What did Delta Really Change in their SkyMiles Program?

Frequent fliers woke up to some interesting news this week.

Starting in 2015, Delta Skymiles will change how its fliers earn redeemable reward miles.  Instead of the traditional model which allows passengers to earn miles based on the number of miles flown, or:

600 miles flown = 600 redeemable miles earned
(plus any premiums depending on your Skymile status)

the new model rewards passengers with 5 miles for every dollar spent, for example:

$600 for a r/t ticket = 3000 redeemable miles earned

If you have silver status or higher with Delta, your reward mileage conversion increases by the following multipliers:

  • 7 for silver;
  • 8 for gold;
  • 9 for platinum; and
  • 11 for medallion

So what does this mean to the everyday traveler? Probably not much.

Remember, this change to Delta’s mileage program doesn’t change the way you earn qualified miles (or frequent flyer status), only on the way you earn redeemable reward miles.

Did you catch that?

If not, you’re not alone.

Let’s say you want to plan a trip to Paris from Washington Dulles in September.  An economy class ticket costs $1282; a business class ticket costs $5058.

Assuming this passenger has no status, the economy class ticket would earn about 7722 miles r/t; the business flier 11,583 miles (with 50% bonus miles).

Based on the 2015 plan, the economy flier would earn 6410 miles; the business flier 25290 (with 50% bonus miles).

So while the redeemable reward miles earned are greater under the 2015 plan, in order to earn Silver status, both would earn the same number of qualifying miles (based on 7722 miles of actual distance flown) from this flight.

In fact, the biggest change has to do with the dollar component now required to earn status.  Not only do passengers need to fly the required 25,000 qualifying miles to earn silver status, but the 2015 plan also requires customers to spend a minimum amount on Delta tickets for each level ($2500 for silver, $5000 for gold, etc.)

I have to believe that Delta didn’t make this confusing on purpose; but it took me nearly half an hour to really decipher what changed and what didn’t.  I consider myself a very educated person, but it took some time to find the right link to tie together all the figures and tables and conversion charts on the website.

At the end of the day, all you really need to know is this:

Delta’s 2015 Skymiles Plan essentially rewards customers who spend more per ticket, or buy many tickets over the course of time.  This means more miles redeemed on Delta and partner flights or other affiliated services.  It’s a great ploy to build brand loyalty.

Redeemable miles are not the same as qualifying miles which will still be calculated on actual distance flown.

Status will be achieved through a combination of qualifying miles + minimum qualifying dollars spent.

Let’s take one more example of a last minute business traveler who’s jetting from Washington Dulles to L.A. for a meeting.

A last minute economy seat costs $1108, a business seat about $2000; the distance is the same at 4756.  Starting in 2015, the economy flier will earn about 5500 redeemable miles, the business flier 10,000.

HOWEVER, assuming they both have no status they BOTH earn 4756 qualifying miles with the business flier earning a 50% bonus.

Got it?

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Should I Buy Travel Insurance?

A couple of years ago I booked a couple on a summer trip to Italy.  On the day of departure, their outbound flight was canceled.  They were promptly booked on the next day’s flight at no additional charge; however, they lost an entire day of their vacation.  The hotel was non-refundable as was the excursion they missed on day two.  Fortunately, they purchased travel insurance when they booked their trip and we were able to file a claim to recover the costs of the missed hotel night and the excursion.  Without it, they would not have been so lucky.

I like to tell this story because it illustrates the value of travel insurance.  For many, the assumption is that travel insurance is just extended medical coverage, and for healthy travelers this would seem redundant to their current plan.  Travel insurance, in reality, has very little to do with medical coverage (although most good policies include emergency medical services) and is really a catch all to cover most events that could go wrong during a vacation.  A sample policy that I might offer to my clients usually consists of the following:

–          Trip Cancellation up to 100% of insured cost;
–          Trip Interruption up to 150% of insured cost;
–          Trip Delay up to $1000;
–          Lost or delayed baggage up to $1000;
–          Pet care boarding if you are delayed from returning home for medical reasons up to $300;
–          Emergency Medical Expenses up to $50,000;
–          Emergency Medical Evacuation or Repatriation up to $500,000;
–          Travel Accident Dismemberment or Death up to $10,000; and
–          24-Hr Worldwide Emergency Assistance

Some clients think that their medical coverage provides out-of-network care overseas, but that is usually limited to bigger cities. In the middle of a crisis, the ambulance will likely take you to the closest emergency room which may or may not be affiliated with your home medical coverage.

And even if by some lucky miracle the ER is affiliated with your home medical coverage, I can guarantee with absolute certainty that any emergency medical evacuation costs are NOT covered.  A medical evac or repatriation can cost upwards of $300,000.  When a plan – such as the one above – might cost an extra $180 it’s hard to think of a reason NOT to have the coverage on hand just in case.

It’s also very important to really understand what the basic coverage includes and doesn’t include.  Trip cancellation, for example, is usually limited to very specific circumstances such as (but not limited to): disabling sickness or injury of the traveling party; financial default of an airline, cruise line or tour operator; inclement weather; and the destination being devastated by flood, fire, volcano, or tornado.

Travel insurance also comes with optional coverage which I may recommend to clients depending on the nature of their trip.  Such optional coverages include:

–          Cancel for ANY reason;
–          Sports coverage;
–          Renters Collision Insurance; and
–          Increased limits to Medical and Baggage Coverage

Again, it’s important to know the limits of the coverage especially as it pertains to sports.  The coverage was designed for “low-risk” activities like skiing or even skydiving (in some cases), and may not cover accidents or injuries caused by other sports such as jet skiing or rapelling.  Even more so, if you were negligent or reckless in a covered sport, your claim for accident or injury will be denied.

I don’t go on any trip without travel insurance.  With more and more flights being delayed and cancelled, I want to know that I’ll be taken care of since the airlines no longer compensate you for anything less than a mechanical failure.  I’m also rather accident and sick-prone, and if I were to ever come down with a sudden case of malaria or fall and break my ankle, I never have to think twice about seeking medical assistance.

There are a number of great providers out there that offer quality plans in terms of coverages, limits, and premium price.  My personal preference is Travel Guard and Travel Insured.  (Travel insurance policies offered by airlines and cruise lines offer very different exclusions and waivers and it’s extremely critical that you understand what those are if you are considering purchasing through those carriers.) Both Travel Guard and Travel Insured offer a variety of plans to best suit the nature of your trip.  A basic worldwide plan, with optional cancel for any reason, costs on average about $250.  For an 8-day trip to Italy that costs about $5,500, that works out to about $30 a day.

At the top of this page, I’ve included a link to Travel Guard if you’re interested in seeing what a plan may cost for your upcoming vacation.  I encourage you to check it out and to bookmark this page to return to when you’re ready to purchase your travel insurance policy!

And now I’ll leave you with this great infographic which compares Marvin and Mark’s vacation and how travel insurance can really pay off in just a few unfortunate, but very realistic, scenarios:

infographics-900TI

Have you ever purchased travel insurance?  
Now that you’ve learned more about it, will you in the future?

Making Travel Affordable

If I were to ask a random group of people about what prevents them from traveling, do you know what the overwhelming response would be?

Not lack of time or interest.
Not because they have small kids or pets at home.
It’s because of money.

Yet they often tell me how much they wish they too could take off for a week or more to [enter your favorite destination here].  What they don’t understand is that they can.

Traveling – whether for a weekend, a week, or a year – does not have to be a luxury affair.  With proper planning and budgeting, you can make that dream vacation or career break a reality.

So where should you begin?
Here are eight great tips to get started.

Make Travel a Priority The reason I travel so often is because I want to more than I want to do other things.  That means I’m more willing to put money aside for this purpose.  Until you’re willing to make travel a priority, it won’t be.

That’s a fact.

tropical

Montego Bay, Jamaica

Set Realistic Budget Expectations Once you’ve decided you are willing to make that long weekend in the big city a priority, it’s time to get real about what it might cost you.  This will help you keep your budget in line as you start to plan your trip.  Lodging and food are the two biggest travel costs (aside from airfare) that you’ll incur.  They are also the two biggest variables that you can control.

Something else to consider is the cost of your destination.  Some cities in the U.S. are more expensive than others; SE Asia is typically less expensive than W. Europe.  I work with budget travelers, luxury travelers, and everyone in between. Having a realistic budget for your category of travel ensures that you are able to travel comfortably and stretch your dollar as YOU see fit!

Make Your Credit Cards Work for You Don’t misunderstand me.  I am NOT advocating that you open a credit card and charge your vacation to it without the means to pay it off without incurring thousands in interest charges.  I AM advocating that if your current credit card isn’t earning you any miles or exchangeable points – dump it.

If you don’t have one already, I recommend opening a credit card with any of the major airlines that you fly frequently (United, AA, Delta). Upon opening a new account, you can typically earn 30,000-50,000 miles after you spend ~$1000 in purchases that you would have made anyway.  That’s a free roundtrip in the U.S. or to Europe!  An added benefit of most of these cards also include no foreign transaction fees and some premium benefits (free checked bag) on the affiliated airline.  Those are other savings that can quickly add up!

Trim Unnecessary Expenses So you want to take that trip of a lifetime to Machu Picchu. You’ve set your budget and you just opened airline-affiliated credit card. Now what? Unless you have an unlimited amount of disposable income (which I don’t), it’s time to start cutting back on costs temporarily.

It might mean reducing the number of nights you eat/go out with friends, negotiating lower rates for your cable and/or cell phone bills, switching to public transportation where possible, putting off your shopping spree, and curbing your Starbucks addiction. It may seem overwhelming, but it’s only temporary and isn’t that trip worth it?

Be Flexible Americans, especially, have so little vacation time so it’s important to make it count.  That being said, one of the best ways to keep travel affordable is to be flexible to the extent you can.  If you know you don’t want to spend more then $800 on airfare, then keeping your dates open allows you to monitor deals and airfare specials to book when it’s convenient for you.

Alternatively, if you travel during the off-season you will often find lower rates and fewer crowds.  The weather may not be the warmest or the driest, but it can be the most affordable.

Book Alternate Accommodations If a hotel room at $120/night is not part of your budget, then book something else.  Hostels are a great alternative to the traditional hotel stay, as are apartment rentals, guesthouses, and bed & breakfasts.  Make sure to vet things properly through reputable sources such as Curious Tourist or other online rating sites, like Tripadvisor.  Some travel experts recommend couch surfing – because it’s free – and because it provides an opportunity to really integrate as a local. This is not ideal for everyone, but it is a viable option for those who are looking to travel on the cheap and meet new people along the way.

Enjoying an English breakfast at a local cafe instead of the pricy hotel restaurant

Enjoying an English breakfast at a local cafe instead of the pricy hotel restaurant

Eat Like a Local Locals don’t dine at 5* hotels and Michelin-rated restaurants.  Locals eat in cozy, neighborhood locales and so should you.  Not only will it likely be the best meal of your life, but you’ll feel more like part of your surroundings and less like a tourist. I’m also a BIG fan of street food.  Not only is it really good, but I’ve found I’m less prone to get sick watching my meal cooked in front of me in New Delhi, India than eating in some of the nicest hotels where I’ll never know if they washed the vegetables or not.

(In full disclosure I like to splurge on at least one “fancy meal” during any trip.)

Join Frequent Flyer/Point Programs This is the 2nd most effective way to reduce travel costs. If you travel any airline at least twice a year, join their frequent flyer program. If you travel for work, sign up for every airline or hotel loyalty program (unless otherwise prohibited) so that you can accrue miles/points with each trip.

I fly at least 50,000 miles each year for my day job.  I haven’t paid for an international flight in years.

Travel, unlike other hobbies or interests, doesn’t require any pre-requisites, specialized skills, or your life savings.  With these tips, you can look forward to a fun, relaxing, and affordable vacation.

Relevant Links:

Ho(s)tel Life

Lodging is one of the biggest vacation costs that you can control.

Within the travel community, there seems to be mixed feelings (opinions?) about whether travel consultants (ahem, me) should recommend hotels or hostels as appropriate lodging for travelers.

There are advantages to both:

  • Hotels offer private accommodations with en-suite bathrooms. Standard amenities include housekeeping, linens, television, wifi.  Some hotels even have restaurants, spa, and concierge services on premises.
  • Hostels emphasize the social aspect of traveling and offer dorm-style rooms (single sex and/or mixed) where guests pay by the bed per night.

    Dorm-style lodging in a hostel, photo courtesy of twobadtourists

    Some hostels offer private rooms. Bathrooms are typically shared (although more are starting to offer en-suite bathrooms).  Linens and breakfast are usually provided.  Most hostels offer a common kitchen and social area for guests to mix and mingle.  Because hostels cater to more long-term travelers, additional amenities could include laundry facilities, wifi, and lockers to store documents.

What does this look like in numbers?

Let’s say you’re traveling to Paris for 3 nights in February.  An average hotel room will cost $60-185/night whereas a hostel will cost $30-60/night.

There was a time when hostels were synonymous with young backpackers, college students, and young twenty-somethings who were finding themselves through travel. While much of this is still (to some extent true), hostels have been under increasing pressure to compete with budget hotels, guesthouses, B&Bs, and apartment rentals offered on public sites such as airbnb or Flipkey.

This means that hostels today are more modern, cleaner, have better security protocols, and offer similar amenities typical of a budget hotel.  Hostels are able to offer all of this while still staying true to its roots as a crossroads for guests to meet like-minded travelers, share some stories, and catch some z’s for a very affordable price.

Kex Hostel Common Area, photo courtesy of digibron

Hostels are not for everyone, particularly those who may not be open to sharing space with other guests (whether it’s the room, bathroom, or a common area).  That is okay. However, if you’re looking for ways to cut costs on your extended vacation (5+ nights), it might be worth looking into hostels as alternative accommodations.

I last stayed in a hostel in 2005.  I was in Florence, Italy with my best friend.  We had just graduated college and it was our 2nd stop on our European adventure. We had a private double room; the bathroom was across the hall.  I remember it being clean, the A/C worked, and it was a short walk from the Duomo.

As a 22-year old on a budget, I really couldn’t ask for much more.

Other Relevant Links:

Have You Called Your Travel Consultant Yet?

Travel consultants sometimes seem ubiquitous in our world of instant gratification. Anyone can log on to the online travel agent of your choosing and book themselves a flight or vacation package to anywhere in the world at any time.  At … Continue reading