Is Cathay Pacific Planning to Restrict American AAdvantage Members from Booking Award Space?

by Gary Leff

As part of Cathay Pacific’s revamp of its frequent flyer program, there’s discussion of limiting partner airlines from accessing award space on their flights. This would be a huge deal for AAdvantage members. But how likely is it?

Cathay Pacific Is Preparing to Go Revenue-Based, Cut Back Elite Benefits

Cathay Pacific is considering making its frequent flyer program revenue-based.

[P]roviding these offerings is becoming increasingly expensive as the ranks of loyal travellers swell and the airline caters to more needs.

Among the many changes is a new focus on revenue-based spending, rewarding business and first-class customers, who pay much more than economy passengers.

Hong Kong’s leading airline says its existing measures to reward travellers based on the number of flights and distance flown “are not the best measure of value”, and that airlines all over the world are recognising these “anomalies”.

They may also eliminate lounge access for their Silver members.

In an attempt to enhance the premium experience, silver-tier members are likely to lose unlimited lounge access. At a stroke, the change will ease congestion in its lounges, notably at Chek Lap Kok, and save money.

They’ve apparently brought in someone from Qantas to spearhead the revamp of the program. That alone may be telling, as Qantas offers mileage earning everywhere but astronomical redemptions and is anything but generous overall.

Will Cathay Pacific Limit Award Seats to Partners, Making More Inventory Available to Its Own Frequent Flyers?

That’s what’s being speculated in the South China Morning Post (HT: Traveling Better).

Cathay Pacific is to set aside more free seats for its seasoned frequent fliers, under the latest proposal to revamp the award- winning airline’s loyalty scheme.

The plan is to slash the number of free air tickets available for partner airlines and to reallocate those to Cathay’s own Marco Polo Club members, sources close to the ongoing review say.

However, it is understood the number of points needed to redeem a flight will at the same time go up incrementally.

In the background they’re perhaps unhappy with the cheap redemptions offered to American AAdvantage members.

At present, Cathay lets clients of partner airlines book flights using air miles accrued through their own flier programmes. But these passengers can redeem Cathay flights at much cheaper rates than Marco Polo Club members, putting its own privileged customers at a disadvantage.

One such partner carrier is American Airlines, which at the same time gives away tens of millions of free miles to flyers each year via credit card schemes.

The sources say Cathay believes it is time to stop allowing external redemptions when the airline is capable of filling aircraft with paid passengers – boosting long-term profitability.

This argument has a couple of fallacies, though.

  • The airline is already limiting redemptions, they’re called capacity controls, and availability of Cathay Pacific seats has gotten much tighter over the past year as it is — as the airline fills their aircraft with paid passengers.

  • The notion that American Airlines is filling their planes with credit card miles-earning passengers seems strange (while a partner program taking an outsized number of seats could be a concern, the source of the miles seems like it ought not be).

  • Cathay Pacific fills seats with credit card points-holders. Leaving aside co-brand card earning, they’re an American Express transfer partner both in the US and around the world.

Cathay Pacific already has inventory discrepancies between their own AsiaMiles program and partner inventory, though there aren’t separate inventory buckets. The issue has often been attributed to technology and syncing challenges.

Although perhaps here they’d create a separate inventory bucket. An open question is whether the inventory would be made available to all AsiaMiles members or whether additional award space would be offered only to elite Marco Polo Club members.

There’s no question though that Cathay Pacific premium cabin awards have been readily available since spring 2009 (before that they were almost non-existent) although in recent months they haven’t been so available far in advance. I’ve certainly flown my share:

For Most Airlines, Award Space is Award Space. Very Few Offer Improved Inventory to Their Own Members

Lufthansa and Swiss offer more award space to Miles & More members than they offer to the rest of the Star Alliance.

Singapore Airlines offes more award space to Krisflyer members than they do to the rest of the Star Alliance. Indeed, premium cabin award space on Singapore Airlines is pretty good if you’re using Singapore’s own miles. Long haul business and first class awards are virtually non-existent using, say, United miles (and that leaves aside that United removed the ability to see Singapore award space from its website).

Swiss restricts access to first class awards to Miles & More elite members. Air France restricts access to first class awards (and even then charges rulebuster pricing) to Flying Blue elite members.

Occasionally some programs appear to have better access to seats on some partners, that’s not always intentional but can stem from point of sale errors where a given partner frequent flyer program starts ‘seeing’ the awards these airlines are offering to their own members.

And of course those airlines which offer expanded award availability for additional miles generally only make that expanded availability on offer to their own members.

Is Restricting Saver Available to Cathay’s Own Members Against oneworld Alliance Rules?

I’ve long understood alliance rules to require that award space be made available to all member programs.

Equal access to award seats across the alliance was publicly articulated to the Wall Street Journal as a contrast to the way United used to block its members from booking partner award space.

Oneworld says its members have agreed to make reward seats equally available—if one carrier offers the seats, all must offer them. The alliance hopes that can be a “competitive advantage,” said spokesman Michael Blunt.

Alliances Don’t Have as Much Strength As They Used To

Alliances have been cracking up.

Delta doesn’t award elite miles for Korean flights.

Despite Bangkok Airways’ reservations about joining an alliance due to restrictions on codesharing outside the alliance, Korean codeshares with American.

Etihad and American have expanded both codesharing and mileage earning, despite American’s alliance partnership with Qatar. They codeshare on Dallas – Abu Dhabi despite Qatar competing directly with Dallas – Doha.

And of course Qatar itself is an alliance member, while Qantas left a joint venture with alliance member British Airways in favor of a joint venture with non-alliance member and Qatar competitor Emirates.

So the alliance hasn’t served as a restriction on airline behavior in a meaningful way in recent times.

American Miles Would Be worth Less, While Amex Points Worth More?

If Cathay Pacific restricts award space to its own members (but doesn’t require elite status to access this space) then:

  • American miles will become a little less useful, since they won’t be able to get you as many Cathay Pacific premium seats.

  • American Express points will become a little more useful, since transfers to AsiaMiles would provide better access to Cathay seats than American miles will.

It’s all speculative at this points, and new program details haven’t yet been announced. It’s something to watch closely.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. Any guess on timeframe? I need to book a trip to Asia next summer but still have about 60 days before I can

  2. Something strange is happening with the AA award calendars in general — just looking at DCA-LIM for September and there’s not a single Saver ticket, in any class, available for August, September or October.

  3. But they even just mentioned they want to reward the seasoned traveler, which means you will likely need status to get access to the additional seats!

  4. If this comes to pass, it will implode the AA program. CX is the only partner that has somewhat reliable award space left for parties larger than one or two. Especially without YQ. If this goes, then the only remaining options to SE Asia will be QR and EY at a substantially higher mileage cost.

    This especially blows because I just spent a small fortune to buy AA miles for a trip to Bali I am planning to book in early July.

  5. @AAExPlat – “If this comes to pass, it will implode the AA program.”

    No, it won’t. The only way it “implodes” AAdvantage is if the ONLY award you’re interested in is CX. And if that’s the case, you may be better off earning/redeeming with CX itself. Not everyone has the same award goals as you do.

  6. @Brian L.

    It may not implode it for you, but name me one partner (let’s not mention AA metal because there is little to no availability much of the time) that reliably makes 4+ seats available in any class (much less without ridiculous YQ ala BA).

    For families with kids, CX was the last good option.

  7. @AAExPlat – 4+ seats are going to be tough in most programs. Not really fair to bash AA/CX over that.

  8. CX – we flew first class SFO-HKG-SFO in Feb of 2014. Very few award seat available using AA miles – booked as soon as the calendar opened. There were a total of 3 passengers in first on SFO-HKG and a total of 2 in first HKG-SFO. CX flew a lot of empty seats across the Pacific and I can not understand it. This article sounds like they want to fly more empty seats.

  10. Thanks for posting. If this comes to fruition, to me it would even be worse than the Club Carlson card devaluation. I know we all have different travel goals, but for me, relying on that great business or first class seat with AA points to SE Asia on Cathay has spoiled me.
    This one may cause me to go into deep mourning. Probably stay on bed for a month or so.

  11. AA is up to something, as GloverParker mentions above. Not one single seat available from usa to eze in saver (checked every day from june to end of calendar next april, including in economy)? Maasive, maasive devaluation? Getting rid of saaver level?

  13. If Cathay still made seats available at a lower rate, I think most would be ok with that. But, if Cathay only made seats available 2 to 7 days prior to departure, as they are doing now. I guess I would have to give up using AAdvantage as a hedge against Mileage+ and SkyMiles. This could be the final throes of easy award travel.

  14. Funny, I was just thinking this was overdue during my last few flights on Cathay in first to HKG.
    I thought AA would raise the mileage. You still have Alaska at 70k to the Indian subcontinent.

    I’m lucky in that I can leave on a moment’s notice, and Cathay does do a great job of opening last minute space.

    I’ve recently flown Qantas, Singapore, Emirates 380, and Cathay in first and I like Cathay best.

    I think people have become too used to being able to get cheap awards that indeed are less than Asia Miles (it’s 60k just to upgrade to MLE last I checked, and that’s really only to HKG).
    Something has to break, and with all the extra miles AA is doling out this year that seems likely.

    The one place we haven’t seen any significant pullback is in bank credit card signups. I’m sort of surprised they have not ditched those who sign up for multiple bonuses and who –let’s be honest–abuse the manufactured spending, which really isn’t supposed to earn points if you read the T&C. I suppose the banks will eventually get around to this.
    Gary, does it really make any sense an airline can earn more from a credit card user than a frequent flyer, such that there is a great disparity in favor of credit card signups?

  15. Nice work, @Brian L,. you lost your first argument (that 4+ tickets are near impossible) so quickly segued into a different argument (that they are too expensive). Are you now saying that it is worse to have to pay United’s “obscenely high partner redemption rates” than it is to have no ability to redeem at any price at all? I will agree that this is a niche market for the points and miles enthusiast, a group of 4 or more that wants to travel in premium cabins.
    In regard to your first assertion, that 4+ tickets are tough in any program, I have redeemed United miles, Aeroplan miles and ANA miles for 6 of us to travel in premium cabins on Lufthansa, Air Canada, Turkish, Egyptair, Brussels, US Airways (last year before they disappeared) and United. In the meantime, I have 750,000 AA miles burning a hole in my pocket trying to find 6 premium cabin tickets to anywhere on Oneworld airlines. Star Alliance is much better for finding multiple premium cabin redemptions than One World.
    CX and JAL are my last, best hope to use these most effectively for my family. I, too, am waiting for the booking window to open for next summer so I can book using these miles. I thought I was going to be pushed to use them by an AA devaluation, but now there is a new threat on the horizon. Luckily (?), even now, it seems more likely that I will find this kind of space on JAL than CX, so this change likely will have no effect.

  16. @farnorthtrader – I never said they were near impossible, I said they were tough. Not the same thing. And I am indifferent as to whether or not its better to have have no availability vs. not having the ability to redeem at all. If they jack up the rates high enough (and if you then multiply it by 4 or 6 or whatever), that’s essentially the same thing.

  17. “They’ve apparently brought in someone from Qantas to spearhead the revamp of the program. That alone may be telling, as Qantas offers mileage earning everywhere but astronomical redemptions and is anything but generous overall.”

    I think this says it all. Qantas’ ‘Loyalty’ division is now the Group’s most profitable division and is basically a customer insight business driven by big data. That has stripped any hidden pockets of value out of the program. Now other airlines are catching on.

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