What is the Value of Delta SkyMiles Points?
At a high level, estimating the value of Delta Skymiles® is a 3-step process:
- First, obtain the miles redemption schedule from Delta…easily done.
- Next, make some assumptions around what portion of travel will be done during periods of low, moderate and high demand, as the Delta Skymiles® program charges different amounts of points for each of these tiers.
- Finally, tie in PlasticIQ’s estimates of typical “market rate” ticket prices, making sure to back out out-of-pocket taxes and fees which miles never cover. This will enable us to calculate the dollar value per Skymile.
A quick note on Delta’s Medallion Program
Delta offers several levels of Medallion status (silver, gold, and platinum) with ensuing benefits as you reach each new level. One of these benefits–increased earnings of Delta Skymiles®–doesn’t affect the value of an individual Skymile (it just gives you more of them). We capture this upside when you run our Card Ranking Engine. Other benefits, such as expedited baggage handling, priority boarding, complimentary upgrades, access to international airport lounges, etc., are all excellent perks in their own rite, but PlasticIQ doesn’t try to attach a monetary value to them. Firstly, we would get a headache just trying (how much is priority boarding worth??). Secondly, we try to focus on cash-value transactions only, since we believe the majority of users on this site are most concerned with minimizing the outflow of green from their bank accounts. Enough said about Medallions.
Understanding Delta SkyMiles® low, medium, and high demand awards
It’s important to understand the 3 redemption tiers (low, medium and high demand) as this could impact the results of our analysis. These tiers don’t reflect seasons per se, but rather are directly linked to supply-demand for a given flight leg at a given time. So if Delta’s computers tell us that historically, flights on June 9th from LAX to Heathrow sell out months in advance, you can expect to need the “high” level of points to get that ticket.
PlasticIQ examined 3 routes (LAX-NRT(Tokyo), LAX-LHR(London), and LAX-JFK(NYC)), going month by month to see how many low, medium and high rate seats are available, both on the departing and returning legs. We were able to analyze a total of 334 days worth of data for each route (for a total of about 668 data points, since each day has a departure and return leg). We discovered the following:
- For trips within the US and from the US to Asia (using Tokyo as a proxy for Asia), about 75% of the legs were rated “low” for demand, with the remaining 25% as medium demand. Only 2 out of the 668 legs were “high” so we ignored them.
- For the LAX-LHR(London) route (a proxy for travel to the EU), 58% of the legs were low demand, 37% medium, and about 5% high. Again, we decided to ignore the high demand tier in our analysis due to the rarity of these rates.
The reason these stats are important is because it gives PlasticIQ confidence to make a simplifying assumption that all travel will be conducted at the low demand rate–where the vast majority of seats are available. We could have gotten fancy and done some sort of percentage allocation, but we didn’t feel the cost-benefit justified over-complicating the analysis.
One final note: to calculate the value of any miles program, PlasticIQ needs to derive a “market” estimate of the cost of airline tickets. This is a challenging endeavor, but PIQ has done it’s best. See the article Detailed Analysis of Flight Costs for an in-depth explanation of how PlasticIQ calculates these ticket costs. Also note that we use pre-tax ticket costs since all frequent flyer programs require you, the customer, to pay taxes and fees out-of-pocket.
|From||To||Miles Req’d||Pre-tax ticket price||$ val/mile||Travel alloc%||$ val contribution|
|Pre-penalty $ val||$0.0117|
|Post 5% penalty $ val||$0.0111|
Here is the link to the Delta SkyMiles® Award Mileage Chart.
The Final Analysis
PIQ estimates the final value of Delta Skymiles® at around $0.0111 per mile. This is somewhat on the lower side for frequent flyer programs, but still better than a 1% cashback card! See our article, Frequent Flyer Mileage Valuation Comparison, to see how Delta SkyMiles® stack up against the competition.