There’s been a trend over the past several years for airline to award status based on ticket spending. United took this to the most extreme place, dropping miles and flights and in favor of a straight-up pend counter. It’s crass, and it’s not very engaging. It also misses the point that the customers who spend the most aren’t necessarily the most profitable, or the ones with whom a program can influence wallet share.
It’s been obvious for two decades that frequent flyer programs were the highest value part of an airline. Mileage Plus was the only profitable piece of United when the airline filed bankruptcy 20 years ago. They secured debtor-in-possession financing from their co-brand card partner, and when times were rough pre-sold miles to provide the airline with liquidity. During the pandemic the largest airlines raised $6.5 to $10 billion apiece against the future income streams of their frequent flyer programs alone.
Nonetheless it took the pandemic for airlines to try new things, to move out of lock step with each other in their race to the bottom. American Airlines did something truly revolutionary (if not obvious) in declaring that the company’s best customers aren’t just the ones who spend the most on low margin airline tickets. Instead spending money with the airline’s co-brand credit card, shopping through their portal, and engaging in myriad other transactions with their partners that cause those partners to buy miles from the airline are the sine qua non of a profitable customer.
Elite status will require:
- Gold: 30,000 points earned
- Platinum: 75,000 pointss earned
- Platinum Pro: 125,000 points earned
- Executive Platinum: 200,000 points earned
A minimum of 30 flights will be needed to earn ‘choice awards’ that start at 125,000 Loyalty Points per year. But status itself can be earned without ever setting foot on an airplane. And upgrade lists are prioritized based on elite status followed by the number of loyalty points you’ve earned in the preceding 12 months.
Why do I say this is fun?
- I remember 20 years ago driving around to find gas stations that accepted Diners Club. Now maybe it makes sense to drive around looking for Shell gas stations, though you only earn a loyalty point per dollar and need a lot of gas to move the needle on your status and you’re capped at earning 1560 miles per year this way.
I was never going to have a gas preference based on 1500 miles per year (especially when it meant giving up cash back) but every little bit helps towards status and could make the difference in clearing an upgrade.
- Groups of frequent flyers earn their travel funds by buying products through shopping portals and reselling those products to break even or earn a profit, with their margin coming from the shopping portal in the form of miles or cash back. Those folks can leverage the American Airlines shopping portals towards top status for the first time. Figuring out what products you can do this with will be – for some – a way to net elite status without coming out of pocket at all, but of course there are inventory risks. Figuring out online sales – being an entrepreneur – can earn elite status with American Airlines AAdvantage.
Now that @AmericanAir status can be earned making purchases through the AAdvantage portal they should rename Executive Platinum "Reseller Elite"
— gary leff (@garyleff) January 2, 2022
- Stack offers for maximum effect. You’ll want to look for offers where you can pay with a Mastercard and earn miles for the transaction (via SimplyMiles) and make the purchase online earning miles through the shopping portal (AAdvantage Shopping) and pay with an AAdvantage co-brand credit card all at the same time with each of those 3 things separately earning Loyalty Points for the same transaction.
Earning 40 miles per dollar sending flowers is no longer exciting the way it was 20 years ago. But when you can stack a card-linked offer, and when the credit card charge earns miles and when all three activities earn elite status too you’re going to want to jump on it. It brings to mind the old AAdvantage credit card ad, “Was he sorry? Or was it the miles?” Or my favorite of the series with a diamond ring, “Was it love? Or was it the miles?”
- You’re going to want to go out of your way to generate charges on an AAdvantage co-brand credit card (something that hasn’t made sense for most people in many years). You might pay your car payment via Plastiq charging to an AAdvantage credit card (2.85% fee) and pay your mortgage via Plastiq, Mastercards are accepted for this and fortunately U.S. AAdvantage co-brands are Mastercards. Pay quarterly takes (pay1040.com charges 1.87%) with credit card as well. Tax time has an upside for your elite status.
There are still some misses in the American Airlines elite qualifying program, like failing to count seat revenue, bag fees, and buy ups to first class (high margin products all) and imposing new onerous requirements on customers in regions without the opportunity to engage with as many elite-earning partners. However this is a step towards ‘getting’ both what customers are actually profitable to the business and incentivizing customers to engage in more profitable activity.
And they’ve made the program fun again by creating something for members to chase. They’ve gamified their elite status to the benefit of both themselves and their members. This is new, and there will certainly need to be tweaks as they see how it works out in practice. But it’s been so long since these programs have been genuinely exciting.