This week American AAdvantage made several changes to its program:
- Rolling out a new three-tier pricing model for AAnytime awards (paying extra miles when regular award seats aren’t available).
- Eliminating free stopovers on international awards at the North American gateway city
- Eliminating distance-based oneworld explorer awards
- Increasing the telephone booking fee from $25 to $35 (they still do not waive this fee for awards that cannot be booked online, and most airline partner awards cannot be).
I saw the changes themselves, overall, as not that big a deal — but the lack of notice about these changes (implemented before communications even went out to members) as being a very big thing indeed.
Of course for members who had been taking advantage of these things, losing them was a big deal and it wasn’t my intention to minimize that — just to point out that for the membership of AAdvantage as a whole these aren’t among more-used features, that there weren’t really any surprises in the changes (changes to double miles awards were very much expected for instance). And there will be many much larger decisions to be made in the near-term that will make some people happy and anger others unavoidably.
No Notice Changes Are the Worst Thing a Program Can Do
The real key, and the best AAdvantage can do, is provide reasonable advance notice about the changes they plan to make.
The worst thing they can do, on the other hand, is what they did — pull the rug out from members who may have spent years saving up miles for a specific award they’ve now not given any last shot for those members to book.
There are going to be many more changes to come as American and US Airways align their policies and procedures over the next year. Most of those are going to be far more significant than the things announced this week.
Members are flying all year this year, giving American and US Airways their loyalty in exchange for promises of benefits in the future. No matter what program terms and conditions say about a legal right to change rules at will, and notwithstanding the Supreme Court’s ruling that consumers have no state law remedy against frequent flyer programs, their is a basic offer and acceptance and moral obligation to deliver on promises which is fundamentally breached when changes are made without meaningful notice.
And members save up for years for those dream trps on the basis of descriptions of what’s possible.
Devaluations without notice are the last refuge of scoundrels and banana republics.
Members Are Up in Arms
Reading the comments to various posts here, both my original discussion of the changes and my subsequent interview with AAdvantage President Suzanne Rubin, you’d think I was at best something like Marshal Pétain in the second World War.
This was either because I did not come across as sufficiently critical in the interview (my goal was to share what they had to say on serious issues, and let readers judge for themselves, and judging from the comments I think I accomplished that) or because I appeared to downplay the substance of the changes.
I know they are a big deal to the people taking advantage of these features. Many readers, for instance, loved the allowable stopover in North America on an international award. But it’s precisely how beneficial (and costly) it was with benefits focused on the relatively few people who knew about it and were proactive enough to take advantage of it that it likely made sense to American in their top-to-bottom review and comparison with Dividend Miles to eliminate going forward. I don’t love it, but it doesn’t surprise.
I’d rather they kept the benefit, but it’s small fish compared to what’s to come.
I think the biggest reaction by members was really a fear of the future — if they did this, and they did it without notice, what’s next? And how can I trust them to steward the miles I’ve accumulated and the loyalty that’s resulted in my elite status?
My Framework for What to Expect at American Going Forward
I think that, on the whole, soft things like loyalty and product differentiation are going to matter less at American Airlines as a whole in the future, and this has nothing to do with stewardship over the AAdvantage program. It’s what I expect for inflight product, and for service standards. It’s about mission and focus and the message from the top. I think the DNA that came over from Arizona believes that frills are boondoggles.
Scott Kirby is a numbers and spreadsheet guy, and if you can’t quantify it and show a revenue stream attached to it you’re going to be hard pressed to make an investment.
The airline industry needs this, or at least it has needed this, given the sheer magnitude of malinvestment that had taken place. But you have take it too far, especially if you’ve misspecified the models it’s possible that they’ll lead you to bad business decisions.
Clearing out bad investments that’s the place in the life cycle of a business where it’s worth erring in that direction. But having done the heavy lifting already in that direction I’m not sure if it’s the right position to be taking — not just for customers, but for the business as a whole.
Scott is a sharp guy, and I trust he knows he grabbed the low hanging fruit at US Airways and that the bankruptcy already grabbed a lot of it for American, and that a different tact may be best strategically going forward.
But I do expect a natural skepticism from
US Airways American leadership that customer investment is warranted, in terms of winning incremental business.
But I Still Trust the AAdvantage Program
I don’t love the changes to the program that have been announced so far. But they aren’t surprises and they aren’t nearly as significant as the decisions about the program that are still to come — about the overall award chart, unlimited domestic upgrades, international upgrade certificates, and so on down the line.
I think and hope that the strong consumer reaction to lack of notice of these changes will be a lesson learned.
For me they get one screw-up.
How they behave next time — advance notice of changes and clear, transparent communication about those changes — will factor much more into my own opinion about the trustworthiness of the program than this one-off incident.
I’ve always thought that about the worst thing a program can do is pull the rug out from under customers when making changes. And when I’ve seriously and immediately called out programs in the past it’s generally been of programs I already didn’t have much trust in.
Here I think there’s warranted criticism for how this was rolled out. American AAdvantage still has my trust, but I’m wary, and future decisions over the next months are going to be key.
They’re at a turning point. Certainly they know it. And we’ll all be watching.
But I still trust them, and whether I continue to do so will be dependent upon the next data point.
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[…] against Gary's assertion that he still trusts AA to give advance notice of future devaluations: http://boardingarea.com/viewfromthew…an-aadvantage/ IMHO Gary's position isn't so much his belief as it is his effort to encourage better behavior by […]