Delta Airlines has officially announced (InsideFlyer, USA Today, and the Wall Street Journal) that it’s changing to a new revenue-based program that starts Jan. 1, 2015.

Mile Earning Based on Price of Ticket

The SkyMiles you earn will be based on how much you pay for your ticket, no longer the miles flown.

“…passengers with no elite status in SkyMiles will receive five miles for each dollar spent on tickets, excluding government taxes and fees. Those in the highest elite level will receive 11 miles per dollar spent.”

The earning tiers are broken down like this for elite status members:

  • No elite status flyers will earn 5 miles per dollar
  • Silver Medallions will earn 7 miles per dollar (40% bonus over base members)
  • Gold Medallions will earn 8 miles per dollar (60% bonus over base members)
  • Platinum Medallions will earn 9 miles per dollar (80% bonus over base members)
  • Diamond Medallions will earn 11 miles per dollar (120% bonus over base members)

“No longer will a flier who pays the cheapest fare in coach be able to earn the same number of miles as a fellow passenger who purchased a perch in business class. Instead, the flier who spends more for a first-class seat or perhaps a last-minute business trek will also earn more.”

This certainly levels the playing field, and potentially eliminates lucrative mile earning mileages runs on Delta. The highest earning possible for a flight without considering miles earned from a credit card is 9.1 cpm. By using a Delta branded credit card one can earn an additional 2 miles per dollar on top of the miles earned from the spending itself.

The way SkyMiles Medallion members earn their status and their elite benefits will not be changing. Medallion qualification will still be based on distance flown.

What’s Exactly Changing?

Let’s go through an example. For the existing rules you earn miles for actual miles flown no matter how much you paid for the ticket. If you paid $250 for a flight from Portland to Los Angeles, you would earn ~800 miles each way or 1,700 miles round trip. With connections and elite status the miles earned could more than double.

Come the revenue-based earnings starting in 2015, you would earn miles only on the base fare excluding taxes. Taxes on this ticket run are around $30, so you would earn miles on the $220 base fare. This puts potential earnings ranging from 1,100 miles to 2,420 depending on elite status.

Obviously this is worse for the mile savvy and budget oriented travelers, but means more miles for the big spenders and higher elite status members. It’s clear that Delta wants to reward the highest elite fliers and spenders, not the price-sensitive travelers.

“What they’re trying to do is make the airline better and SkyMiles program better for those who spend more.”

In fact, the mile earning potential for higher elite status members purchasing expensive tickets is big. But I can guess that if you’re reading this blog you don’t fall into that category.

Bad news for mileage runners and budget travelers, good news for high spenders.

5-Tiered Award Chart?!

If Delta’s award charts weren’t convoluted enough, they plan to introduce 2 more award options. It sounds like these options will be at the 75,000 and 105,000 mile mark, but no details have been released as to how they differ from existing options. It’s not like Delta currently offers much in terms of valuable and highly available award options, but you can only imagine that the prices won’t be going down…The new redemption levels will be released in the fourth quarter. On top of the added tiers, there will be there option to book one rewards using cash and miles.

“Delta plans to introduce a system with up to five tiers of redemption choices so customers will have a wider variety of options, including one-way reward tickets and the ability to redeem tickets using both miles and cash…For fliers redeeming their miles, Delta will continue to award tickets by pricing them in miles, not in actual cash fares, offering different levels of availability as it does now.”

Quite possibly the only benefit for most of us is that Delta plans on improving the number of lowest cost award availability and will also offer one-way awards starting at 12,500 miles. Not to be a complete cynic, but I’ll believe the ‘improved’ award availability when I see it.

Needless to say, this is a move that will likely set precedence for other major US carriers. Innovative and good for Delta’s bottom line? Maybe. Good for budget and mile savvy travelers? Not so much.