Rick Elieson, who manages AAdvantage at American Airlines, told The Points Guy that the days of traditional award charts at his frequent flyer program are numbered.
He insists he has ‘no plans to devalue’ which means, of course, that he’s planning to devalue the program but not call it a devaluation. How do we know this?
First, because every program everywhere that has eliminated award charts has made their points less valuable, not more valuable. We even saw that during the pandemic where United, Delta, Southwest, and IHG Rewards devalued their points, increasing the cost of redemptions. When you no longer have a price list, you don’t even have to tell members when you’re systematically raising prices so you do it more often.
But second, the tell is in the very interview he gave where he said he wouldn’t be devaluing the program. He described using miles as a currency and said that award charts don’t support expanding options for members,
The current award charts list your mileage redemption options for flights only — there’s no mention of using your miles for other ancillary purchases like extra-legroom seats, upgrades, and more.
Now, this is literally false, the award charts do not “list your mileage redemption options for flights only” excluding options like upgrades. There is literally an upgrade award chart that the program publishes.
And it’s also beside the point because publishing a price list for flights does not prevent the airline from allowing miles to be used for things besides flights. American hasn’t gone as far as some other programs in offering non-flight redemptions, in the words of one former President of the program, because flights are what members want to redeem their miles for.
However AAdvantage has long had other redemption options. For instance they used to let you spend miles for magazine subscriptions. They eliminated that during the pandemic. There have been hotel and car redemptions, too.
The tell though is that Elieson is thinking about upgrades as an “ancillary purchase” – using miles as money for upgrades the same way you’d use miles to pay for checked bag fees or seat charges. In other words, he appears to be thinking about upgrades along the lines of Delta which eliminated fixed upgrade prices and instead introduced spending miles at a penny apiece to pay the difference in price between your coach ticket and a higher cabin.
Instead of, say, 25,000 and a $550 co-pay to upgrade a transatlantic flight, the difference in price might be $1500… or 150,000 miles.
That’s not a future for AAdvantage that I think any of us want to be a part of. However airline executives usually think that Delta managers are smarter than they are. And it’s difficult to buck the trend, the safe path is to do what everyone else does and both Delta and United have eliminated award charts.
American has been the financial laggard so it’s difficult for them to chart their own path. Besides legacy America West management at US Airways were prepared to eliminate award charts even before Delta did six years ago. They were distracted from doing so by the merger with American.
However the American AAdvantage program has generated more cobrand credit card charge volume than Delta’s program or United’s program for a reason. Eliminating award charts, diminishing trust in the AAdvantage program, puts that at risk. And investors in American’s AAdvantage-backed $10 billion in debt should be on notice.