A penny for my thoughts…and my miles

Recently I decided to take a closer look at the incessant entreaties and come-ons from Delta and American Express for the Platinum Delta SkyMiles Amex credit card.  As an American Express cardholder since 1976 with a regular Platinum Card in my wallet, I didn’t really think I could use a second Amex account.  But what the heck, I thought, I’ll do the analysis and see if it’s worth keeping the card for a year to earn the bonus miles.  Delta’s new restrictions on the transfer of Membership Miles prompted me in part to think about it, even though I won’t be subject to the 2015 cap (250,000 miles, but will it shrink in ensuing years?).

Frequent flyer games you can play

Thus, after reading through the materials and making some calculations, I indeed accepted Delta’s offer for a Platinum Delta SkyMiles American Express Credit Card.  I liked the idea of 45,000 bonus miles after the first $1000 in purchases within the first three months, and double SkyMiles for Delta purchases, and a $100 one-time statement credit, for reasons that will become clear.

After receiving the new SkyMiles card, I made plans for next summer for a double-whammy trip to the states of Washington and Montana: to Washington to take our kids to see where my wife and I were married twenty years ago at Hurricane Ridge in the Olympic National Park, and to Montana to make our annual trek to the beautiful Beartooth Mountains Wilderness Area to visit my wife’s parents.  I booked us on Delta all the way  I had already checked Kayak.com and several other air travel websites before deciding to get the Platinum SkyMiles Amex card.  All those sites were showing around $830 round trip for Raleigh-Seattle-Billings-Raleigh on every airline that flies to those cities.

I also checked SkyMiles seats, and awards were available for the lowest possible mileage, but that was 80,000 miles per ticket.  Despite being a Five Million Miler with Delta, I did not currently have 320,000 SkyMiles on account.  Doing the numbers, at the cheapest “free” seat category, the miles are worth $0.01 each.  At higher award seat categories, they are worth a good deal less than a penny a mile. $831 divided by 80,000 miles is indeed one cent per mile, so the frequent flyer seats would have been a relative bargain had I enough to qualify.

As it was, I charged all four tickets (for my wife, me, and our two kids) to the new SkyMiles Platinum American Express credit card, which will yield me 45,000 bonus Skymiles plus another 6,446 Skymiles because purchases on Delta count as two miles for every one dollar charged ($3223 X 2).  When we fly next summer, we will also earn another good chunk of miles, 6,274 SkyMiles per ticket, for a grand total of 76,542 SkyMiles for the four of us, all of which we can cash in later.  That took a little of the sting out of the annual fee for the new Amex card.  Here are the total frequent flyer mileages (SkyMiles) to be earned based on our itinerary:

RDU/LAX – 2237

LAX/SEA – 951

SEA/SLC – 690

SLC/BIL – 387

BIL/MSP – 746

MSP/ATL – 907

ATL/RDU – 356

TOTAL – 6,274 SkyMiles per ticket x 4 people flying = 25,096

GRAND TOTAL – $3,223 for four tickets x 2 SkyMiles credit per dollar charged = 6,446 + 45,000 bonus SkyMiles + 25,096 SkyMiles for actual miles flown = 76,542 miles

Not bad for the annual Skymiles Amex fee of $195–no, check that, for $95 after my $100 statement credit for getting the card.

Delta affirms that miles are worth a penny each

This exercise also made me rethink how Delta values each SkyMile these days.  Almost fifteen years ago I came up with a business plan which I called IDEALMILES.COM (a play on the words “I deal miles”) that would allow frequent flyers to sell their miles, or to buy frequent flyer awards based on miles, through an airline-sanctioned online clearing house.  Without going into a lot of detail, the scheme would have allowed airlines to harvest at least a penny a mile by acting as the intermediary.  I first pitched the idea to Delta.  Here is one slide in a presentation I put together in 2000:


It was too controversial at the time, and no airline expressed sufficient interest for the business to take off.  Airline CFOs were struggling with how to value the billions of miles carried on their books.  The following year’s effect of 9/11 on the commercial aviation industry put IDEALMILES to rest once and for all.

When I was hawking my scheme to airline execs, they were coy about the retail value they placed on each mile, so I was intrigued to find that Delta’s website now allows the use of up to 55,000 Skymiles per ticket to be used to pay for part of airfares, and that those miles are valued at a penny per mile (55,000 miles discounts an airfare by $550).  You can see how that works in this screenshot:

Delta mileage screenprint

So it looks like I had it right in 2000 when I offered Delta one cent per mile.  It just took awhile for them to do it their way.

One thought on “A penny for my thoughts…and my miles

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