At the J.P. Morgan Industrials Conference on Tuesday, American Airlines CEO Robert Isom committed to maintain the value of an AAdvantage mile. This isn’t just corporate pablum. He was explicit that the an AAdvantage mile is more valuable for travel redemptions than competitors (“There’s no doubt about it that the value of a mile on American gets you farther than anyone else”) and something they “intend to keep an advantage on.”
Now if you have a customer experience and a network and a product offering that customers want, you have a chance to build loyalty. And from that perspective, American has always been the leader with our AAdvantage program, and we intend to capitalize on that and make it even better.
So I’ll start with this. There’s no doubt about it that the value of a mile on American gets you farther than anyone else. And that’s something that we intend to keep an advantage on. We’re also looking for ways to really expand redemption and making it literally countless ways that you can use an AAdvantage Mile. So whether it’s redeemed miles for gift cards, experiences such as our relationship as the FIFA World Cup U.S. North American sponsor. Those are opportunities where we can continue to expand.
And we expect — and what we’ve seen so far is that our loyalty enrollments have increased to record levels. They’ve expanded even greater than where we were in ’25, which were record levels as well.
And to just further note, this new Citi relationship, our single co-branded credit card program, that launched January 1, and we love what we’re seeing. We’ve had the highest level ever of co-brand acquisitions for the first 2 months of the year. We’re on track to meet the goals that we had set for ourselves. And ultimately, that’s to increase pretax income by $1.5 billion as we reach, and that’s over 2024 as we reach the end of the decade. So highest loyalty enrollments, highest co-brand acquisitions that we’ve ever seen. And all that is putting us in a great spot.
This isn’t a legally binding promise, of course, but it’s explicitly something Isom is highlighting to investors as a reason what customers will choose American Airlines given a better customer experience. If American can be as pleasant to fly as Delta, why wouldn’t you choose American when AAdvantage is so much better than SkyMiles?
And it’s customer preference for AAdvantage that drives cobrand card acquisitions – which are how the airline makes and will grow high margin revenue. American previously reported a 53% margin for AAdvantage and now they’re explicit that they expect their Citi AAdvantage deal “to increase pretax income by $1.5 billion” over 2024 levels by the end of the decade. This happens by growing cobrand revenue, not by cutting redemption expense.
When asked about what moats American has as a business, Isom concludes “at the end of the day, we have this loyalty program. Customers want to fly American. They want to use our loyalty, they want to use our loyalty currency.”
Low bar.
A ’78 Ford Pinto is more valuable than SkyMiles.
And yes, I understand the difference between the value of points to customers and the value of points to a corporation’s bottom line. I’m just making a dig at Delta after seeing a nearly half-million point quote for one-way trans-Atlantic business class.
I mean, let’s see how this post ages one year from now. But AAdvantage is actually an advantage compared to DL and UA right now. AA and Citi are singing from the same hymnal which is more than UA can say about Chase. If AA could get its act together it might be a worthy competitor to DL one day.
By the way, sitting at the Chase lounge in LGA right now and there are some cool old school Chase advertisements on the wall. The one next to me from the 1940s keeps referring to Chase as “the Chase” as in “you’ll find the Chase prepared to help” and “At home, the Chase has…”. Found that fascinating!
@Peter — I set my timer. *holding breath*
I generally have never had an issue using miles but at same time I don’t expect AA to make business classes seats available to Hawaii over the holidays. Plan ahead and be flexible. It’s not that hard.
I agree with Peter – they are earning my business because of AAdvantage redemption pricing vs United and Delta – not perfect, but reasonable domestic first class award prices and (not as good in the last year) – international as well. Too bad they don’t have more widebodies to have more international upgrade opportunities – would be nice if they had a way for SWUs to work on BA economy fares to Club.
AA points are VERY valuable to me. And this after I was THE Delta points for almost a decade. I no longer work to collect a single SkyPenny and only focus on other points.
Well he might not be the CEO much longer so…
That’s odd considering not all seats earn points any longer. Value is relative!
They get the lion’s share of my CC spend (DoubleCash in conjunction with a Strata for 2x AA miles/$) solely because AA’s Main domestic short-notice award prices generally require SIGNIFICANTLY less miles than DL/UA/WN. I almost always get a value of at least 3 cents/mile for my AA award redemptions, sometimes much more.
Probably less discussed but besides inflation driving devaluation Delta
is the single program of greed that damaged all loyalty programs over the last few decades or longer.They emboldened other programs including hotel programs to continue the path of torching value to aspirational awards.I have boycotted Delta for some 26 years now and will continue until I’m below ground.They also are extremely overrated and still flying around antique planes.While I have my issues with American they are minuscule compared to Delta and it sly Pesos program.
He’s right. I pivoted to AA after redeeming a June trip from West Coast to Europe for 30k on 3 weeks’ notice. UA was 80k. AA also wins across the Pacific.
Seems like business model on AA miles has changed recently. I live in Chicago where we have the luxury of using either United or AA miles. Using AA miles was generally more favorable vs. United, but two months ago United now much more competitive than AA to most destinations.
AA is undoubtedly going to keep redemptions better compared to DL and UA – but those richer redepemptions come at a cost.
And the highest value passengers are focused first on schedules. If AA is not competitive in major markets like NYC, CHI or LAX, some high value passengers will put up w/ a worse schedules but not many.
and then you have to consider the quality of AA’s operation compared to DL and UA. No amount of miles matter if your flight is much more likely to be delayed or they route you through miserable hubs.