From Delta: "Even More Ways to Use Miles"

As any mileage-collector will readily confirm, the more options for redeeming points, the better. But the savvy mileage-collector will be quick to ask the follow-up question: When redeemed for _____ (fill in the blank), how much are my miles worth?

Years ago, when the average price of a domestic roundtrip ticket was close to $500, the industry-standard price for a frequent-flyer award ticket was 25,000 miles. While a more detailed analysis would deduct somewhat for the hassle factor of booking a capacity-controlled award ticket versus a revenue ticket, the benchmark value of a frequent-flyer mile was generally assumed to be around 2 cents.

Of course, you could get more or less per-mile value, by booking more or less expensive award flights. But the average traveler was more interested in convenience than in squeezing extra value from his points.



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When redeemed for non-travel awards, the return-on-investment has always been much less. Want to cash in miles for an iPad? Fine, but expect to get less than 1 cent per mile in redemption value.

In the years since 2-cents-a-mile was the standard, the value of a mile has steadily eroded, in the process significantly devaluing airline loyalty programs themselves, at least for average travelers who earn more of their miles from credit-card charges than from flying.



New Delta Redemption Options



Delta, for one, has signaled, both in public pronouncements and in its award pricing, that it wants the value of a SkyMiles mile pegged at 1 cent apiece.

This week,

Delta

added the following to the list of services for which SkyMiles members can redeem their miles:

• Upgrades to Delta Comfort+, first class, or Delta One
• Selecting Preferred Seats
• Ticket change fees
• Award-ticket redeposit fees
• Same-day confirmed fees
• External ticket charges
  
  
  
  Looking at using miles to upgrade to Comfort+ or first class, 5,000 miles can be redeemed in exchange for a $50 discount on the upgrade price. So exactly 1 cent per mile. And that's best case. Because the pricing is based on 5,000-mile increments, you'll be getting less than 1 cent when redeeming for intermediate amounts.
  
  To the extent that it's possible to quantify, the other new redemption options also yield a per-mile value of 1 cent, or less.
  
  Bottom line: Assuming you're earning most of your miles for credit-card use, at a rate of one mile for every $1 spent, getting 1 cent per redeemed mile amounts to a 1 percent rebate.
  
  
  
  Reader Reality Check
  
  
  
  At what point do airline loyalty programs become irrelevant to you?