Done with Delta (SkyMiles)

[editor's note: my worthless Macbook Pro has finally stopped working completely, so I'm using an aged clamshell laptop for my blogging this week. Grammar and punctuation will suffer, and pictures will be minimal/nonexistent.]

I had an enlightening moment on Saturday when I saw on Twitter that Loyalty Lobby had posted an offer for 10,500 Expedia+ Rewards points for booking 6 nights at "VIP Access Hotels" in 2016.

What I realized was that not only was I not interested booking 6 nights at VIP Access Hotels, I wasn't even interested in reading about the offer.

Now to be fair, that's partly because Loyalty Lobby has a terrible website that takes over your web browser with popups and terrible rendering. But it's also because the online hotel booking engines have so gutted their loyalty programs that no number of reward points elicits even the slightest interest compared to straightforward Hilton and Hyatt points redemptions, or simply paying for hotel nights.

Math isn't dispositive — but it's helpful

I wrote on December 31, 2015, that I was going to use the American Express Delta Platinum Business credit card to manufacture $50,000 in spend this year, in order to earn 70,000 SkyMiles and 20,000 Medallion Qualification Miles, securing Silver Medallion status (and free checked bags) for 2017.

Since the Delta American Express cards don't have any interesting bonus categories, all $50,000 in manufactured spend would be done in unbonused spend categories, costing roughly $1,000 compared to a 2% cash back card.

As a Delta American Express cardholder, I could redeem the 70,000 redeemable SkyMiles for $700 in airfare on Delta-operated flights, leaving me roughly $300 out of pocket.

Except the card also carries a $195 annual fee, which will be charged in April, bringing the total cost for the calendar year to $495. And unlike actual travel expenses, annual fees have to be paid for with cash!

To look at it another way, to get $1,195 in value (a $195 annual fee plus $1,000 in foregone cash back) from 70,000 redeemable SkyMiles, you'd need to consistently redeem them for over 1.7 cents each. That's not impossible, but Delta has certainly made it harder in the last few years.

What does $495 buy?

Using the first, conservative calculation and valuing SkyMiles at a flat 1 cent each, my total cost for carrying the American Express Delta Platinum Business card is $495. So what would I be getting for that out-of-pocket expense?

• Domestic companion ticket. If I paid cash for my Delta revenue tickets, a companion ticket would be potentially worth $300-400. But since I don't pay cash for my Delta revenue tickets, a companion ticket is worth perhaps a quarter of that, thanks to price compression. Let's say the companion ticket is worth about $100.
• Free checked bags in 2017. I've already requalified for 2016 Silver Medallion status, but keeping the Platinum card for another year and manufacturing $50,000 in spend would give me Silver Medallion status for all of 2017 as well. To make up the remaining $395 in out-of-pocket cost, I'd need to check bags on something like 8 roundtrip flights in 2017, at $50 per bag, per roundtrip flight.
• More SkyMiles on paid flights in 2017. If Delta keeps the same redeemable SkyMiles earning rates in 2017, then Silver Medallion status is good for an additional 2 SkyMiles per dollar spent on Delta flights in 2017. At one cent each, I'd need to spend $19,750 on paid Delta flights in 2017 to break even. But I only earned $1,870 2015 Medallion Qualification Dollars, a rough approximation of the total ticket price of my paid flights. It's possible I'll spend 10 times more on paid Delta flights in 2017 than I did in 2015 — but unlikely.

First Class tickets aren't that expensive

The additional problem is that, thanks to price compression, there's no reason to book economy tickets that require paying for checked bags at all. If you're buying paid flights for 75% off retail, then for all roundtrip first class flights costing less than $200 more than economy, you'll be strictly better off booking the first class flight and checking your bags for free, since you're paying less than $50 for your checked bag (and earning class-of-service bonus miles).

That's not all flights: there certainly are domestic routes where first class tickets cost more than $200 more than economy flights. But when you're working your way back from a $495 deficit, you need to book a LOT of those flights before you break even, compared to simply booking first class seats to begin with.

So I'm done chasing after Delta SkyMiles

Delta is still the best airline in the United States, and I'll keep flying them whenever possible because of their unparalleled air and ground operations.

But the idea of that translating into paying another $195 annual fee, and $1,000 in foregone cash back, just doesn't make any sense to me anymore.

And it's all thanks to Loyalty Lobby's terrible website.

Who are an airline's best customers?

Now that the three biggest US carriers (Delta, already followed by United, and soon to be followed by American) have moved to revenue-based mileage earning, at least on flights marketed or operated by them, we've heard a lot of rhetoric about how these programs will reward the airlines' "most valuable customers."

I think this is nonsense.

Delta markets hotel rooms and rental cars

You might think that Delta is a major US airline that operates with unmatched on-time consistency.

I think Delta's a corporate holding company with a subsidiary that happens to have a particular speciality in operating passenger aircraft. But in addition to operating passenger aircraft, which is a preposterously complex operation involving local, state and national contracts, a commodity trading desk, and is constantly prone to interference from the weather and other hazards, Delta also operates a hotel and car rental booking engine:

View fullsize

Delta doesn't have any specialization in operating hotels or car rental agencies. Indeed, Delta doesn't own any hotels or car rental agencies. Delta just collects a commission on hotels and rental cars booked through their website, then credits SkyMiles members with a seemingly random number of miles:

• One mile per every $2 spent at delta.com for a completed hotel stay.

• 1,250 miles per car rental for Diamond and Platinum Medallion members.

• 1,000 miles per car rental for Gold and Silver Medallion members.

• 500 miles per car rental for general members.

American licenses a shopping portal

You may be familiar with the AAdvantage eShopping Mall. It's one of those Rube Goldberg contraptions whereby Cartera Commerce, the portal's operator, receives a commission from merchants, then splits that commission with American Airlines, which then awards an arbitrary number of AAdvantage miles depending on their share of the commission.

The key point here is that American does not have any stake in Groupon, Bloomingdale's, Tumi or Dell.

View fullsize

American could not care less which online merchants participate in its Cartera-licensed portal, because the portal spins off cash regardless of the participating merchants.

An airline's best customers never set foot on a plane

Owning, operating, and maintaining passenger aircraft is expensive and extremely risky. If you're a corporate holding company, you'd naturally like to do as little of it as possible. Of course, somebody's got to operate passenger aircraft, and airlines are, as a matter of corporate organization, ideally suited to doing so.

But it's crazy to say that any airline passenger is among an airline's best customers. An airline's best customers are the ones who book hotels, rent cars, and do their online shopping through the airline's licensed shopping portal! Those customers generate what is indistinguishable from free cash, while even the customer booking a paid business class seat actually has to be conveyed, safely, from origin to destination!

Ok, large corporate travel coordinators are also great customers

If there's one exception to this rule, it's the travel coordinator for a medium or large corporation who gets to decide which airline should serve the company's business travel needs. If you can fill up two or three wide-body jets per year with your company's employees, you might be almost as profitable as the customer who buys a new laptop through the same airline's shopping portal.

But to be clear, that travel coordinator need never set foot on a plane to be the airline's best customer.

Airline tickets are a cost for you, not for the airlines

By focusing on the revenue the airlines get from their portal operations, you may think I'm missing the point: that the miles earned will eventually be redeemed for flights — and potentially expensive ones! That not right.

The airlines, against their better judgment, continue to operate high-fixed-cost, low-marginal-cost flights throughout the year. Giving away empty seats to their best customers — their shopping portal customers — is a no-brainer if it keeps that free cash coming in.

Shopping portals are profit engines

I always find extreme examples to be most illustrative. So let's say you decide to buy a 20,000-AAdvantage-mile one-way off-peak award (October 15 to May 15) to Europe exclusively by buying Proactiv+ through the AAdvantage eShopping Mall. You'll need to spend $1,000 on Proactiv+ to earn those 20,000 AAdvantge miles, for which we can assume American receives something like $200-$300.

You then get to redeem those 20,000 miles for:

1. empty seats;
2. during low season;
3. on dates of American's choice.

And all American has to do is provide you with a couple cocktails and some flavorless fish.

Airlines shouldn't award miles for revenue flights at all

Since airline miles don't cost the airline companies anything, you might wonder why they're being so stingy in handing them out.

I have the opposite question: since operating passenger aircraft is by far the most expensive source of revenue for the airline holding companies, why do they reward people for buying passenger airline tickets at all?

After all, however small the cost of airline mile redemptions is (and it is very small), it's not zero, which means that rebate value could be used to reduce airfares and move your airlines' flights higher in the now-ubiquitous price-sorted booking engines.

Airline miles would make much more sense as a reward for directing your online purchases towards one airline's booking engine rather than another's, or for putting spend on one airline's co-branded credit cards rather than another's.

Rewarding people for booking flights on your full, gas-guzzling passenger aircraft seems like a serious strategic miscalculation.

Pro tip: keep your free bags when crediting Delta flights to Alaska

Background

From my local airport, Delta is by far the most convenient airline to fly. With daily flights to Salt Lake City, Detroit, Minneapolis, Atlanta, and New York City, it's possible to fly virtually anywhere in the country or world with a single stop (although our New York flight is to La Guardia, so a bus transfer is sometimes required).

Moreover, with an American Express Delta Platinum credit card it's easy to reach Silver Medallion status each year by manufacturing $50,000 in spend and earning 20,000 bonus Medallion Qualification Miles (and simultaneously dodging Medallion Qualification Dollar requirements).

Unfortunately, Delta gutted their redeemable mileage earning this year by linking it to the price of your purchased airfares.

Fortunately, Alaska has continued to allow Delta flights to be credited to Mileage Plan based on distance flown, at a lower rate for discount economy fares and a higher rate for first class fares.

I love checking bags

If you just read travel bloggers, you might get the impression that airlines only remain in business out of glee at losing checked bags. Sure, it happens sometimes, but I love being able to throw any old thing I think of into my biggest suitcase and pick it up at my destination.

And I especially love doing it for free, which Delta Silver Medallion status lets me do, for up to 9 people traveling on the same reservation.

On outbound flights free checked bags are easy

Even if you plan to actually fly on your Alaska Airlines Mileage Plan number, it's easy to take advantage of Delta Medallion status to check bags for free on your outbound flights: simply check in with your SkyMiles number on your reservation, then once the airline has possession of your bags change the frequent flyer number on your reservation to your Mileage Plan number (note that this is impossible if you've requested a Medallion Complimentary Upgrade).

On return flights it's slightly trickier

Once "travel has commenced," that is to say, once you've actually boarded any flight on a single Delta reservation, you can no longer change the frequent flyer number linked to your reservation.

What I discovered on my return flight from Salt Lake City after Christmas was that check-in agents are able to honor the free checked bags you receive for having a co-branded American Express credit card, even if you aren't flying under your SkyMiles account number.

To do this, after checking in on a Delta terminal, choose however many checked bags you wish, and when prompted for payment choose to "pay with cash." You can then show the baggage check agent your co-branded American Express card and ask them to honor the free checked bag.

Conclusion

I'm sure there are agents at some stations that are either unwilling or simply don't know how to waive checked bag fees for co-branded cardholders flying on non-SkyMiles frequent flyer numbers.

But I'll be using this technique whenever possible to check my bags for free when I find myself flying on Delta roundtrip itineraries.

Beware Delta bearing voluntary denied boarding compensation

It's no secret that I think Delta runs the best domestic airline operation in the United States. They have incomprehensibly good on-time and completion statistics compared to the competition, and their mainline jets are clean and comfortable. It's a great airline.

However — and this may not be totally surprising — they don't love giving away money.

Delta's voluntary denied boarding compensation is more restrictive than their competitors'

When you volunteer to give up your seat on a flight that's overbooked, airlines will offer voluntary denied boarding compensation, which usually takes the form of a voucher valid for use only on the airline you were originally scheduled to fly on (rather than the cash you'd be entitled to for being denied boarding involuntarily).

Both United and American allow such vouchers to be redeemed for any passenger. It's true that American doesn't make redeeming vouchers easy (you have to present your voucher in-person at an American ticket counter or mail it to a post office box in Florida), and it's true that flying United is a special kind of hell, but the vouchers are, in fact, relatively easy to redeem (in American's case, as long as you have a stamp handy!).

For a few years now, Delta's electronic credit vouchers have only been redeemable in situations where the "bumped" passenger is one of the passengers on the new reservation. According to the terms and conditions of the voucher I received back in August:

"5. REDEMPTION/TRANSFERABILITY: VOUCHER IS NON-TRANSFERABLE UNLESS ASSIGNED TO SOMONE TRAVELING WITH THE ORIGINAL VOUCHER OWNER ON THE SAME RESERVATION AT THE TIME THE VOUCHER IS BEING REDEEMED."

My experience redeeming an electronic credit voucher

When I lucked into a $1,300 voluntary denied boarding voucher back in August, I knew the restrictions on transferability and assumed that I would redeem the voucher for my own flight to Europe next summer, while redeeming Flexpoints or Skymiles for my partner's ticket.

Then life got in the way. And by "life," I mean my partner listened to the original cast recording of Hamilton and said, "Hey, let's go to New York."

Fortunately, we have two daily nonstop flights to New York City, so this was not a heavy lift. Even better, those nonstop flights were just $206 roundtrip! In fact, those flights are so cheap that it became hard to decide how to pay for them. They're far too cheap for a Flexpoints redemption. Ordinarily I'd redeem Ultimate Rewards points at 1.25 cents each, but all my current Ultimate Rewards earning is reserved for a few upcoming transfers.

That's when I remembered: I have $1,300 in Delta credit!

Electronic credit vouchers can't be redeemed for multiple passengers online

When redeeming an electronic credit voucher for a single-passenger itinerary, it is either greater than or less than the cost of the flight you're redeeming it for. In other words, you either owe money, or will be issued a residual credit voucher.

When redeeming a voucher for two passengers, things aren't so simple. Here's what it looks like when I try to redeem my residual balance for a similar itinerary:

View fullsize

What you're seeing is the that my $862.60 voucher is only being applied against my own fare. The second passenger's $341.20 fare has to be charged to a credit or debit card.

When I asked Delta's normally-helpful @DeltaAssist Twitter team what to do, they told me the only way to redeem my voucher was to call in:

View fullsize

Delta tried to charge me for two direct ticketing fees — then lied to me and charged me one anyway

Call in I did, and eventually got on the line with a reservations agent who understood exactly what I wanted to do.

But instead of the $412.40 my tickets had priced out to online, he quoted me a whole $50 more. When I asked about the discrepancy, he explained that since I was making my reservation over the phone, there was a $25 per-ticket direct ticketing fee.

I told him that since the tickets couldn't be booked online, I expected him to waive the direct ticketing fee. He agreed, and came back again telling me that my total was $437.40 — again, $25 higher than the tickets had priced out online.

This time he explained that while he could waive my direct ticketing fee, he couldn't waive the second passenger's direct ticketing fee.

At this point my readers can imagine that I was more than a little frustrated. So I explained again that the only reason I was calling in the first place is that the ticket I wanted to book couldn't be booked online (you'd have to be crazy to book a ticket over the phone if you could help it!).

My agent went back to his supervisor again, then came back and told me that my residual travel voucher would be $887.60 — $1,300 less the correct $412.40 my tickets priced out at online.

I immediately logged into my account and saw this:

View fullsize

The residual voucher had been reissued less the $25 direct ticketing fee the agent assured me had been waived.

Conclusion

I immediately contact the @DeltaAssist Twitter team — again — and they submitted a refund request on my behalf.

This is the kind of miserable nickel-and-diming that it would be nice to believe Delta was capable of rising above. How many people have to call in to redeem these vouchers and don't think to ask how the phone agent arrives at the final price?

At the end of the day, when you accept voluntary denied boarding compensation for taking a later flight, you are doing a favor for the airline that is able to get their flight out full and on time. It would be nice if the airline was able to appreciate that and make it as painless as possible to redeem those vouchers for any eligible itineraries.

Loyalty is an expensive, annoying trap

I shared on Monday that over the weekend I was the proud recipient of $1,300 in Delta voluntary denied boarding compensation, and reflected on some of the possible consequences for the miles and points I'd budgeted for my upcoming travel.

Since I booked some speculative hotel rooms in Eastern Europe for next summer before the latest Club Carlson devaluation, but haven't booked our flights yet, I thought that would be a good place to see how far $1,300 in Delta transportation would get me.

The answer, it turns out, is pretty far! I was able to find this great itinerary flying into Prague and out of Frankfurt, for example, for $1,294, marketed and operated by Delta:

View fullsize

Since there are two of us going, I decided I'd use my Delta transportation voucher to fully pay for my ticket (since the voucher was issued in my name), then redeem FlexPoints or even SkyMiles for the other (if low-level award space opens up — fat chance!).

Silver Medallion status has (a few) privileges

Then I remembered: as a Silver Medallion, I get to choose Comfort+ seats within 24 hours of departure on Delta-operated flights for myself and companions flying on the same itinerary. If I book my partner and I on separate itineraries, I won't be able to select a Comfort+ seat for her without paying $129 for the outbound leg and $99 for the return.

Alternatively, I can book the two tickets on Delta's website, using the transportation voucher to cover the first $1,300 and paying cash for the balance. That would be way too expensive, even if I used my Arrival+ MasterCard to pay the the balance.

On domestic flights, you may or may not care about Comfort+ seating, but on two long-haul international flights, I don't think it's unreasonable to want some additional legroom in economy.

Loyalty makes easy decisions harder

I'll grant that this sounds like a corner case – a curiosity – and not a real problem. But in fact, I find myself in similar situations with some regularity.

Later this year we're flying to Portland to celebrate my partner's birthday. The flights I wanted cost $330, and were pricing out at 20,000 SkyMiles roundtrip. This is basically a wash: redeeming 20,000 FlexPoints would give me the equivalent of 3.33% cash back on $10,000 in spend, while redeeming SkyMiles would get me a 2.3% return on $14,285 in spend (since I earn 1.4 SkyMiles per dollar spent on my American Express Delta Platinum card).

Both returns exceed the 2.22% I'd earn with my Barclaycard Arrival+ MasterCard, so there's no wrong choice. On the one hand, my preference is to redeem SkyMiles as aggressively as possible, because of their rapidly dropping value. On the other hand, I'd like to keep my Alaska Airlines MVP status next year, and to do so I'll need all the paid Delta flights I can get.

So I split the difference: I redeemed SkyMiles for my partner's ticket, and FlexPoints for mine, for an average return of 2.72% on $24,285 in manufactured spend.

Here again, only I'll have access to Comfort+ seating, but additionally I'll have a free checked bag thanks to my Medallion status, while my partner will have to pile her firearms, knives, and dry ice into my bag in order to avoid Delta's checked bag fees.

Conclusion

Checked bag fees and charges for preferred seating are huge revenue sources for the airlines, and can be huge expenses for passengers willing to pay them. The free checked bags and preferred seats offered to elites are therefore real, tangible benefits of elite status.

But elite status also makes it easier to be guided by motivated reasoning, allowing you to justify decisions you wouldn't otherwise consider.

In my first example, Delta is presenting me with a false choice: buy a second cash ticket in order to secure my partner Comfort+ seating, or redeem Flexpoints for the second ticket and pay to upgrade my partner. It's a false choice because absent elite status we would both be fine sitting in Main Cabin seats!

In my second example, I'm redeeming valuable Flexpoints for my ticket instead of taking the opportunity to empty my SkyMiles account even further, all in order to earn a few thousand more Alaska Airlines Mileage Plan elite-qualifying miles.

I still don't understand the appeal of revenue-based rewards programs

Invariably when I write about Ultimate Rewards transfer partners, commenters chime in that I've left out Southwest. And this is invariably true: Southwest doesn't serve my local airport, I don't fly Southwest, and I don't like Southwest, so I don't write about Southwest.

But it's worse than that: I don't care about any revenue-based rewards programs.

Hotel revenue-based rewards programs are great — if you're a business traveler

If you're a business traveler who is reimbursed for their paid hotel stays, then it's essential to understand the concept of point "density:" how much you need to spend at each chain in order to earn enough points for award redemptions at that chain's properties.

If you pay for your own stays, on the other hand, then it's vanishingly unlikely that you're going to get a big enough rebate from a hotel's loyalty program to justify paying retail for hotel rooms booked through that chain, as is typically required in order to earn hotel points: after all, you can get a 17% rebate by simply booking paid stays through Hotels.com, after clicking through a cash back portal like TopCashBack.

Of course there are corner cases, like someone who otherwise pays for their stays through manufactured spend, but who is gunning for Hyatt Diamond elite status in anticipation of an upcoming trip where that status is going to pay for itself with suite upgrades, breakfast, or lounge access. But an extraordinary amount of digital ink is dedicated to those corner cases, which are simply not encountered by the typical traveler in any given year.

Airfare is too cheap to think about revenue-base airline rewards

Southwest has a "pure" revenue-based rewards program: you earn points based on the amount you spend on airfare, and then you redeem points based on the paid price of a ticket, after the appropriate conversion rate is applied.

So the ideal use case for Southwest points looks something like this: earn Ultimate Rewards points at 0.5 cents (gas stations) or 0.67 cents each (office supply stores), transfer them to Southwest, where you have a Companion Pass, and redeem them for between 2.5 cents and 3.4 cents each when booking award tickets for yourself and your designated companion, giving you a discount of 73% to 85% over retail.

And if you live in a city served by Southwest, and which serves many destinations with nonstop flights, that really might work out to a pretty good value. Baltimore and Dallas, I'm looking at you.

In exchange, of course, you have to fly Southwest. On the one hand, that means free checked bags. On the other hand, it means furiously checking in exactly 24 hours before departure, lining up for the alphabetical cattle call, and then crossing your fingers that you and your companion will actually get to sit together while the flight attendant raps his safety briefing at you.

Meanwhile, if you have access to grocery store or gas station manufactured spend, you can use a US Bank Flexperks Travel Rewards card to get up to 75% off paid airfare on a distance-based carrier like American, Alaska, or Delta (if credited to Alaska). And in addition to your air travel, you also earn miles that can be redeemed for additional airline award tickets.

That's the calculation that prevents me from having any interest in flying on Southwest, or crediting my paid flights to revenue-based carriers.

Crediting paid flights to revenue-based airlines is the least efficient method of earning miles

A general member crediting a paid United flight to United will earn 5 Mileage Plus miles per dollar spent on airfare. Pay $400 for a domestic roundtrip ticket, with $5.60 in taxes and fees, and you'll earn 2,000 Mileage Plus miles.

Pay the same $406 for gas station manufactured spend, and you can buy 82 OneVanilla prepaid debit cards, earning 82,811 Ultimate Rewards points. That's 3 domestic economy roundtrips at the "saver" level or 1.5 roundtrips at the "standard" level. It's $1035 in paid, mileage-earning airfare — on any airline, not just United.

The difference in scale here is geometric. Go ahead and bump your United earning up to 7, 8, 9 or 11 Mileage Plus miles per dollar spent, and you'll run into the exact same situation: the more you spend out-of-pocket on paid airfare, the more miles you're leaving on the table.

The same is true of Delta: as long as SkyMiles are a transfer partner of American Express Membership Rewards, you'll never get better value buying paid Delta-operated flights and crediting them to Delta than you will spending the same money manufacturing spend in bonus categories on your American Express cards.

Go ahead and credit to Delta and United — just don't do it for the miles

Of course I'm begging the question here: once you've manufactured the spend you need to redeem your miles for paid domestic travel, you still have to credit the flights somewhere.

Personally, I privilege flying American, Delta, and Alaska in order to credit flights from all three to Alaska'a Mileage Plan, but you may well find that United best serves your needs, and decide to credit your paid United flights to Mileage Plus.

Likewise, you might find that Delta Medallion elite benefits make it worth crediting your paid Delta flights there, whether for complimentary upgrades, preferred seating, or refundable and changeable award tickets.

But if you do, don't use the rebate value of your redeemable miles as justification. It's not there.

Exploring the Virgin Australia award chart

Yesterday MileValue wrote about the partnership between Virgin Australia and Singapore Airlines, which allows points to be transferred between the two programs at a 1.35:1 ratio (points can apparently be transferred either direction at the same ratio, although I haven’t tried it yet).

Virgin Australia doesn’t belong to any of the big three alliances but, like Hawaiian Airlines and Alaska Airlines, has a lot of partners around the world. It also has a distance-based award chart. Since Singapore Airlines is a transfer partner of all three major flexible rewards currencies, that got me wondering: are there awards that are booked more cheaply using Virgin Australia’s distance-based rewards chart than other transfer partners?

The transfer ratio isn’t great

Since 1.35 Singapore Airlines KrisFlyer miles become 1 Virgin Australia Velocity mile, you lose about 26% of your points right off the top. That means you’d need to spend 26% fewer Velocity miles than other rewards currencies before you'd start seeing a profit with this shell game.

airberlin is a bust

My first thought when seeing MileValue’s post was airberlin: it’s already a great airline to use distance-based Avios on because of the 3,749-mile distance between New York City and Dusseldorf, costing 20,000 Avios in economy with no fuel surcharges.

So I meticulously lined up the distance bands of Virgin Australia’s and British Airways award charts, adjusting for the transfer ratio between KrisFlyer and Velocity and looked for sweet spots.

Since I already made the chart, I’ll share it, but there’s nothing to see here.

View fullsize

For any given distance, an airberlin flight booked with British Airways Avios will be cheaper than the same flight booked with Velocity miles transferred from KrisFlyer.

Between Australia and the United States

Virgin Australia operates flights between Los Angeles and both Sydney and Brisbane, which cover 7,488 and 7,161 miles, respectively. Both routes will cost 47,000 Velocity miles in economy, 94,000 in business, or 141,000 in First. Converting from Singapore Airlines, those values come to 63,450, 126,900, or 190,350 flexible points.

Since you could book the same Virgin Australia flights for 50,000 Delta SkyMiles in economy or 80,000 SkyMiles in business, transferring points through Singapore Airlines is unlikely to be your cheapest route to Australia, unless you have no Membership Rewards points or SkyMiles banked.

Virgin America

Next I turned to Virgin Australia’s more advantageous award chart for flights on "Virgin Australia, Virgin Atlantic, Virgin America, Virgin Samoa, Etihad, Delta, and trans-Tasman Air New Zealand flights." Here I got a little bit of traction:

View fullsize

For extremely short flights along the West Coast of the United States, and between Austin and Dallas's Love Field, paying 6,900 Velocity miles (9,315 flexible points) may well be the cheapest option, depending of course on award availability and paid ticket prices.

Additionally, since award flights to Hawaii on domestic carriers will typically cost more miles than flights within the mainland, if you can find Virgin America award availability between San Francisco and Honolulu or Maui, you can come out a little bit ahead. Even if it’s not a windfall, it’s at least worth keeping in mind while searching for award seats, as an additional option in the face of dwindling award availability.

Transfer Starpoints directly to Virgin Australia

So far I’ve been talking about transferring Ultimate Rewards, Membership Rewards, or Citi ThankYou points to Singapore Airlines KrisFlyer in order to transfer them to Virgin Australia.

But Virgin Australia is also a transfer partner of Starwood Preferred Guest, at a 1:1 ratio, with a 25% bonus when you transfer in increments of 20,000 Starpoints.

If you’re Starpoint-rich, you don’t need to take the initial 26% hit by transferring your points to KrisFlyer; you can transfer them directly to Virgin Australia Velocity.

Conclusion

I've never given much thought to Virgin Australia, either as a transfer partner of Starwood Preferred Guest or of Singapore Airlines, so these are just my very preliminary thoughts on using their miles for fun and profit.

What else should I and my readers know?

The 20-cents-per-mile breakeven point for Delta and United mileage earning is still wrong

Regular readers know the sacred cows that get repeated daily by affiliate bloggers, which drive me bonkers whenever I accidentally glance at one:

• "The Chase Sapphire Preferred is the best travel credit card."
• "Statement credits reduce your annual fee."

But there's one seemingly minor one which makes my skin crawl in a way the outright lies don't: the claim that Delta and United travelers need to pay 20 cents per mile to break even under the new, revenue-based SkyMiles and Mileage Plus programs. It's not just incorrect, it's so blatantly innumerate it makes my head spin. Here's a thought leader in travel last week:

"Both United and Delta require spending at least 12.5 cents per mile flown to earn elite status as part of their revenue-based elite rules. But they both require an average of 20 cents per mile flown just to break even with the miles that had been earned under the old distance-based system."

That's still wrong, as I helpfully pointed out in September of last year. Since it apparently still hasn't sunk in, let's go over it again.

Elite mileage earning changed out of proportion to non-elite mileage earning

Since January 1, 2015, Delta and United have had the same mileage earning structure for passengers crediting flights to their frequent flyer programs:

• General members: 5 miles per dollar
• 25,000-mile elites: 7 miles per dollar (40% bonus)
• 50,000-mile elites: 8 miles per dollar (60% bonus)
• 75,000-mile elites: 9 miles per dollar (80% bonus)
• 100,000-mile (United) and 125,000-mile (Delta) elites: 11 miles per dollar (120% bonus)

Before January 1, 2015, redeemable miles were earned at the following rates:

• General members: distance flown
• 25,000-mile elites: 25% bonus
• 50,000-mile elites: 50% bonus (United) and 100% bonus (Delta)
• 75,000-mile elites: 75% bonus (United) and 100% bonus (Delta)
• 100,000-mile (United) and 125,000-mile elites (Delta): 100% bonus (United) and 125% bonus (Delta)

The mistake innumerate bloggers make is looking only at the first bullet points: if general members now earn 5 miles per dollar, then to earn as many miles as under the distance-based regime they'd need to spend 20 cents per mile flown. If they spend more than that, they'll earn more miles under the new regime; if they spend less, fewer.

Your actual breakeven point depends on your elite status

Since elite status with both airlines is still based on distance flown with them, the typical traveler's elite status will depend on their actual travel needs. With that in mind, here are the breakeven points for average cost per mile flown, depending on your elite status:

• General members: 20 cents per mile flown
• 25,000-mile elites: 17.9 cents per mile flown
• 50,000-mile elites: 18.8 cents per mile flown (United) and 25 cents per mile flown (Delta)
• 75,000-mile elites: 19.4 cents per mile flown (United) and 22.2 cents per mile flown (Delta)
• 100,000-mile and 125,000 mile elites: 18.2 cents per mile flown (United) and 20.5 cents per mile flown

To calculate these values on your own, take a sample trip of exactly 1000 miles. A Diamond Medallion would have previously earned 2,250 SkyMiles. To earn 2,250 SkyMiles at 11 SkyMiles per dollar, the same Diamond Medallion would now have to spend $204.55, or 20.5 cents per mile.

Conclusion

For mid-tier Delta elites, the situation is even worse than the 20-cent-per-mile conventional wisdom would have it, since their flights need to be, on average, 11-25% more expensive than that to earn the same number of miles as they did last year. Only Delta Diamond Medallions approach the same bonused earning rates under the new regime as they did under the old, distance-based system.

United elites, meanwhile, have it relatively easy since their redeemable-mile earning was never as heavily bonused as that of Delta Medallions.

Price compression and mileage running

I like to use the term "price compression" to refer to the interaction of two benefits to travel hacking:

• The out-of-pocket price paid for travel is lower;
• The difference between the out-of-pocket price paid for more-expensive and less-expensive travel shrinks, even if the ratio between them stays the same.

The ideal cases are more-convenient or more-luxurious award redemptions that cost the same fixed number of miles and points, but you also see price compression when redeeming cheaply-acquired, fixed-value Ultimate Rewards, Membership Rewards, or ThankYou points: more expensive flights will cost more points, but the out-of-pocket expense of acquiring those points will be (in some cases much) closer than the cash prices.

Theory of mileage running

A traditional mileage run is a flight taken exclusively to earn airline miles, and will ideally cost less than 4 cents per mile flown if credited to a distance-based frequent flyer program. Personally, I understand the logic behind the traditional 4-cent-per-mile cap in the following way:

• a high-level elite will earn at least 2 redeemable miles per mile flown due to elite mileage bonuses;
• a travel hacker will attempt to redeem miles for at least 2 cents each;
• so by pre-paying for future, non-elite-qualifying travel through mileage runs, the mileage runner receives elite-qualifying miles in the present, which help them maintain high-level status and the perks that go with it.

Of course it's possible to mileage run speculatively or purposefully: someone can take every sub-4-cent flight available with the goal of earning the highest elite status possible, or they can take one or two mileage runs in order to top off an award or earn the last few elite-qualifying miles needed to reach the next level of elite status.

Price compression and mileage running

Looking at mileage runs through the lens of price compression results in some interesting conclusions.

In programs like Alaska Airlines Mileage Plan and American AAdvantage, which still feature distance-based redeemable-mile earning, price compression has no effect (besides making mileage runs cheaper): since booking more expensive flights (within a cabin of service) doesn't yield any additional redeemable or elite-qualifying miles, the goal of minimizing the cent-per-mile cost of each mileage run is still paramount. Reservations in excess of the 4-cent-per-mile "breakeven" point may still be worth making, but more expensive flights would have to be justified by an unusually high value placed on elite-qualifying miles — perhaps if you're a single flight away from the next elite status level.

In revenue-based programs where mileage earning is based strictly on the amount paid for tickets (although with a multiplier for elites in the case of Delta and United), it's only ever worth mileage running for the benefits of elite status (for example, free award changes and redeposits). In such programs, since more-expensive flights also earn more redeemable miles, part of the increased price is rebated in the form of more redeemable miles earned.

Consider the following stylized case: a United Premier 1K with the American Express EveryDay Preferred and Business Platinum combination wants to maintain her top-tier elite status with United. She manufactures spend at gas stations at roughly 1 cent per dollar in manufactured spend, and is able to redeem her Membership Rewards points for 4.29 cents on United flights after her 30% Pay with Points rebate. In other words, she is able to buy United tickets at a roughly 77% discount. As a MileagePlus Premier 1K, she earns 11 miles per dollar spent on United fares. Valuing each United mile at 2 cents each, as above, she's receiving a 22% discount on (the fare component) of each United revenue ticket she buys, meaning her net cost is just 1% of the fare, plus taxes and fees, which don't earn redeemable miles.

Let me be clear: this result only holds for someone who actually values the benefits of elite status, and is sure they'll redeem each one of their United miles for at least 2 cents (remember, unredeemed miles and points are worth nothing). But for someone positioned in this way, the cent-per-mile calculus is almost irrelevant, given the up-front discount and redeemable-mile rebate they receive on each revenue ticket they buy.

Conclusion

I don't fly United or credit my paid Delta flights to Delta, and I don't hold any super-premium credit cards since I don't find their annual fees worth paying. Still, I wanted to share this analysis to demonstrate the power of price compression when applied to a range of everyday problems in travel hacking.

Pro tip: flying as a dual Alaska-Delta elite

I've written before about my transition this year from Delta Platinum Medallion to Alaska MVP Gold 75K status. In short, I couldn't justify crediting my paid Delta flights to the SkyMiles program now that they've moved to revenue-based earning and voodoo-based redemption.

My Alaska Mileage Plan elite status means I can freely choose between American- and Delta-operated flights, which is a huge luxury when pricing out paid itineraries.

Given similar-enough prices and convenience, however, I'll typically choose Delta for my paid flights because they run a fantastic airline. But while I earn elite-qualifying and redeemable miles in Alaska's Mileage Plan for those flights, I don't get free Comfort+ seating or free checked bags, and that's not ideal.

For that reason, I also keep Delta Silver Medallion status. Here's how I leverage the two elite statuses.

Don't request Medallion Complimentary Upgrades

If you book a paid reservation through a third-party booking engine like the US Bank Flexperks site and add a SkyMiles number, your Medallion Complimentary Upgrade will be automatically requested.

That's a problem because once a Medallion Complimentary Upgrade has been requested, you won't be able to remove your SkyMiles number from the reservation.

After booking the ticket, you'll need to manually add your SkyMiles number.

If you're buying a ticket directly from Delta, you can simply uncheck the "Request Upgrade" box during booking.

If you did accidentally request an upgrade, you'll need to contact Delta to cancel the request (this is not an unusual request; often couples or business travelers want or need to be seated in the same cabin).

Check in with your SkyMiles number

24 hours before departure, Silver Medallions can request free Comfort+ seats (higher-level Medallions can request them earlier).

If you're checking a bag, you'll also need to drop your bags off at the airport while your SkyMiles number is attached to the reservation in order to avoid checked bag fees.

Remove your SkyMiles number and add your Mileage Plan number

I've had mixed success asking airport agents to remove my SkyMiles number from reservations after check-in. But fortunately, it's simple to do online, as long as you haven't requested an upgrade. Just access your reservation (in the app this is called "Trip Details") and click "Remove" next to your SkyMiles number. Then add your Mileage Plan number. The website will automatically add 3 leading zeroes, but in the app you'll need to type them in yourself, so your Mileage Plan number is a total of 12 digits long.

Reprint your boarding passes

This isn't strictly necessary, but as a precaution I always fly on boarding passes showing my Mileage Plan number and elite status.

Final note

Obviously for the sake of convenience it's easier to do this on one-way rather than round-trip reservations, since the more times you have to remove and add frequent flyer numbers, the higher the chance of something going wrong, either on your side on in Delta's reservations system. If I were checking a bag on a roundtrip reservation, I might even consider simply leaving my Mileage Plan number attached to the reservation and paying the checked bag fee, in order to ensure proper crediting to my Mileage Plan account.