The piece opens with Elieson explaining how loyalty and cargo aren’t that different than you’d think and the joke almost writes itself about AAdvantage members being self-loading cargo.
During the pandemic the traveler profile on American, like at most other airlines, has been different. Most passengers are younger leisure travelers buying basic economy fares and who aren’t members of the loyalty program, though the percentage of travelers who at least belong to AAdvantage has grown over the last several months.
Elieson sees this as an opportunity to engage new customers and build loyalty,
To Elieson, the “silver lining” of the pandemic is getting new customers on AA flights. “You have people trying out the product,” he explained. The opportunity now is to “take people who are new to American and get them indoctrinated in the program… I’m a big believer in lifetime value. The new customer has the greatest potential value.”
The framing, though, that being a ‘big believer in lifetime value’ is consistent with new customers having the greatest potential value seems wrong to me.
- The people with the greatest likelihood of driving value are those who have driven value (past behavior is the best predictor of future behavior)
- Younger travelers buying basic economy passengers are uniquely price-sensitive, rather than being brand loyal. A true ‘wow’ experience could change that, but it’s the demographic least likely for that to happen, and it’s not clear what wow experiences the airline is delivering (adding more seats to planes, removing seat back video for instance).
- Looking to the lifetime value of new customers isn’t what we normally think of as being a ‘big believer in lifetime value’ which a customer would naturally think of as honoring the value a customer has given to the airline in their lifetimes. But American in recent years has diluted the value of their lifetime elite program. Hopefully that will change.
Elieson does confirm that award charts aren’t going away at AAdvantage, though of course they’ve grown revenue-based redemptions alongside traditional availability and restricted the latter through journey control from an origin and destination standpoint – good luck finding non-stop saver awards from American’s hubs.
This comment about charts is somewhat concerning though, suggesting he may not quite ‘get’ the transparency award charts offer dismissing them as the ‘median’ of what’s required and thinking they’re less relevant if most customers are redeeming more points (because of American’s own lack of availability).
Elieson doesn’t necessarily understand “why award charts have so much meaning for folks.” He recognizes that “people need some line in the sand to aspire towards dream destinations. They want to know how many miles it will take.”
But traditional award charts aren’t necessarily the best representation of those goalposts. “What’s more valuable is showing the median award that was required, some critical mass or range where most people are burning their miles,” Elieson continued.
Elieson does think though that they can get more saver award inventory, noting the time he spent in revenue management and I’d add now that AAdvantage reports up to the head of revenue management. However that’s been a years-long quest that dates back two heads of AAdvantage since US Airways management took over the airline – and the carrier’s efforts at improving availability so far have focused on introducing revenue-based redemptions.
Finally Elieson is ‘open to’ family pooling of miles the way their joint venture partner British Airways allows and Air Canada Aeroplan introduces next month, but hasn’t figured out “how to avoid secondary markets and gaming.”