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Delta, United will lower value of frequent-flier miles

The airlines say the moves are justified because of higher travel costs and service improvements, but some of their travelers aren't buying it.

By Money Staff Dec 20, 2013 12:50PM

This post comes from Justin Bachman at partner site Bloomberg BusinessWeek.

 

Bloomberg BusinessWeek on MSN MoneyThe number of award miles needed to snag a seat in the premium cabin will rise dramatically next year at Delta and United -- and airline mile collectors are fuming.

 

parked airplane © Sava Alexandru, Vetta, Getty ImagesThe biggest changes in both airlines' loyalty programs will be for international travel in first and business class, where some award levels on United will jump as much as 87 percent. To be awarded a first-class ticket now from North America to the Middle East, for example, a traveler has to spend 150,000 frequent-flyer miles. Beginning Feb. 1, that award seat will require 280,000 miles when flying on one of United’s partner airlines. The same trip on United's own planes will require 180,000 miles, up from 150,000. From North America to Europe, first class on a partner airline will rise 63 percent, from 135,000 to 220,000 miles.

 

Delta is introducing increases on June 1, with round-trip business class from the U.S. to Europe rising by 25,000 miles, to 125,000 miles; round-trip flights to Asia will increase 20,000 miles, to 140,000. (Delta plans smaller award level hikes from Feb. 1 to June 1.) The new award levels for coach seats are largely unchanged, with only minimal, 5,000-mile hikes on some routes.

 

The airlines say the increases are necessary due to higher costs for travel and because they've improved their products and services after mergers and a broader industry restructuring. A Nov. 1 "speaking points" document (pdf file) from United to its sales force said the MileagePlus increases mark the first changes in several years and was needed "to offset the increased cost of providing award travel, particularly premium-cabin award travel and award travel on MileagePlus partner carriers." The airline declined to comment Wednesday on partner costs.

 

Scoffing at the scope of the award inflation and the airlines' rationale, frequent flyers have been ranting on social media and online forums.

 

"This is a blow to the solar plexus with a simultaneous kick to the groin," a poster called jetsetr wrote on Nov. 1 on Flyertalk.com, a forum popular with airline mileage junkies, calling the new levels "quite shameful." Another writer, tommy777, suggested that "if the United management ever gets canned, they could just move right in and take over a banana republic with an inflation like this." Online, some Delta SkyMiles members have begun referring to their miles as "Sky pesos," given their perceived decrease in value because of the inflated award levels.

 

Much of the ire no doubt is because Delta and United -- and possibly American, once its merger is farther along -- have directed the increases at what has long been considered the most valuable aspect of airline mileage plans: long-haul premium travel awards.

 

Business and first-class tickets are usually the most expensive, especially on highly rated partner airlines, such as Singapore, ANA, Lufthansa, and Air France, where the onboard service generally is better than U.S. carriers' offerings. The award changes at Delta and United come after both carriers imposed new minimum spending levels for 2014 for travelers who want to qualify for elite status in the carriers’ mileage programs.

 

The award ticket level hikes have not been matched by Delta and United partner airlines and suggest the U.S. airlines may be trying to reduce the number of award redemptions, says Gary Leff, a travel blogger in Arlington, Va., who writes for "View From the Wing." Difficulty in redeeming frequent-flyer miles for a free ticket is one of the most common complaints from mileage collectors. "If you raise the prices for seats, you lower the demand," Leff says.

 

Leff and other mileage experts suggest travelers redeem as many miles as possible before Feb. 1 to get award seats at the old levels. Miles "are a propriety currency with no independent central bank, let alone currency board, no mandate to minimize award price inflation," Leff wrote last month. "Miles are worth more today than they will be tomorrow."

 

More from Bloomberg BusinessWeek:

8Comments
Dec 20, 2013 2:16PM
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They are offering better products and services? I don't think so. Airline mergers are eliminating competition, making it easier to stiff consumers without consequences. That is the real story.
Dec 20, 2013 2:53PM
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The more they make changes like this the easier it is to not be loyal and book with foreign (and better) airlines on international travel.  All our big airlines have been making the qualification rules for premier status harder and making the use of award miles harder so why not just fly one of the really nice foreign airlines....they rarely are more expensive but most often are much better quality. When was the last time a United employee thanked you for your 1K status? Yet when I flew Emirates last year it was like I was their only customer....and the quality of the cabin and food was so much better. I have flown Emirates a bunch since then as well as Hong Kong Air and Cathay.  Thai is about the same cost and quality as United but at least they smile. Delta? I think the last time I flew Delta was 10 or 12 years ago....they would have to pay me to fly on their airline again....United is getting close.
Dec 20, 2013 2:08PM
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Looks like a minimum 20% increase for all redemptions but we can blame it on the people in the front cabin.  Just like "they've improved their products and services" which includes nickle and dime charges for everything with an unfriendly and antagonistic staff.  I found out five years ago that there are airlines out there that really treat you as a customer.  I've left 200,000 miles with Delta and flown twice that many since on their competition.  If Delta were the only airline, I'd drive.  Actually, I've done that more than once.
Dec 20, 2013 4:38PM
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On most of my travels in the US if its 500-600 miles I had just soon drive. It ends up not being that much difference in time. Get to airport two hours before flight change planes or a stop over, then wait for luggage and pick up a car at the rental counter. Not much difference.
Dec 20, 2013 10:28PM
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These people are really trying to p--- off everyone ,now the big buck ones.
Dec 20, 2013 2:58PM
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Ah yes --- the smell of government "security" overhead is all over this like Bill Clinton on an intern.
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