How much are Delta SkyMiles worth?

If you’re trying to decide whether to put your spending on a cash back card or weigh going for a Delta credit card welcome bonus or a cash back welcome bonus, a natural question to ask is, “How much are Delta SkyMiles worth?”

When you search for answers to this question, you’ll get a wide range of answers. You might read online that Delta SkyMiles are worth as much as 2 cents each, or you might see references to SkyMiles being relatively worthless.

Here’s our data-based take on what SkyMiles are worth.

How we think about the value of miles and points

When we talk about the value of miles and points, we’re trying to find the price point at which we are ambivalent to earning miles/points or cash. This differs from most blogs in this space, which usually compare the cash price of airline tickets or hotel rooms with the price of the same in terms of miles to come up with their valuations.

But most miles and points aren’t cash. This means that miles that might get you $400 worth of Delta travel are worth less than $400 cash. Because $400 cash can purchase you that same $400 of Delta travel—or $400 of United travel—or $400 worth of a Vanguard mutual fund—or $400 worth of jelly beans. You get the idea.

We solve for this by applying a discount to correct for the loss of option value with restrictive points so that we can get a number that we can compare directly to cash bonuses that doesn’t oversell the value of points.

At the end of the day, figuring out a value of any particular point system is about making better, more informed decisions about the financial products we choose to use.

Data we used: Based on actual trips

We think that data collected from actual trips that we have taken or intend to take provides the best basis for any valuation.

Our analysis of the value of SkyMiles is based on data collected by those who contribute to this site. As we search for trips, we capture data on the price of various itineraries in terms of SkyMiles and the price of the same itineraries, were we to book them with cash.

But we don’t include every data point possible in our analysis. Here’s a bit more on the data we include and exclude:

• We only include trips that we intend to take. This ensures that we’re not inflating our value based on things like business class fare sales that require us to fly half way across the country. Most of our trips are within the U.S. in domestic coach.
• We only compare viable alternatives. Maybe we could get that $800 flight on Delta with a connection for a relatively cheap amount of miles, but if a $79 Southwest Airlines direct flight can get us there, that’s the flight we’re going to take. Since the Delta trip isn’t viable, we won’t consider it in our analysis.
• We collect data on how often we find a viable flight. On Delta, pretty much every itinerary is bookable with miles if it is bookable with cash, and the value you’ll get for your miles is relatively consistent. This point is more relevant for other programs where you might not be able to use points on many trips, but when you do, the value is incredible.

Using trips that we intend to take ensures that our dataset is based on our actual use of the SkyMiles program, rather than some theoretical travel patterns. And it prevents us from selecting trips that inflate our valuation.

Our metric: Cents per point

Many rewards currencies can be cashed out for 1 cent per point. For example, with Chase Ultimate Rewards®, you can always redeem your points for 1 cent of cash back each. Calculating a “cents per point” metric makes it easy to compare miles against rewards points that can be redeemed for cash.

For every search in our dataset, we divide the cost of an itinerary in cash by the cost in miles, adjusted for any required cash co-pays of taxes/fees, to get a figure for cents per point.

When we did this, here’s what we came up with for Delta:

• Mean: 1.16 cents/point (1.37 cents/point with The TakeOff 15 Discount)
• Median: 1.17 cents/point (1.38 cents/point with the TakeOff 15 Discount)
• Standard deviation 0.0004 (0.0005 with the TakeOff 15 Discount)

This means that 10,000 Delta SkyMiles is likely to get you a Delta ticket priced at $107-$125. If you have a Delta credit card, the same number of SkyMiles will likely get you a ticket priced at $126-$148.

Applying a discount factor: SkyMiles are not cash

If I offered you a $100 bill or a $100 Delta Air Lines gift card, which would you rather have? Most people would prefer taking the cash. Cash is more valuable than the gift card because you can use it more places.

Similarly, would you rather have $100 in cash or would you rather have enough SkyMiles to purchase $100 worth of Delta tickets? Again, you’d prefer to have cash. Even if you intend to travel, the cheapest airfare might be on American. Or the time of Southwest’s flight might work better for you. In these cases, you’d prefer to take your cash and book a ticket on another airline.

This is why we discount the value of points that can’t be redeemed for cash. We think that the secondary sales markets for airline gift cards provide a fair discount value. Generally you can sell gift cards for major U.S. airlines for about 83% of their face value, so we discount these programs miles by this amount. If 10,000 miles can get you a $100 airfare, we consider it “worth” about $83.

Wrapping it up: Our valuation for Delta SkyMiles

After applying our discount factor, here’s what we found SkyMiles to be worth:

• About $0.0096 (0.96 cents) each if you do not hold a Delta SkyMiles credit card.
• About $0.0114 (1.14 cents) each if you hold a Delta SkyMiles credit card that offers the TakeOff 15 discount.

Additionally, our dataset tells us a few more things about SkyMiles.

• SkyMiles are easy to use. In most cases, if you can book an airfare with cash on Delta.com, you can book it with SkyMiles.
• SkyMiles provide consistent value. The low standard deviation in our dataset means that you’ll get consistent value when you use SkyMiles. You are unlikely to find opportunities to get outsized value or relatively poor value from SkyMiles.
• Occasional SkyMiles sales offer the best opportunity to get more value from your SkyMiles. We recently booked a trip to Taipei in business class for 166,000 SkyMiles round trip. This type of redemption opportunity is an outlier, but proves that it is possible to use SkyMiles for aspirational awards at good prices.