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.