American Airlines plays “me too” with loyalty program

Rotation

That a change was coming to the American Airlines AAdvantage program is no surprise. The carrier has intimated in the past that the only reason it had not altered the program was the integration efforts related to its merger with US Airways. More recently, it was president Scott Kirby stating in the company’s quarterly earnings call that innovation within the frequent flier program was next on the agenda for the company. And so the announcement this week was expected. Alas, it was not particularly innovative.

American will follow United Airlines and Delta Air Lines to a revenue-based earning scheme for points starting in the “second half” of 2016. This move, of all the changes, is arguably the least surprising. The airline industry has been shifting in this direction for several years now and AAdvantage was the last major loyalty program based on miles flown. Alaska Airlines remains the only significant player in the US market with a distance-based program rather than revenue-based.

Beyond the award earnings rate changes for travelers there are a number of other changes at hand related to elite status within the program. For passengers flying in premium cabins, elite qualifying miles (EQM) earnings will improve – significantly in some cases. The program will also drop the elite qualifying points metric, rewarding the higher fares more richly through the EQM scheme. Elites in the AAdvantage program will also need to fly more to earn their coveted upgrade instruments. Top-tier Executive Platinum members can still earn eight system-wide upgrades but that will now require 200,000 EQMs rather than 100,000.

At the lower tiers the program’s 500-mile upgrade “stickers” will now require 12,500 miles flown rather than 10,000. And the program year for elite status will be truncated a month, now ending in January rather than February. These changes apply for earning for the 2017 program year starting in 2016; earning in 2015 for 2016 will not change.

Rotation
When it comes to redeeming points, the new program features a mix of changes. Reward tickets from the US to Mexico, Central America and the Caribbean will go down in price, as will awards on the 300-ish routes 500 miles or shorter. Canada, Alaska, Hawaii, Europe and Asia all get more expensive with the revised charts. And, in a move affecting a very small percentage of the total awards redeemed, awards for long-haul travel in premium cabins on partners will increase by as much as 62%, though most increases are far more tolerable. The award charts will adjust for redemptions made on or after 22 March 2016 meaning travelers have some time to plan.

AAdvantage members accruing points through higher fares or partner transactions (e.g. co-branded credit cards) who redeem for shorter trips – the more profitable customers – will be well rewarded under the new program. Those who fly on lower fares or redeem for more far-flung travels will fare much worse. This is neither surprising nor innovative. It is just the new AAdvantage program.

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