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Delta's 'Pay with Miles' award alters frequent flyer landscape

For the past two months, Delta has been hinting at two major enhancements to the SkyMiles program, one concerning a new pay-with-miles feature, the other a new award tier.

The airline made good on the first part of that promise this week with the introduction of Pay with Miles.

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Members of Delta's SkyMiles program who hold American Express Gold or Platinum SkyMiles credit cards now have a choice when paying for flights on Delta and Delta Connection: Redeem miles; charge the flight to their SkyMiles credit card; or combine the two.

The new Pay with Miles option can be used to book flights as follows:

For base fares less than $100, redeem 25,000 miles to cover the total fare.

For base fares equal to or greater than $100 and less than $250, redeem 10,000 miles for $100 off the total fare or increase the redemption to cover the total fare, starting at 25,000 miles and going up in increments of 5,000 miles ($50 off) to cover the total fare.

For base fares equal to or greater than $250 and total fares less than $1,000, redeem 10,000 miles for $100 off the total fare or increase the redemption in increments of 5,000 miles ($50 off) to cover all or part of the total fare (15,000 miles for $150 off, 20,000 miles for $200 off, etc.).

And for total fares equal to or greater than $1,000, redeem 10,000 miles for $100 off the total fare or increase the redemption in increments of 10,000 miles ($100 off) to cover all or part of the total fare (20,000 miles for $200 off, 30,000 miles for $300 off, etc.).

So in most cases, the miles have an effective value of 1 cent each when redeemed through Pay with Miles. That's decent if not spectacular value. But at the very least, it establishes a predictable minimum value that SkyMiles members can expect to receive for their miles, if a better deal can't found by redeeming for a restricted SkySaver award.

And together with that baseline value, SkyMiles members enjoy restriction-free access to seats: when combining cash and miles through Pay with Miles, members can book the same seats available to a paying customer. That's a significant step in the right direction.

Some will be concerned that access to Pay with Miles is limited to holders of American Express credit cards, which otherwise might not be the customer's best choice, based on cost or merchant acceptance. (The Gold card carries an $85 annual fee, waived the first year; and the Platinum card costs $135 annually. And American Express cards are not as widely accepted as Visa or MasterCard cards.)

Another drawback of Pay with Miles concerns mileage accumulation and upgrades: currently neither is possible with tickets purchased using Pay with Miles. I raised the issue with Jeff Robertson, managing director of Delta's SkyMiles program. Robertson acknowledged that, in the two-and-a-half weeks that Pay with Miles has been available since its soft launch, those limitations have been the most controversial aspects of the new feature. The situation is being monitored and Robertson suggested that steps would be taken to support mileage accumulation and upgrades if member demand warrants.

Notwithstanding quibbles, the increased flexibility, transparency, and convenience provided by Pay with Miles will be welcomed by many SkyMiles members and sets a new industry standard for award availability.

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