Two years ago American Airlines stopped allowing customers to earn miles on most Alaska Airlines flights. Alaska sources told me at the time this was a decision made by American, and one they were disappointed by.
Back in July I told you to expect even more degradation of the American Airlines-Alaska Airlines partnership.
That’s now been announced: effective March 1, 2020 it will no longer be possible to use American AAdvantage miles to redeem for travel on Alaska Airlines, and vice versa.
American tells me that there are no further changes to reciprocal lounge access or what’s left of their codesharing relationship at that time. The only change this coming March is that neither airline’s frequent flyer members will be able to redeem their miles for travel on the other carrier any longer.
Why American Says They’re Dropping Award Redemption With Alaska
American says they’re taking this step because,
- Alaska members redeemed more on American (and in premium cabins) than American’s members redeemed on Alaska. They argue that eliminating Alaska member redemptions on American will mean more availability for American AAdvantage members, although I submit that if American had an overriding concern with award availability they’d… offer a reasonable amount of award availability to start with.
- With Alaska’s growth, after merging with Virgin America, they now serve 97% of Alaska’s destinations. But this isn’t American serving more destinations than before, the gaps in American’s route network that Alaska helped plug remain. This is just that American serves the same cities Virgin America used to – and it isn’t even serving the same routes since American is weak in San Francisco.
Dropping More Partners is a Strange Move for American to Make Now
American isn’t serving their customers better by losing Alaska as a partner. Serving a city in the Pacific Northwest from Dallas Fort-Worth is useless to American customers in Los Angeles.
It’s particularly odd for American to own goal lose a partner now, immediately after having LATAM yanked out from under them, and this continues a trend of the airline dropping partners without adding new ones for seemingly little good reason (Cf. Gulf Air).
This is American walking even further away from competing in the Bay Area and Pacific Northwest. They just became even less relevant to customers there. My wife’s parents, for instance, living in a city only served by Alaska’s regional subsidiary Horizon Air, just found their substantial AAdvantage mileage balance useless.
To be sure customers can originate their redemption in Seattle and buy separate connecting flights, but then American won’t even through-check luggage.
If it is indeed true that Alaska members redeem more on American than vice versa, maintaining options for members would even be cash positive for American since they’d be getting paid for those net redemptions. As a result this seems petty, along the lines of immediately closing off inventory on LATAM codeshares, the needs of their customers to have options and make changes to already ticketed flights being paid no mind.
Will This Affect Other Alaska Airlines Partnerships?
Alaska continues to partner with airlines in oneworld like Qantas, Cathay Pacific, and British Airways and with independent carriers like Icelandair and Hainan Airlines. They’ve said they’ve looked at joining oneworld as a limited ‘connect carrier’.
One of the key changes that American had to make to get their joint venture with Qantas approved is that it couldn’t require Qantas to drop its partnership with Alaska. Hopefully the commitments they made to get anti-trust immunity to coordinate schedules and prices with Qantas will be upheld.
This is a Blow to American’s Profitability Engine
This appears to make little sense from an American Airlines standpoint. The airline has largely walked away from the New York market and has only a limited presence in the Bay Area and Pacific Northwest. It’s unclear why they’d want to reduce their relevance to Bay Area customers even further, as Delta builds up not just Seattle but a focus city in ex-American Airlines hub San Jose.
American generates its profit largely from credit card deals selling miles to banks. The two most important markets for credit card spend are perhaps… New York and the Bay Area.
In order to attract that spend the AAdvantage program needs to be relevant to consumers in these markets, offering them flights that take them where they want to go.
Ultimately This Shouldn’t Change How You Value AAdvantage Miles Much
It’s true that American miles do less, accessing fewer flights and destinations. And one is pressed to think of the last time there was a piece of good news for members?
While if you have a vision of visiting small towns in Alaska using miles, you should make those redemptions soon, as long as you don’t live in a primarily-Alaska city this isn’t likely to affect you much. You should be using American miles for premium cabin international redemptions on the airline’s partners like Cathay Pacific, Japan Airlines, Qantas, and Qatar.
Nonetheless I just want American AAdvantage, and American, to do something for once with its members and customers in mind instead of taking another thing away.