Aug

4

Airline Miles Depreciation - Fuel Surcharge

August 4, 2008 |

At the end of June, Delta Airlines informed me that:

Escalating fuel prices continue to impact our world economy, everyday life and the airline industry. Due to continued, unprecedented fuel costs, we will add the following fuel surcharge to Award Tickets originating from the U.S. and Canada, effective August 15, 2008:

  • $25 for Award Travel between the 50 states and Canada
  • $50 for Award Travel between the 50 states/Canada and all international destinations

This just depreciates the value of the miles I may have accumulated on Delta.  Free is no longer free.  Free already had some taxes and security fees imposed onto it, and now it has a fuel surcharge.  Now, when figuring out the value of a mile I will have to take the expected ticket price minus the taxes and fuel surcharges and divide them up over the miles / points required.

Old formula:  (cost of ticket) / (miles required)

New formula: [ (cost of ticket) - (taxes and security fee) - (fuel surcharge) ] / [ (miles required) ]

There is some consolation, however. Tickets have been steadily increasing in price — because of the surcharges and because of the base price. Assuming you can actually get an award seat on a plane (which are scarcer now that there are fewer flights), you may land a good deal on the use of those miles.

However, my point of the story remains: Use the miles the soonest you can. Don’t accumulate them for the dream vacation (accumulate money for that).  Use them for special trips, especially international, but don’t wait years before cashing them in.  They may depreciate in some way.


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