American keeps lowering the price that they will sell miles for. After the merger with US Airways they took the Dividend Miles approach of putting miles on sale three fourths of the year. The only purpose that ‘regular price’ serves is to be a reference point that allows them to announce a huge (always on) sale.

At first they hovered a little over 2 cents a mile, then the price point fell to 2 and then below 2 cents. Each promotion would vary a bit but the trend has been downward.

Now the price is as low as 1.72 cents. In fact last month American was selling miles for as low as 1.72 cents apiece. That was a limited time offer valid through end of June. That’s the price they brought back for July.

Buy exactly 150,000 miles and you’ll get receive 250,000 miles for 1.72 cents apiece. (This price is still more than AAdvantage miles are worth.)

The deal is “10% off” and a bonus of ‘up to’ 100,000 miles through June 30.

Here’s the offer table:

Buying 150,000 miles and receiving 250,000 works out to a price of $4311.19 or $0.017244 apiece.

Terms and conditions:

To be eligible for a the bonus miles and discount AAdvantage members must purchase 11,000 AAdvantage miles or more in a single transaction from the Buy or Gift Miles program beginning 12:00:00am CT on July 3, 2017 to 11:59:59pm CT on July 31, 2017. The prices shown include the discount. The discount applies to the AAdvantage miles purchased and does not apply towards taxes or the $30 transaction processing fee. The bonus miles earned are calculated based on each individual purchase amount and the corresponding bonus award. Bonus miles earned do not count toward the annual purchase limits. The applicable bonus miles are awarded to the recipient for Gift Miles transactions.

The miles purchased with the Buy Miles program and received with the Gift Miles program do not count towards AAdvantage Gold, AAdvantage Platinum, AAdvantage Platinum Pro, AAdvantage Executive Platinum or AAdvantage Million MilerSM status qualification. Transactions are nonrefundable and nonreversible. The miles successfully purchased or transferred usually post to the designated account right away, but please allow up to 8 hours for processing. Each AAdvantage member is limited to purchasing or receiving in a calendar year, a combined total of no more than 150,000 AAdvantage miles. Miles purchased through the Buy Miles program or received as a gift through the Gift Miles program count against this total. A confirmation email will be sent to the primary buyer/gifter and/or recipient, using the email address(es) associated with the AAdvantage account(s) and any additional email address provided. AAdvantage accounts less than 30 days old are not permitted to Buy or Gift Miles. The price of your purchase is in U.S. dollars. Your credit card company may add a currency conversion fee.

Even at 1.72 cents I still can’t recommend buying unless it is for a specific award where the paid ticket you would otherwise buy is more expensive and you can find the availability and put space on hold before purchasing.

In fact with more frequent premium cabin sales than in the past it isn’t even always cheaper than buying the ticket.

It is not at all surprising to see the price of American AAdvantage miles falling because the VALUE of American AAdvantage miles has been falling.

• They increased the miles price of awards
  
• And have very limited availability of saver awards on their own flights.
  
• They even increased the miles price of standard or rule buster style awards.

We know that American hasn’t hit projections for credit card signups. That is materially affecting the airline’s revenue as they disclosed to the SEC. They increased signup bonuses to try and compensate.

Co-brand credit card deals are worth about $2 billion a year to American and expected to grow. If customers are less interested in working to acquire those miles there is a big hit to revenue. Customers may be less willing to pay as much to purchase miles, so we are seeing lower prices. American isn’t lowering prices because they expect it to lead to the less revenue after all.

As airline programs have cut back, bank proprietary rewards programs have been ramping up spending to record levels. In other words, the programs have competition — which is why they cannot maintain better than 50% profit margins. They have to improve the value proposition for consumers or their cuts will be self-defeating — less credit card revenue and less revenue from the sale of miles, not to mention a less useful currency to actually encourage customers to choose their airline over competitors.

How low can pricing go? On average across all customers American sells miles for about 1.3 cents apiece. They make good money doing so. If they push down the regular consumer price, however, they’ll have difficulty maintain current pricing with other customers. The entire model is getting squeezed.

While I don’t recommend buying American AAdvantage miles speculatively at 1.72 cents, the fact that they’re for sale at this price is actually a good sign for program members. After all, they say the first step is the loyalty program admitting they have a problem.