award…prices…for…transatlantic…business…class…OK? (And Delta ain’t providing that.)

    • DLSilver Reply
      May 16, 2022 at 2:20 pm

      Reading his answers made my head ache! Why cant corp people just answer in plain English? Why all the talk around babble bull shit?

  4. Jan Reply
    May 16, 2022 at 11:44 am

    Yep. SkyYen and every mileage point systems are judged solely on J R/T to Europe. Never mind domestic flights, never mind flash sales.
    No other metrics matter.

    • Matthew Klint Reply
      May 16, 2022 at 11:45 am

      In my case, they do not matter. I don’t need coach domestic redemptions. I need intercontinental business class.

      • anonymous Reply
        May 16, 2022 at 11:54 am

        Same here. I don’t care about Delta’s domestic flash sales on dates I don’t wish to travel, from some city far away from where I live, to some place I don’t particularly want to go, and which may be at some distance from an actual place I might want to go.

  5. Jerry Reply
    May 16, 2022 at 12:15 pm

    Readers of this blog care about intercontinental J, but most SkyMiles members don’t, and view redemptions as “free travel.” People seem to love Delta so much, and I just don’t get it.

    Aeroplan is an interesting comparison. Because of their new program and promotions, I have booked paid travel on AC, I have redeemed Aeroplan miles, and I have accrued *A flights to them all in the last year, and all because I view them as a competitive program.

  6. DWT Reply
    May 16, 2022 at 12:29 pm

    Most egregious I’ve seen on DL recently is 197,500 for a one way domestic business class ticket (BOS-LAX, so it is lie flat, but still) for this summer… and not on a holiday weekend.

  7. PM Reply
    May 16, 2022 at 12:36 pm

    To my mind, this sounds like they’re shifting their focus from high spenders (whether they fly a lot and/or on expensive tickets) to the more occasional flyer. At first glance, that looks like a stupid move, but it may actually make sense if DL has huge income streams from the banks and also believes that business travel is never going to return to the 2019 status quo (i.e. there are/will be fewer people buying expensive last minute tickets, and potentially a lot fewer weekly commuters).

  8. Rav Reply
    May 16, 2022 at 12:38 pm

    It’s very simple. Delta Airlines has a preferred product & travelers will pay a premium for it. Whether they pay with miles or money. You can all try & bring Delta down but I think the facts speak for themselves. Delta is just better.

    • PM Reply
      May 16, 2022 at 1:04 pm

      I don’t believe they can charge higher fares than the competition. I was recently looking for a ticket from Europe to Mexico for a wedding I am going to in Feb next year and their prices seemed pretty keen. Departing DUB, prices for the underwhelming Lufthansa business class [in the infamous P booking class that yields no miles in most Star Alliance FFPs] were well over €2000 whereas with DL you would have change from €1600. I considered it for about 5 seconds before deciding I can’t be bothered to connect in the US.

    • Fetzer Mills Reply
      May 18, 2022 at 7:36 am

      I’ve had such bad experiences with other airlines that I won’t fly on anything but Delta, Air France and KLM. Delta, to me, has the best flying experience of any American airline. Their high redemptions are worth it to me. I don’t mind paying for quality. I think a lot of people feel this way. I don’t mind paying a lot more to stay at a Four Seasons hotel than I would staying at a budget motel. It’s the same with airlines.

  9. James Reply
    May 16, 2022 at 12:41 pm

    Typical corporate rhetoric using flashy catchwords to mask his bull$hitting. It sucks that they won’t even offer a break to their most loyal Medallion members. Way to demonstrate an appeciation of their loyalty DL. That said, I can usually get decent value redceming SkyPesos for domestic awards – usually between 1.5 and 1.8 cents per point. It’s not flashy, it’s not aspirational but it’s value that I’ll take. When I want international biz, I’ll redeem my Chase or AmEx points for Star Alliance J awards.

    • PM Reply
      May 16, 2022 at 1:10 pm

      I don’t believe they can charge higher fares than the competition. I was recently looking for a ticket from Europe to Mexico for a wedding I am going to in Feb next year and their prices seemed pretty keen. Departing DUB, prices for the underwhelming Lufthansa business class [in the infamous P booking class that yields no miles in most Star Alliance FFPs] were well over €2000 whereas with DL you would have change from €1600. I considered it for about 5 seconds before deciding I can’t be bothered to connect in the US.

      (I should be clear that this wasn’t an issue specific to the Irish market. I hate paying the UK taxes so I always check a bunch of options around Europe for my long haul flights. In the end I am flying AM from BCN and getting to go all the way to GRU with a stopover in MEX for even less money!)

      • PM Reply
        May 16, 2022 at 1:12 pm

        I don’t know how this ended up in the wrong place! The original comment wasn’t being uploaded so I just added the bit in brackets and hit ‘submit’!

  10. Willem Reply
    May 16, 2022 at 1:00 pm

    With only 32 DeltaOne seats on their Flagship aircraft (vs 60 and… 52? for United and AA respectively), each seat booked with miles is disproportionate loss of cash sales when the cabin is full… potentially the only reason why record-low demand during Omicron allowed us to book USA AMS in “true” DeltaOne last winter

  11. John Reply
    May 16, 2022 at 1:41 pm

    United is providing greater reliability, a better premium experience and better FF plan value these days.

    • Matthew Klint Reply
      May 16, 2022 at 1:49 pm

      I don’t agree on the frequent flyer value (though certainly relative to Delta the answer is a big yes) and think the food onboard right now is abysmal, but yes in terms of reliability and a comfortable seat (I don’t care for the Delta 763 fleet). Plus, wi-fi has been so much more stable and faster this year on United, a big improvement, even if it is playing catch-up to AA and DL.

      • Mark Reply
        May 18, 2022 at 8:16 am

        Shocking response!

    • Tom Thumb Reply
      May 16, 2022 at 10:38 pm

      After flying LAX NRT…. you’re wrong. While nothing is unpleasant I’m just shocked this what UAL calls a premium product.

  12. DLSilver Reply
    May 16, 2022 at 2:26 pm

    I dont want domestic award flights. The majority of my flying and into the future is international. I can drive to most places being I live in the middle of the country or get a flight pretty cheap. Im starting to wonder if it is worth having status on DL vs AA or UA? I will admit though that its been ages since I’ve flown the other two.

  13. Justin Reply
    May 16, 2022 at 2:33 pm

    I was looking to take a flight pre-covid JFK to Belgium, was 80k (one way) for Delta One. Moved my points over then covid hit and we cancelled the trip. Same ticket now is 180k.

  14. DM Reply
    May 16, 2022 at 3:05 pm

    Reading all these comments, I can’t help but feel that this is classic case of mileage enthusiasts with blinkers, who think they know more about running a loyalty program than actual people running it. Don’t forget that these people make a living out of running these programs and will have 1000s if questions from revenue management, marketing, and even the board that they need to satisfy before any public changes are announced.

    Given that premium seats comprise of less than 20% of any available seats on any aircraft and international traffic being 10% of total passenger movement in the US, one has to remember that more often than not, people are redeeming their miles for economy class on domestic routes and that’s where FF programs aim to deliver outsized value.

    I find mention of Aeroplan funny since in my view, Aeroplan is also plagued with the same problems that you mention here, since its move to dynamic pricing. Most people who live in the US don’t face this since they are not redeeming Aeroplan points for AC flights alone (search YYZ-YVR on any given date and try to see business class award costs) but are using it to book partner flights which have fixed mileage (which btw, Delta, United and AA also have!) requirements when seats are available. Aeroplan is excellent value when redeeming for domestic economy flights (my personal best was 4cpm and worst at 2.1cpm), but again, cash costs in Canada are inflated due to lack of real competition to AC.

    • PM Reply
      May 16, 2022 at 4:55 pm

      It absolutely makes sense to prioritise high value products and repeat customers if you are trying to incentivise people to spend more money with a business. That’s how most frequent flyer programmes work in most of the world, they try to drive incremental sales and customer loyalty with the promise of aspirational rewards. However, that arguably isn’t the case in the US market, where credit cards seem to make airlines more money than they make actually flying planes. It is all a bit upside down, but it’s not hard to find method in the madness.

  15. Simon Reply
    May 16, 2022 at 3:27 pm

    At the time, I felt a bit ripped off for my J redemption JFK-LAX-SYD – 225,000 miles, but in the grand scheme of things, I think I did quite well!

  16. RRH Reply
    May 16, 2022 at 3:41 pm

    Come on Delta…I followed all the rules during Covid..retired just before and had to cancel a couple of celebratory international trips booked with delta one upgrades—then you basically took the delta one option away (which I earned-had 6 left) gave a measly 8,000 miles for each—now you’re ripping everyone off with exuberant miles needed for reward travel—loyalty my a**—going to give right back, NO LOYALTY from me anymore. Recently traveled from Charlotte to Austin nonstop on American and had a wonderful experience and much cheaper, SO, after I use up the million miles I have left, I will use the most convenient, least expensive airline to suit my needs..

  17. Michael Reply
    May 16, 2022 at 9:32 pm

    I just cancelled my Delta one way business class award flight SFO/CDG in Nov for 240,000 miles for 2 and rebooked it with Air France Flying Blue for 100,00o less miles AND got a 25% bonus for moving Ultimate Rewards to AF. Booked other business class award flights using United and AF miles to Europe in the next year for so much less than Delta. Accumulating all those miles with several DL Amex cards sounded good, but the value is few and far between. The one time they were a value was on China Eastern in 2019 when we were stuck in the Philippines due to EVA strike. China Eastern business class was better than expected based on reviews.

  18. Tom Reply
    May 16, 2022 at 10:41 pm

    I would respect him if he just said – it is what is. This is the pricing model we have decided to go with. …next question.

    I bet he would use over 100 words to order a glass of water with no ice.

    • Matthew Klint Reply
      May 16, 2022 at 10:53 pm

      I tend to agree.

      • whocares Reply
        May 17, 2022 at 1:25 pm

        well he is Indian. And Indians can be VERY verbose. Have you ever been to India or Sri Lanka? Did you ever notice how DENSE the newspapers are?

        “Making a mountain out of a mole hill.” Hiding behind jargon.

        Of course in some quarters of society, people are too brief and don’t provide enough detail. That or people are attracted to super short videos / blurbs – like TikTok / Twitter.

  19. Stuart Reply
    May 17, 2022 at 10:38 am

    Talk about someone speaking AT you rather than WITH you. What a load of senseless word of the day jargon crap with things like “holistic.”

    Let me translate it for you, “We know our program is a horrible value. We don’t care. There is a segment of the population that doesn’t know any better so we we see no need to change. We will continue to gouge the masses until they learn otherwise.”

    My god, talk about insulting anyone with half a brain. An example of a corporate messenger who really digs the company further into a hole. If I was a Delta loyalist I would seriously be shaking my head and look at alternatives.

    • Matthew Klint Reply
      May 17, 2022 at 11:17 am

      Perfect translation.

  20. Andrew Reply
    May 17, 2022 at 12:07 pm

    Frequent flyer programs are a relic of an era when price-insensitive business travel dominated and most routes had multiple direct options. Business travelers actually had options and could prioritize a particular airline for its loyalty benefits. Now, business travel is diminished and more price-conscious, and there is often only a single legacy carrier providing reasonably frequent direct flights between a given city pair. Delta’s program is optimized for this environment.

    Atlanta, Long Island, Detroit, and Minneapolis flyers are mostly captive. Maybe an involuntary DL loyalist sacrifices $250 of value (1x mile vs 2% cash back) by hitting the $25k spend on their DL Amex, but that $250 could be worth the benefits of achieving Gold or Plat if they’re accumulating sufficient MQM with low MQDs… I can’t judge because I’m not a DL captive

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