A Step Towards Revenue-Based Redemption At American Airlines

Up until coronavirus fears starting chasing passengers away, planes have operated pretty much full for several years. That meant it was tough to deliver traditional ‘saver’ award seats, which are seats that would have otherwise gone unsold. That’s true at a time when more miles than ever are being printed and earned through partners.

Simply tell customers nothing’s available, or nothing is available except at rulebuster pricing (which itself has gone up substantially) risks turning off customers and killing the golden goose of the frequent flyer program.

What many programs have done is introduced revenue-based awards, offering not just expected unsold seats but also seats that would have sold for cash – with the cheapest fares available for the fewest miles.

United and Delta have hidden their award charts claiming to eliminate them entirely (they haven’t). American has kept its award charts while running a parallel revenue-based redemption program called ‘web special’ awards. (This is, by the way, the correct way to run a loyalty program.)

American’s web specials truly are revenue-based redemption, so much so that they’ve extended the same discount to employees redeeming web specials that employees get when buying paid travel from American.

American Airlines employees (and eligible family) can now redeem ‘web special’ awards at a 20% discount, and also receive a refund for checked bag fees. This mirrors their ability to buy paid American Airlines travel 20% off with a bag benefit. Effectively American’s web specials are ‘miles as money’ awards (that do not earn miles).

The trick is that the 20% employee discount usually means putting an itinerary on hold and calling in to have the discount applied. Here they’re offering a rebate after travel is completed (and a refund of checked bag fees paid).

If American ever automates booking employee discounted paid travel (versus having them hold itineraries online and call) we can probably kiss the web hold feature goodbye. When American started offering 24 hour cancel/refund they still needed to make holds available for this reason. Eventually they said online holds would go away, but that was contingent on automating the AA20 discount process.

Regardless if there was any doubt that these web specials were revenue-based redemption, this change should offer insight into how American thinks about them.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. Gary, as a matter of fact AA20 has historically applied to regular awards too. So this announcement should simply be an addition, not anything to read into

  2. Gary’s point is that you have to call in to have the agents manually process the 20% discount. I don’t quite get the jump in logic in them applying AA20 to Websaaver and eliminating award charts. But his further logic that when the computer systems are able to process this stuff without human intervention then total revenue based will be the plan might be correct. Though the airlines need their loyalty now more than ever. I will say that 12 months to refund bag fees seems a long time.

  3. Do we really need to try and find something right now. . . gezz this is not blog or even comment worthy.

  4. With planes fractionally full, airlines should be offering tons of saver seats. But of course they will take the opposite view that every redemption is $’s that could have been milked.
    Surprisingly, the handful of domestic fares I looked at weren’t especially cheap. Which again means instead of the airlines encouraging travel thru attractive fares, they’re saying no one is traveling who doesn’t have to, so let’s milk it.

  5. The worst change to the AA program is that they’ve eliminated ALL domestic saaver awards for flights departing within a week or less of booking date. There used to be tons of value booking this way (especially when using Avios). Now it’s all subject to being revenue-based.

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