American Airlines Quietly Joins Forces With Chase—Unlocking 2 Cents-Per-Point Points Boost Flight Redemptions

It’s super-interesting to see American Airlines flights coming up as Points Boost opportunities through the Chase travel portal, since American is cobrand partners with Citi. You can now use Chase points at 2 cents apiece to book American Airlines business class (and in some cases, domestic first) and premium economy is boosted, too.

This isn’t a function of any other relationship that American has with Chase, the way Chase leans on its partners for inventory. (In fact their renegotiated cobrand agreement with Hyatt explicitly calls out more Hyatt hotels coming to The Edit.)

When Points Boost was launched last summer, we saw United flights as the major airline offering, with a ton of options to redeem points at 2 points apiece. Chase issues United credit cards of course.

• This is both a great deal for Chase cardmembers. Customers get good use of points.
  
• And Chase can afford to offer the high value point redemptions, becasue they’re getting access to the inventory at a discount.
  
• Meanwhile, the airline fills seats.

When we see American Airlines showing up with Chase Travel as a Points Boost offer, that means American is seeing a revenue opportunity in offering the flights through the Chase portal at a strong discount. They’re filling excess seats, generating incremental revenue, by using Chase’s cardmember distribution platform.

This is a far cry from where American was two years ago. When they were pushing distribution onto their own platform, and denying the lowest fares (including basic economy fares) to third party platforms this was mostly interpreted as a move against managed travel and an effort to strong-arm them into shifting to ‘New Distribution Capability’ technology that would let them merchandise things like seat assignments and not just sell tickets.

But it did more than that. It meant pulling cheap flights from platforms like American Express and Chase travel portals for cardmembers, giving up seat sales (that they couldn’t replace with points redemptions for paid flights through their own partner, Citi, whose distribution platform is smaller – fewer cardmembers and not as many points). They should have replaced these butts in seats with cheap AAdvantage seats for their own members, but that was a lesson learned.

It does seem that they ‘get’ the power of these platforms better now. Chase Travel now rivals Expedia, even though it isn’t even selling to the ‘general public’. Giving them discounted fares that they can offer at higher points value is a way to move inventory in an opaque fashion. Chase doesn’t discount the fares sold for cash. They don’t lower the ‘price’. They increase the value of the currency. That has the same effect: liquidating spoiling inventory, without undercutting pricing to consumers who will pay the going rate.

Dan’s Deals notes the overall state of Points Boost,

Points Boost value on airfare has changed…. Previously, premium cabins on United would get a value of 1.75 cents on the Preferred cards and 2 cents on the Reserve cards. Those peak values are still achievable, but on different airlines…

[T]he consumer Sapphire Reserve and JPM Reserve have more valuable options than the Sapphire Reserve business card, and the consumer Sapphire Preferred has more valuable options than the Ink Preferred business card.

You’ll find offers like American Airlines business class at 2 cents apiece for Reserve cardmembers, American domestic first for 1.75 – 2 cents apiece, as well as things like Lufthansa, and BA economy for 1.15 and Air Canada economy flex for 1.5 cents; JetBlue coach and American premium economy for 1.5 cents; and Singapore business and first class for 2 cents apiece (and premium economy at 1.75 cents). Sadly Chase’s The Edit hotel redemptions are no longer guaranteed to be 2 cents apiece.

Points Boost is great when you can find two cent redemptions. You don’t worry about finding award space. You earn points and status credit on your trips. And it’s not even always more points than you’d pay when transferring points. With The Edit hotel bookings, you’re getting added benefits like an upgrade, late checkout and breakfast plus a property credit – as well as earning hotel points and status credits and stacking with any status benefits you may have.

This was the replacement for 1.5 cent fixed value redemptions for Sapphire Reserve (and lower value elsewhere). That was expensive for Chase because Chase doesn’t get big commissions on airfare – and they were letting you redeem for any travel, so it often cost them 1.35 to 1.5 cents per point for the redemptions. With Points Boost they control their cost, making higher value redemptions available when they’re getting the biggest discounts and commissions. That can mean higher value redemptions than before in some limited circumstances. But Chase keeps varying what those circumstances are.