The new American Airlines elite status-earning system going into effect next year makes it super easy to keep elite status if you engage with the program across a variety of earning streams, rather than just by flying. Here are 10 takeaways on what’s going on with the new program.
- It’s harder to earn status on flying alone. It takes about $18,000 in spend to requlify as an Executive Platinum member with just flights. That matches United. Most Executive Platinums spend far more than this, and American is basically saying that unless you provide them revenue in some other way like using their credit card then a $15,000 ticket spend customer shouldn’t be an Executive Platinum.
- It’s harder to earn status for the first time. Going from no status to Executive Platinum on flying alone would cost a bit over $27,000 in ticket spend.
- Status is (much) easier to earn overall. They expect more elite members, even coming out of the pandemic.
- Lower levels of status become less valuable. With more elite members that means more competition for upgrades, and a need to be a higher level of elite to see the front cabin.
- Lifetime elite status gets further devalued. Just as prioritizing upgrades based on spend in the past 12 months meant that those whose lifetime of loyalty occurred earlier are lower down on upgrade lists (and going forward based on ‘Loyalty Points’ in the past 12 months), more elites to compete against who have more loyalty points push those lifetime elites further down. All the more reason American needs to address its uncompetitive lifetime elite program, which tops out at the second from the bottom level of status.
- Recognizes where profit comes from. Before the pandemic American was largely earning money selling miles (mostly to banks) rather than flying. Co-brand credit card customers are higher margin than just flyers.
- American needs to include ancillary revenue when calculating Loyalty Poitns. It’s difficult given their IT setup, but paid seat assignments, buy ups to Main Cabin Extra and first class, and checked bag fees are higher margin than airline tickets but these payments to the airline don’t count under the new system.
- Miles no longer matter. Miles no longer are a part of how elite status is earned. Already miles weren’t how redeemable points were earned. Should the currency even be called a mile anymore? Distance flown only matters at this point for calculating earning for partner airline flights, since those tickets don’t report price paid to AAdvantage, and for calculating lifetime elite status credit.
- Finally a reason to spend on American’s credit cards. It’s made zero sense for most customers to spend money on American Airlines co-brand cards. You’d earn more valuable miles with American Express or Chase proprietary products, and even the new no annual fee Bilt Mastercard earns points faster and can transfer miles to American Airlines or other programs.
Now many members will choose to accept less value for their spending (fewer miles, and points that are stuck in a single airline) to both earn status and put them ahead on upgrade lists. This is brilliant on American’s part. Previously elite status credit was only earned at specific spend thresholds, but now ‘every dollar of spend counts’ which encourages marginal use of the product.
- This saves us from devaluation for a bit. American appears to be selling Loyalty Points to its partners as an add-on to redeemable miles. That’s why – so far – only credit card, online shopping, Rewards Network dining, and SimplyMiles count. They promise more partners will be added, but the contracts aren’t inked yet.
Partners were asking AAdvantage ,a href=”https://viewfromthewing.com/the-top-5-reasons-to-expect-an-american-aadvantage-devaluation/” target=_blank>about the expectation they’d devalue miles, and doing so would make it harder to sell Loyalty Points. Pairing a devaluation with this change in status would have depressed excitement about the program, and reduced the willingness to earn the currency when these changes are designed precisely to sell more of the currency. I still expect we’ll see devaluation, but AAdvantage promises not in 2022.
Whether you like this new program or hate it, I’ve always believed that a program could decide what they consider to be a valuable customer – as long as, once they’ve done that, they treat the customer consistently well delivering the benefits they promise. They’re clearly saying that their most valuable customers aren’t $15,000 a year Executive Platinums who don’t also use their credit card. That’s fair, even if it’s tough for those customers to hear. And more people will find status easier to earn than before.
Is there any particular reason that the status year is March to February and not based on calendar year? Is that because of trips that go over the new year?
Seems like the March to February makes it more confusing and difficult.
For me, I think this is the final nail in the coffin for giving loyalty to one airline over another. I earned AA Gold this year, but I certainly won’t be going out of my way to fly AA next year. For 2022, I’ll be booking which ever airline has the best price and schedule.
At what point does AA just stop flying and become a mile selling operation?
Good overview. Thanks Gary.
The new system will likely benefit most but not all.
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HT, rain season is measured from July 1st to June 30th. The typical summer shower happening on June 28th one year and July 3rd the next year will not skew the annual totals on such a system. But, a major winter storm happening on December 28th one year and January 3rd the next year would skew the annual totals if on a calendar year system.
Similarly, February / March is low season for travel. The revenue shift from February 28th to March 3rd is low. On the other hand, many people travel for New Year’s. The revenue shift from December 28th to January 3rd would skew the annual totals if on a calendar year system.
Because tier status will now ultimately derive from revenue, a person who shifts a trip around New Year’s could lead to not renewing tier status. So, the schedule is set to the low-travel period.
So now it makes sense to spend on the credit card and less reason to sit on a plane. And here I was, thinking an airline’s business was about getting you from one place to another. This was becoming obvious when airlines decide mileage programs were the new. Borrowing chip and their business wasn’t.
I search for the best price. I no longer support AA or any other airline.
@Pierre – they need to fly for their miles to be relevant, and they pitch the cards inflight… (in fact, that is the only place where Barclays markets their cobrand officially)
11. AA status will be impossible to earn outside the US.
12. You ll be able to MS your way to EXP for under $1000.
@HT: Because they want Christmas spend on the CC to count, which won’t post until January at best.
I don’t understand why you think it’s bad that a LT plat with 0 LP gets lower priority than any other PLAT with 1 LP. Of course AA should give the latter priority. Both of them can get an AA credit card and spend.
So eventually, AA will just be flying around people on award tickets?
I consider this a game-changer, and expect DL & UA to follow. All three of their cards were never great for spend – I still charge airfare on AmEx Platinum (5x) or Chase Sapphire Reserve (3x). Now this changes the game and finally rewards credit card spenders using AA cards.
This will easily push $75K of my spend annually for AA Platinum Status to get ‘free’ extra legroom seats when booking, and resemblance of some status on OneWorld annually. Beyond that is not worth it for me without getting free upgrades.
@HT: To add to what @Mike said, the change in status year may also be an attempt to get paying passengers on planes more effectively during the otherwise dead period of Jan/Feb, as people close to a threshold for either a status level or a Loyalty Choice Reward might make some segment runs to Hawaii, Caribbean, etc. When you’re close to a threshold with a program that ends the status year in January and have to do a mileage run in December, it’s often a logistical pain working around Christmas and NYE events. Plus, those are times when planes are already packed with holiday travelers so fewer open seats to sell for incremental mileage-run passengers. In Feb, on the other hand, there will be plenty of open seats for those chasing status or a reward by actual flying.
Yet another considerations is that many companies are still at near-zero travel with earliest resumption of business travel not expected until spring 2022 at the earliest. So it makes sense to start new the clock around March, when some of that travel presumably might start to return.
Yet one more reason for me to continue earning AS miles on all my AA flights…
I don’t get the business logic. Let’s say AA gets 1% profit for cobrand spend. Then they’re selling entry-level status for $300 effectively… is their business so bad that they can’t make $300 profit from someone flying 3k EQD per year?
From the cardmember side, is the $300 opportunity cost of spending for entry-level status worth it when the card already gives free bags?
@Esquiar: They profit from selling the miles to the CC companies… and knowing not 100% of them will be redeemed, or will be redeemed for otherwise empty economy seats on domestic flights that are flying no matter what (fixed cost).
It looks like after aggressive pushing for CC, AA revenue from selling miles to City is falling because of smaller number of sign-in bonuses and little spending put on the card. Thus, they came up with the idea of selling miles via bank in exchange for flying benefits. This also means that they lost hopes of selling their products to high yield business customers.
First class with smaller seats and miniature bathrooms for all just isn’t worth it and poison mystery meat on a clammy soggy roll
They virtually have nothing left in a hard product to offer me or better said
There simply is no skin in the game if there ever was
Great, this means I can double dip. I can use my AA executive Citi CC to book flights on Delta to enhance my status match to medallion while at the same time getting credit toward EXP on AA.
Boy, what genius concocted this plan?
From those of us that kept on flying AA through the height of the pandemic:
It’s great that right now we get upgraded more often than not. But when we don’t there’s no drinks and no EP snack back in coach. 18 months now, when I’m back in coach there is ZERO recognition. As travel picks up, upgrades less frequent- so what’s the point of status?
Currently, about the only time I don’t get upgraded is when A concierge key member takes his whole family on a A319. I wonder if I can get this status through card spend alone.
I for one am NOT worried about somebody buying their way in to EP by card spend alone. If I had $200,000 to charge each year the last thing I’d be worried about is getting a free upgrade. I’d just pay outright and I think most in that income bracket would think the same.
How does one calculate AA Loyalty Points when flying on Partners but crediting to AA?
I won’t be doing this, but I’m curious how the new program helps/hurts that method.
I like it. Will easily get plat status on cc spend and can book family into economy extra at time of booking. Upgrades so few and far between I never rely on them. I just pay for it if it cheap enough (eg 141$ to Austin form ord last weekend.
Side note I’ve been spending on my aa card in the last month but don’t see anything posting to my cc spend for the $15k status promotion at aa. Any tips regarding this?
I’m glad I didn’t transfer hotel points to AA back when I could have earned lifetime Gold. Lifetime anything is usually a disappointment. Most companies stab you in the back. Not to mention time shares, which I have also avoided.
The bottom line for me appears to be that flying 100K miles, and spending $15K to do so, no longer means ExPlat status – but spending $200K does. I have been able to do the former for the past 4 years, but my pockets are not deep enough to spend $200K when I only have $100K income. Also, with more ExPlat flyers (if this actually occurs), there will be less upgrades per person. Will ExPlat’s be rewarded in any other tangible way – as many other status holders and/or cc holders already qualify for free luggage and extra legroom seats in the main cabin. It would be valuable for me if Gary or one of the other frequent flyer blogs would investigate and publish the actual number of elite members the different air carriers have or had over the past 4 – 5 years. If I knew that I would be one of 10,000 versus one of 100,000 or one of 500,000, it would be a factor if I wanted to spend or fly to reach that particular status. I have the suspicion that this data is SUPER TOP SECRET information the airlines won’t report or release to the traveling public.
@todikaios Unfortunately, your value to AA has markedly decreased as they pivot from being an airline with a FF program to being a miles wholesaler who also happens to fly airplanes. I would recommend Delta.
Pierre….thanks for your thoughts, however most of my international flights are to Central and South America and AA has the most flights to these areas….sooo….
During the past 18 months I have been averaging 75% or so in upgrades….I doubt this will continue when “normalcy” returns.