A reader shares how changes to the AAdvantage program’s elite status-earning drove his behavior in making a major purchase – Super Bowl tickets – and this story perfectly underscores how ‘Loyalty Points’ are changing the game in loyalty marketing and American’s position relative to competitors.
I just bought 4 Super Bowl tickets. (Huge Bengals fan here.) On the upside, thanks to 5 AA loyalty points per $ on Vividseats and 1 point per $ on my AA credit card, I just scored 113,600 loyalty points. Exec Platinum gonna come early this year. I had to pay maybe $1k more than comp seats on another site to use Vividseats, so not a bad deal
This short summary offers several takeaways,
- Consumer spends $1000 more than they otherwise would have. That’s what a loyalty program is supposed to drive towards, though not usually so dramatically. Earning 100,000 miles for an incremental $1000 may be worth it but it’s still a lot of extra money, and the miles alone might not move the needle if only redemption were on the line. But progress towards elite status means a real willingness to spend more.
- Spend goes on AAdvantage cobrand that otherwise wouldn’t have. Even if it made sense to pay more for these tickets through a mileage-earning partner, it would have made sense to do it on a credit card that rewards spend at more than 1 mile per dollar and one that earns a more flexible currency than AAdvantage miles. The one mile per dollar on a big purchase made sense to this customer because of the role of Loyalty Points.
- Associates American Airlines with the big purchases – indeed, the big moments – of your life. When your team goes to the Super Bowl, and you find a way to participate in that, and your first thought is how do you include American Airlines that is a huge loyalty marketing win.
Is American Airlines status now too easy to earn? If it is it’s because the program is too successful at driving purchases.
Who would have had a good reason to spend on an American Airlines credit card before (as opposed to getting the card for its up front bonus and benefits)? And who would have had a compelling reason to choose to accrue AAdvantage miles over competing currencies for online shopping, for dining, and myriad other activities? They have succeeded in making AAdvantage miles the preferred currency to earn for non-air activities.
AA has gone so far downhill from a service & reliability perspective that it’s tough to want to stay with them.
I had over 700k lifetime miles & switched to UA. I’m Denver based & UA makes more sense – but I was willing to give AA a shot, but delays & cancellations made me make the switch.
UA miles are more valuable & as a 1k vs EXP, I feel more valued. What good is status if they can’t get the basics of their business down?
Gary, to your point of driving consumer behavior . . . consider a purchase someone was already going to make at store X. Store X is available on the various shopping portals. At one time or another on a given shopping portal, store X earns (say) 10 points per dollar. Even if we say that all points are of equal value — which they aren’t — buying the item on the AA shopping portal when store X is at 10 points per dollar has the added value of helping one earn tier status. So, in this example, it didn’t change how many dollars were spent but it did change through which shopping portal the dollars were spent. Along the line of the economic theory of “price leadership,” other airline shopping portals might be forced to follow. This is a good thing for those seeking tier status who might not otherwise qualify.
Yeah, it will really cheese me off to think that someone who bought super bowl tickets and only takes 3 trips per year gets the same bennies as me. The bigger seat is just about the only tangible perk remaining for those of us who fly week to week. So to my next seat mate in a double digit row, forgive me when I’m not chatty, I’m just seething because I actually travel and pay directly to earn the good will of the airline aka “the old fashioned way”, through hours of flying and enduring their increasingly poor customer service experience. And… the airline doesn’t care. FYI I am AA EP with an average ticket price of $750 and don’t get the upgrades too often, usually #3 on the list, but I do get to board in group 1 (eye roll). Thanks for letting me vent.
@ Reno Joe Maybe I misunderstood this, but didn’t the Bengals fan pay $1,000 more than necessary?
“I had to pay maybe $1k more than comp seats on another site to use Vividseats, so not a bad deal.”
It seems to me that this did change the number of dollars spent, not just the portal used.
I’ll say it has.
Just used Plastiq to bring forward and bill this entire year’s mortgage to my Barclaycard Silver AAdvantage card.
Also bought $4k of Costco cash cards.
Did that to ensure that I would nail their $50k spend target in the first two months of this year.
With the January & Feb double dip, that’s miles now and Loyalty Points & bonus loyalty points in March, that good start.
Definitely looking toward more multiplier deals as well
Since I am not in a AA hub city, 30 segments should be easy (double hops), especially if I throw in an international mileage (loyalty point?) run on a One World partner airline in Business class.
AA point requirements have gone through the roof! Had to change a trip in 1st class @ 66K points for two and now 118K EACH! And the change is for October which is normally a cheap time to travel. Cash price for a ticket makes the points worth $0.73 cents. Now I’m wondering if I should have purchased $1K for SimplyMiles AA deal? You reading this Gary and you can pass on to Ben @ OMAAT. Oh one other example. Trip across the pond in May, booked back at the 339 day out window for 331K miles for two in business (no first), now AA wants 360K each. Pull your seat belts tight, the loyalty point game is getting worse by the day.
SB, I respect what you’re saying and your choice. Everyone has their own experiences and the fact is that each airline has its warts. Based on my customer experience, I would never set foot on a United aircraft. With someone else, their gripe is with Delta or Jet Blue or Southwest. With a given airline, service on one route is consistently great, on another route is consistently okay, and on yet another route is consistently bad. In the end, rather than having a “silver bullet” airline, I use American for certain routes, Delta for others, etc. Just a thought.
Gary, the original AA program when introduced did drive the consumer behavior towards flying AA. Ten years ago I would fly with a connection and choose least convenient time just to fly AA. This is no longer the case as the whole airline and AAdvantage went downhill. Consumers do make many stupid decisions and an anecdotal evidence that one shifted more spending on an AA card does not mean that AA is making more $ from selling miles. I am sure that this is the hope because it looks like AA is loosing money by flying airplanes but recovers some by selling miles.
I have a colleague who puts quite a bit of spending on his CC. He told me that he and his wife are both HHonors diamonds based on spending on their individual Surpass cards. I asked him why he are not using his AA card if he is primary flying AA. His answer was I do not know. He would not buy things through AA mall because it is difficult as he does not have an app on his phone. That is another example of consumer behavior.
Brutus, you did misunderstand my meaning. Absolutely, the Bengals fan paid up.
What I was saying was that in addition to the scenario of spending more, there is the scenario of changing WHERE the consumer is making the purchase. A separate and independent variable. AA is pulling consumers away from other shopping portals to its shopping portal with the gravy that Loyalty Points provide.
Sorry if I didn’t make that clear.
Harry, your 66K first class seat smells a lot like a web special. I’ve seen and grabbed it myself on occasion. Regarding your 331k going to 360k, it’s worth noting that point-prices fluctuate over time — you should keep checking for a web special on this booking in case it pops up — if it does, cancel and rebook. I’ve snagged June trans-Atlantic first class for only 71k each. Keep at it and you’ll get these same deals.
I may have a similar choice when I book a hotel in Mexico next week. I’d choose one hotel on the merits but the AA hotel portal has a slightly less convenient but similarly rated hotel that gives 3k AAdvantage miles for my stay (it’s also a bit cheaper). Which will I choose?
Interestingly, that portal generally offers two prices for every room — the basic price (which matches, at least approximately, the booking.com price) and a second much higher price which differs only in the number of AAdvantage miles, which always price at 2 cents per additional mile. In my example, $200 more for 13k (versus 3k) miles. These are not referred to as “bonus miles” but not clear wether they will count as loyalty points or not (the hotel portal is in the list of “counts as LP” vendors).
Does anyone know when credit card spending actually counts for loyalty points? Is it when the purchase is made or when the credit card does its monthly post to your Advantage account?
One of my AA cards posts on the 3rd….so most of my February spend for the 2021 bonus period would be lost if the loyalty points don’t count until posted.
@ Gary — People do stupid things.
@Zebraitis – for 2022 qualification, Jan and Feb are extension of what you have spent and earn in 2021. If you already earned the EQM bonus, there is no extra bonus for 2022.
The changes have made ignore the plan and choose to fly multiple carriers. Been an AA loyalist EXP fir years but these changes penalize non US residents so I vote with my wallet..
1. If someone flies three times per year, but has EXP status from spending, the odds of them knocking a road warrior out of an upgrade seat are low. Especially if they’re flying from CVG.
2. The guy just spent an average of $4733 per seat for a football game and didn’t care about the $250 per seat upcharge. Not a lot of people going to do that. I don’t think American is going to be overwhelmed with Super Bowl EXPs.
3. Why would anyone spend points at 0.73 cents rather than pay cash? Even if it is a change, a bad deal is a bad deal. Get the points refunded and wait for a better deal, pay cash now, collect more points, gain status.
4. Reno Joe is correct – always monitor your ticket prices. I cut $105 per ticket off my trip next week less than two weeks out. Didn’t used to work that way, prices always went up that close in, but for some reason they eliminated segregating by Basic Economy and Main Cabin and just sold everything as Main Cabin at the lower price. Had to call to make the change, but $210 credit for a few minutes work is worth it.
What I do not understand is the economics of the LP scheme. If AA is getting even $0.01/mile (it is likely to be less) by selling those to Citibank, than 200,000 LP = $2,000 in profit for AA (assuming that those miles are not redeemed ever). So they are basically selling EXP for $2K using third party vendors. There is of course a natural barrier for number of sales because not everyone can pump $200K/year through CC.
If you are an EXP, you are not getting 100% upgrades on domestic flying. Because EXP still requires 30 segments, I assume you are planning to fly exactly that. Nowadays, I am typically getting an offer to upgrade to F after the booking for about the cost of 500-miles stickers. I was just offered to move to F for $90 for 2×650=1,300 miles round trip. So let’s assume that the upgrade cost is $60/segment x 30 segments =$1,800 /year.. (Upgrade offer would be higher on full flights but you will not be upgraded for free either if you are EXP) .Of course, you are not getting bonus miles for flying because you are not EXP but that will be well compensated by not wasting your $$$ on Plastiq or Bonsai trees.
Indeed, AA thinks that consumers are stupid.
For those hoping / praying for upgrades via tier status, even if there is an empty seat, Revenue Management still might not release it for award / upgrade availability. I have flown trans-Atlantic in F and have seen empty seats. I’m upset that someone didn’t get it.
But, when seats are released for upgrade at the gate, there is a defined pecking order even within EP. It’s sort of like NFL playoff slots tie-breaker rules. Best to look these up to set expectations.
Frankly think AA points are becoming worthless. I was looking for 2 J tickets to Europe next September. Mostly seeing J for > 330k per seat or > 150k per seat and another 2k in fuel surcharge. I have about 800k left of AA points and could easily blow nearly all on one trip in J. Or I could pay $2,500 per seat and not bother with points. I think I am just going to use points for domestic travel and pay for international.
@ptahcha
That is not exactly correct. There is a bonus on my Barclay card silver
Check the program changes as to credit cards at aa.com
There is a bonus of 3000 eqd. And then there will be a 15k quarterly bonus. The last does not have details yet,, but Barclay is saying that Jan &Feb spend will also count toward 2022.
Reno Joe: I’m fine on my bookings. My example of flying across the pond is 331K for two (long ago booked) is actually 360K X 2 = 720K today. Quite a difference wouldn’t you say? My other example on the 66K for two to 118K X 2 = 236K and not paying that to AA. So I turned to Amex Travel and my trusty Platinum Business card and down to 101K Amex points. Granted, we’re talking apples to oranges with AA points vs Amex. However, I can & will turn a lot more Amex points over AA. Elite status, who cares? Unless you’re top of the list, you’re chances of anything, i.e., upgrades, are slim to none. Lastly, once we burn off our DL & AA points, we could not care less to earn more.
Like Mike says about his attempts to book across the pond, I feel we’re head in the same direction. After P2 retired and a good stash of AA miles, it was our intent to use for international tickets. We’ve managed one trip as I have referenced in earlier posts at great prices. I feel that may be the last. I sure hope Flying Blue and Kris do not get the USA airline’s devaluation fever.
@David,
I asked Barclay about this.
While miles usually post on closing date, they said they planned to pull a report of spend from Jan 1 – Feb 28, turn qualified spend into loyalty points, and report that to AA in March. And that is when we should see the Loyalty Points post.
I asked AA what part of my posts /spend would count (of that already showing up at AA.com), their reply was that there would be a new Loyalty Points column in Mar, but deflected on what would count. Referring me to the program changes description page.
So, we wait. 🙂
“Is American Airlines status now too easy to earn? If it is it’s because the program is too successful at driving purchases.”
NO
If someone earns some vaunted status primarily from purchases rather than flying, they seldom crown out lesser elites for the goodies that come with status. To take it to an extreme if someone earned Ex Plat exclusively through non-flying points, and continued to do so, they would never crowd me out for upgrades. Such people give me no heartburn.
Marketing!
jfhscott, you’re wrong. Sure, that one person is less likely to bump someone. The problem is that there will be many of those “one persons”. This means an increased likelihood of you encountering them.
Sincerely,
CR
Even though the spend only EPs will be encountered infrequently, when they are, they will be high in the upgrade priority within the EPs vying for those few upgrade seats.
The only real reason to play this game is the hope of an upgrade. In recent years, I was Executive Platinum and generally got an upgrade about 70% of the time. Once I dropped down to a basic Platinum, I was upgraded 0% of the time. So unless, you are gunning for top tier status, I don’t know why you would bother changing your status. Further, with the cuts in service, AA is looking more and more like a discount product. The perks and benefits on AA are really just not there. At this point, I have a balance 36 of the 500-mile upgrades which I will probably still have when I die. Have fun chasing ‘loyalty points’ on an airline that is not loyal to you! You’re better off just paying for first class from time to time on a longer flight on a better airline.
The only real reason to play this game is the hope of an upgrade. In recent years, I was Executive Platinum and generally got an upgrade about 70% of the time. Once I dropped down to a basic Platinum, I was upgraded 0% of the time. So unless, you are gunning for top tier status, I don’t know why you would bother changing your spending habits. Further, with the cuts in service, AA is looking more and more like a discount product. The perks and benefits on AA are really just not there. At this point, I have a balance 36 of the 500-mile upgrades which I will probably still have when I die. Have fun chasing ‘loyalty points’ on an airline that is not loyal to you! You’re better off just paying for first class from time to time on a longer flight on a better airline.
This will be an interesting time. The old milage programs did require travel, so whole sub-industries developed to maximize return for $$$ spent. People that read the fine print found ways to spend as little as possible to achieve top tier status.
But America has been discussing inequality (billionaire taxation, etc.) for a while now… and from the responses on this thread so far we see the discussion of “spend status” vs “butt-in-seats status”. Hey look! Inequality!
There are plenty of people that have a shit-ton of “excess” capital in the USA… And that means that there will be a lot of those spend status EP’s.
Hell, I have been playing around with the idea of making it happen cheap:
1) Create an LLC (or some type of shell company… maybe start a religion)
2) Become the CEO of that LLC
3) Have me (the consumer) pay the LLC for consulting services
4) My salary as the CEO of the LLC is equal to the income.
5) And I, as the consumer, redeposits money in the bank and starts the cycle again.
Just got to figure out if I can show my LLC to be unprofitable so I can show a loss and avoid taxes on revenue and CEO income. I’m sure we can figure it out.
——————-
I remember when AA changed the program previously eliminating guaranteed miles and then starting that 12x multiplier … and they said it would be better for EP’s because there would be less in the EP ranks, as fewer folks could qualify.
Now, the opposite. This will be interesting.
You make a lousy capitalist. This type of thing has been around since Roy Cohn. There are working examples of this ,but your example doesn’t work – your income as a CEO is still taxable as income. And it’s sure to trigger an audit the way you’ve structured it. Besides which, you’re only allowed to declare losses for so long before it’s not allowed.
What that type of structure is useful for is shifting personal expenses into the corporate structure. Illegal, or questionable, at best, but common. Why do you think so many doctor’s and executive’s wives have side businesses that are barely profitable?
Those in the relatively small points blogosphere I believe are over-estimating the number of people that will go out of their way to use the AA hotel portal, car rental portal, start wine club memberships, etc. For most people, status just isn’t that significant or worth managing a complicated points game. 100,000 points would just make most people not even want to start.
That said, I do think over time people will steer some of their incidental spending behavior toward things like an AA credit card where they wouldn’t have before, but I just can’t imagine a world (or gate) full of EXP’s flying 4-5 times a year spent dozens of hours and thousands of dollars getting status for free $35 seat upgrades and a 20% chance of an upgrade.
Again, I still see this is a smart move and incremental win for AA, but not in the way the points blogosphere seems to be thinking.
It all betrays short term management accountancy. Travel is restarting and the accountants see more profit in being a credit card company. What they are not including is opportunity cost. Come the next downturn. ( could be pandemic, terrorist outrage, economic disaster etc) then the loyal flyers will no longer be there to support the company.
So if the plan is to sell the airline business to British Airways or Delta then it makes sense. If the plan is to stay in commercial aviation then it is a train wreck waiting to happen,