American Airlines Is Stripping Elite Benefits From Basic Economy — You No Longer Have Status, You’re Just Your Fare

American Airlines raised bag fees $10, matching moves made by United, Delta and Southwest (and a similar change that kicked off this whole round of fee boosts by JetBlue). However they’ve done something much deeper.

• They will charge even $5 more for the same bag if you’re flying on a basic economy fare.

• Starting May 18,members with AAdvantage status will no longer receive free seat assignments, complimentary domestic upgrades, or the ability to confirm systemwide upgrades on basic economy fares.

• The airline’s boarding order is being changed to de-prioritize AAdvantage members as well. Later this year, AAdvantage members will be downgraded from group 6 to group 7 boarding.

  Just joining the program no longer comes with the same valuable boarding benefit to ensure access to overhead bin space on the plane and avoid gate-checking bags.

This brings American Airlines closer to the rest of the industry – forfeiting one of its sole advantages, when its products, service and reliability have not kept up with Delta or even United – and ironically puts them behind Spirit Airlines and Frontier which honor their elite benefits on all fares.

This Is Bad For Business Travelers, Too

Business travelers are leisure travelers. The same person who buys expensive tickets during the week, week after week, also travelers over the weekend with their family. Full fare passengers are also price-sensitive passengers.

What American had been doing is say ‘you are a valuable customer.’ Once you’ve spent enough money with American, generating enough Loyalty Points through AAdvantage, we’re going to treat you well every time you step onto one of our planes. It’s not just that you are taken care of when you spend the most money on a given trip, you’re an important customer on all of your trips.

That makes giving American those business trips more valuable and important, because they also take care of you on leisure trips where price matters more. In fact, those leisure trips are far more important because those are often with your family. Abuse you all you want when it’s just you – but treatment matters more when it’s your loved ones also. Plus, you’re showing off your brand that you’re loyal to, to the people that matter most to you. That’s when the brand needs to shine.

Loyalty to the person, not to the fare, is how you create the relationship that leads consumers to irrational behavior. Instead, this change makes the relationship purely transactional.

This Hurts American’s Citibank Relationship

American assumes it has its elites captured and tells them they must spend more on an individual ticket (they already can’t earn status on these fares) and it doesn’t matter if that makes them less loyal or likely to buy tickets. But it also may make them spend less on the AAdvantage co-brand.

The airline’s core advantage – in their own telling – has been their Sun Belt route network (creating more connections with more flights) and the value of the AAdvantage program. Yet they’re voluntarily compromising some of the incremental value of their core differentatior.

AAdvantage status – now earned in large measure with the credit card – is worth less. Jane Fraser should be calling Robert Isom to tear him a new one. It is her customers bearing the brunt of this, and she’s paying American $6 billion.

Now, American didn’t do a good enough job marketing their advantage with advantage, but that is a competence failure not a product one. Dismantling that is a huge risk. Make no mistake, though, you are no longer a status member at American. You are your fare on any given trip.

How Airlines Use Basic Economy

Basic economy is the tool airlines have used, not so much to get customers to pay a bit more for what used to be included in a standard fare, but to price discriminate and sell tickets to ultra-low cost airline customers without offering those low fares to existing passengers willing to pay more.

By making the restrictions unpleasant, they offer their seats cheaply to compete with Spirit and Frontier but in a way that avoids lowering the price of ticket sales to everyone.

That’s been a key way they’ve successfully competed against low fare airlines. They are simultaneously a high fare and a low fare airline on the same plane. And that gives them a much better revenue mix than Spirit et al (albeit with higher costs as well).

Previously they would have to match fares or they would lose too much business – but in so doing they lost too much revenue. Basic economy became the new advance purchase and Saturday stay fare rules that gated business travelers and leisure travelers, allowing them to sell expensive tickets to people flying on company money and cheap tickets to those coming out of their own pocket. It is how they avoid selling cheap tickets to business and premium leisure passengers.

The thinking now seems to me ‘those who care about AAdvantage will buy up or be kept from buying down’ and that might be true. It might also be that without mileage-earning those passengers aren’t loyal and defect to Delta.

American’s Schizophrenic Approach To Basic Economy

Since the very beginning with these fares, American has been constantly tweaking the rules. Perhaps they’ve done it so often they no longer feel the need to tell customers when the rules have changed. They’ll discover it when they fly, or in the case of mileage and elite status credit, after they’ve flown.

American rolled out basic economy in 2017 and they even treated these customers worse when cancelling their flights in addition to offering no changes or credit for cancelled tickets; last to board; no free advance seat assignments; no upgrades; and reduced elite qualfiying credit.

In 2018 they started allowing basic economy passengers to bring carry-on bags on board making their basic economy much more attractive than Untied’s (United still bars standard carry-on bags, which is worse than Spirit which charges for them).

In 2019 they started selling seat assignments to basic economy passengers – it was no longer ‘no seat assignments in advance, period’.

During the pandemic, American restored elite benefits like upgrades, extra legroom coach seats, and confirmed same-day changes to basic economy (as well as allowing basic economy passengers to buy upgrades, priority boarding, and Main Cabin Extra).

American eliminated basic economy earning towards elite status in 2021, and then brought it back starting in 2022.

In 2024, American made it possible for basic economy customers to retain some ticket value when cancelling a ticket.

Then late last year American cut mileage-earning from basic economy fares, which is an own-goal because these fares mean getting new travelers into the AAdvantage program which is the top of the funnel for converting them into credit card customers.

Mileage-earning on these fares was cheap. It was very few miles (cheaper fares, fewer miles per dollar) and unlike most of the industry AAdvantage miles still expire. The miles only had value if you continued to engage in the AAdvantage program and generated value to American, otherwise they’d expire. Dropping points from these tickets saves money in an accounting sense, but there was only real cost to them when generating future profit.