A week and a half ago changes to the AAdvantage program leaked. I broke the details, for instance, that American would be moving to revenue-based mileage earning for flights sometime in the second half of 2016.
American just announced the changes, and they’re everything I had shared earlier in the month, although I also do have new answers to outstanding questions that help fill out the picture of how the program will work and where they’re going.
And they’ve also shared the changes they’re making to their award chart which fills out most of the rest of the picture.
American Airlines A321T at New York JFK
American AAdvantage President Suzanne Rubin explained to me that they “worked very hard on this, studying the marketplace.” The airline has been “occupied over the past several years” (focused on merging American and US Airways) “all the while looking at what we need to do to set the foundation going forward.” They’ve had a “great opportunity to study what’s gone on before. What we see today, rolling out changes, is the next step in evolution of the program.”
Here are the basics:
- Elite status earning remains very similar to what it is today with no minimum spending requirement for status. They’re eliminating the third qualifying method, ‘points’, while making elite qualifying miles easier to earn (a system similar to United’s; premium fares earn bonus qualifying miles). Executive Platinums will start with only 4 confirmed upgrade certificates per year rather than 8, and then earn 2 more at 150,000 qualifying miles and 2 more at 200,000 qualifying miles.
- American will be going to a revenue-based mileage-earning system during the back half of 2016 copying Delta and United. Golds (40%) and Executive Platinums (120%) will get a bigger bonus for flying, while Platinums will see a reduced bonus (from 100% down to 60%).
- Award chart prices are being adjusted up and down slightly for economy awards, going up though for the most part not drastically for business class awards, and going up substantially for international first class awards.
These aren’t good changes for members. They make me like the AAdvantage program less. But they’re less-bad than I think many have feared. And they leave American reasonably attractive compared to United and Delta overall which have themselves made many negative changes over the past couple of years.
American Airlines Airbus A319
Elite Qualifying in 2016 for 2017 Status
There are no changes to American’s status levels (there will still be 3 levels: Gold, Platinum, Executive Platinum). Those levels will still require 25,000, 50,000, and 100,000 miles. Qualifying on segments as an alternative to miles will not change.
American is eliminating their third method of qualifying for status: elite qualifying ‘points’. They had an either-or system of miles flown or miles adjusted by type of fare. Those are being combined, with expensive fares earning more qualifying miles than before.
I would regularly buy some expensive fares, some cheap fares, and the expensive fares didn’t help me earn status faster as a result. That changes going forward.
Elite benefits from one year will expire January 31 of the following year, instead of February 28.
Executive Platinums will no longer automatically earn 8 confirmed systemwide upgrades a year. They’ll earn four upon qualifying — and then 2 more at each of 150,000 and 200,000 qualifying miles.
Gold and Platinum members will earn 500 mile upgrade certificates for every 12,500 qualifying miles earned, rather than 10,000 (but of course qualifying miles become easier to get especially on higher fares). Beginning in 2018 the counter will reset to zero on February 1 instead of March 1, to align with changing the end of the elite benefits year.
No increase in elites from these changes: Perhaps the most common reaction I’ve seen among elites to these changes is that there will simply be more elites. There aren’t any revenue restrictions to cull the bottom out from the elite pool, while it will be easier to earn status on a mix of expensive and cheap fares.
Bridget Blaise-Shamai from AAdvantage tells me, though, that this isn’t the case. She points out that they’ve been running an elite qualifying points promotion for the past year, and that goes away. “We’re not inflating any elite group as a result. Some customers will be getting status faster, but there won’t be more people [with status].”
Late 2016 Redeemable Mileage Earning Goes Revenue-Based
American will adopt a system very similar to Delta’s and United’s for earning redeemable miles based on the cost of a ticket in “late 2016.”
Since American has three elite tiers rather than four, you get somewhat different winners and losers. Golds get a bigger mileage bonus than they do today. So do Executive Platinums.
Platinum members — earning 50,000 to 99,999 qualifying miles per year (with no elite level in between) — see their mileage bonus reduced.
There will be a cap of 75,000 miles earned per ticket — the same as Delta and United — so for expensive premium cabin tickets it will be desirable to book two one-ways rather than a roundtrip.
Until they implement revenue-based earning they will continue to award premium fare bonuses first introduced a year ago.
About a week ago I walked through how this will compare to earning under a mileage-based system. There will be some modest winners, but there will certainly be losers.
American insists though that they will be awarding the same number of miles for flying under revenue-based accrual as with distance-based accrual when you exclude miles earned from the premium fares promotion (which I think is fair for comparison purposes, since the premium fares promotion was meant to counter the additional miles United and Delta were awarding on expensive tickets while American wasn’t taking anything away from cheaper tickets). For this to be true AAdvantage members must on average be spending about 20% more on their tickets than non-members.
What It All Means for Flyers
American is giving out fewer confirmed international upgrades. They’re giving out fewer miles on lower fares. And the miles they do give out will be worth less for business and first class travel.
There’s very little here to be happy about — except that the changes don’t happen right away, and that they aren’t far worse than this.
On the upside, Suzanne Rubin says that American is looking at “all kinds of benefits” for the future and while she wasn’t prepared to say which ones were likely to come to fruition I mentioned things like upgrades on award tickets and also reciprocal upgrades with partner airlines. Those are hard, she says they’ve had conversations about reciprocal upgrades with most of their partners but haven’t been able to offer them outside of British Airways and Iberia.
The big concern going forward, now that we know about changes to elite status, mileage-earning, and redemption, is what the introduction of “Basic Economy”-style fares will mean for AAdvantage earning and elite benefits. American President Scott Kirby is on record wanting fares like Delta’s that come with fewer features, so that they can offer fares that match the ultra low cost carriers while encouraging AAdvantage members to ‘buy up’ to higher fares. That’s not something the AAdvantage team was prepared to talk about today.
View of the Wing, Boeing 787
Suzanne Rubin shared that she most wants members to take away that they’ve been studying, and have been “deliberate about the changes.” She’s “eager to be upfront with customers. For example, information shared before it’s firm. For instance accrual changes [they’re] talking about in the ‘second half of 2016’ — just as we did through the transition to a single frequent flyer program, we’ll continue to update members as changes get closer. Our goal is to be deliberate and transparent.”
As far as what’s next Suzanne says that “obviously we’re always in process [of] looking at what’s right to advance the business. We don’t have anything concrete to share. The team of people here at AAdvantage is looking at ways to make the program work for customers and airlines.
By no means is this the end of changes, but you can expect to see the same approach – deliberate, studied, and transparent when there are more changes.”
She did assure, though, that they’ve “given everything we have on the foreseeable horizon… Nothing [else] in the foreseeable future.”