When United announced at the end of September that earning 100,000 mile flyer ‘1K’ status would also require $15,000 in spending starting next year it was almost a foregone conclusion that American AAdvantage would do the same thing. I highly doubt there’s a single reader at this point who didn’t expect today’s announcement that Executive Platinum status will require $15,000 spend starting next year.
Meanwhile they’re introducing a new choice benefit for Executive Platinums who fly beyond 100,000 miles as well as adjusting mileage and status-earning when flying on their closest partner airlines or on ‘bulk’ or special fares.
American’s New Higher Spending Requirement for Executive Platinum Status
In addition to either 100,000 qualifying miles or 120 segments American’s ‘Executive Platinum’ status will require $15,000 spend starting in 2019, up from the current $12,000 spend requirement.
There are no changes to qualifying rules for lower elite tiers at this time. Although of course they’re gutting earning of qualifying dollars via credit card spend too.
None of this should come as a surprise, and simply continues a trajectory that’s been set. Two and a half years ago I wrote that American would logically make their elite program four tiers, make Concierge Key a new (5th) top tier, and make status harder to earn. That’s exactly what’s happened.
Tougher Status Rules are Reasonable But Disappointing
Airlines need to balance the number of elites in each tier with their ability to deliver benefits. Too many Executive Platinums means not enough upgrades to go around, for instance. Increasing the requirements for top tier status redistributes benefits to customers spending more.
In addition raising the bar will encourage some customers to give American more money. A customer earning top tier status with $12,000 spend, who gives business to some other airlines, may shift additional business at the margin to ensure they keep earning status. On the other hand some customers barely qualifying before may become less loyal. American’s bet here is that they will earn additional revenue that outweighs losses.
Delta, which also requires 125,000 miles for top tier status but allows members to ‘roll over’ any excess to the next year, started requiring $15,000 minimum spend for Diamond four years ago.
Interestingly $15,000 spend and 125,000 miles is a 12 cent per mile average fare, which really isn’t that high. United and American are requiring an average of 15 cents per qualifying mile. American hasn’t been earning the revenue premium that Delta has.
Ultimately American needs to decide what it considers a valuable customer and then treat that customer well. $15,000 seems high to me but I’m not surprised and I can’t fault an airline for ‘firing’ customers it doesn’t want.
However there’s little creativity coming out of AAdvantage at this point. If they want to improve margins, they could probably focus on the cost side. Perhaps they really only need 5 people on salary? Here’s what their new org chart could look like:
New Choice Benefits for Executive Platinums Flying Beyond 100,000 Miles
‘Overperforming’ Executive Platinums will get a new choice benefit. Instead of just earning additional systemwide upgrades for hitting higher qualifying mile milestones up to 200,000 miles, members will choose a benefit at each of 150,000, 200,000 and 250,000 qualifying miles:
- 2 systemwide upgrades. This is currently the default current benefit, and there’s a chance to earn 2 more than today with the new 250,000 mile level.
- 40,000 AAdvantage miles. Unlike systemwides, miles do not expire as long as there’s activity in an account. ConciergeKey members don’t pay cash co-pays on upgrade redemptions, so I’d probably recommend they choose the miles unless they are certain to be able to confirm upgrades at booking. Of course confirmed upgrades on most routes are tough.
- Gift elite status. Members can gift a Gold status at 150,000 qualifying miles or Platinum status at each of 200,000 and 250,000.
Having a benefit choice is better than what’s offered today, but this isn’t a part of Executive Platinum status – even at the new higher spending requirement – only for those exceeding the mileage requirements of Executive Platinum. For those customers this is an unequivocal positive.
Changing Mileage-Earning on Joint Venture Partners and to Special Fares
American is changing how many qualifying miles are earned when flying airlines within one of their anti-trust immunized joint ventures — so far that’s British Airways, Iberia, Finnair and Japan Airlines. (They have joint ventures pending approval with LATAM and Qantas.)
Paid first and business class earns status faster, while mid-fare coach does too. However full fare coach will join coach and only earn 1 qualifying mile per dollar, down from 1.5 miles per dollar. This does not concern me.
Meanwhile ‘special fares’ — tickets where American Airlines doesn’t see the price due to a glitch, as well as bulk or consolidator tickets (for instance you can often buy cheaper business class tickets bundled with a hotel at AAVacations or other online travel sites), are going to see mileage-earning changes as well.
Historically I’ve found that special fares, like cheap business class fares on partner airlines, are much better for earning miles and elite status than tickets purchased directly through American.
They’re increasing class of service bonuses for first and full-fare business class booking codes to 100% (up from 50%) and elite qualifying dollars-earning to 40% (up from 30%).
Meanwhile Q, O and B fares will only earn 25% of miles flown (down from 50%) and qualifying dodllars-earning falls to 5% (from 10%).