United’s award chart will be devalued come February, award prices are going up, up up.
Big changes at United have many flyers considering alternatives. But it would be a shame to jump to a new airline to accumulate points, only to find that airline devaluing its own points shortly thereafter. That uncertainty is what’s holding many people back, and helping United.
I’m going to predict there will be some adjustments to American’s award chart over the coming year, but that we will not see a wholesale devaluation like what United has done — not even close.
American’s Award Chart Isn’t That Much Less Expensive Now for Many Awards, So There’s No Need to Raise Most Prices
United’s changes aren’t as bad as they seem for many flyers. Coach doesn’t go up, or up very much, for most regions of the world. Travel within the Americas doesn’t really get more expensive.
For many awards (and though American hasn’t made substantial changes in years), American was already more expensive — recent changes at Delta and United put them on part with American. Not for all awards, and there’s some room for adjustment, but it wouldn’t take a wholesale devaluation on American’s part just to be ‘competitive’.
I compared the new award charts for United, Delta, and American and I think that comparison is really revealing about what we can expect American to do.
Delta has roughly similar pricing to the new MileagePlus prices for United flights. United’s partner awards are a bit higher, but availability is better and routing rules are better and frequently comparing products between United’s Star Alliance partners and Delta’s Skyteam partners, United’s partners offerings are better.
Right now American has the lowest prices for a few regions, Asia is an especially good value. And Delta doesn’t offer first class, so their main US competitor for these awards is United — American’s first class award prices are positively bargains in comparison to United’s new chart. So it’s these regions where we might see some changes — but probably changes that aren’t nearly as bad as United’s.
Why American’s First Class Awards Won’t Get As Expensive As United’s
United’s partner awards, especially in first class, are off the charts. But United’s business class awards even on partners aren’t crazy, they’re in most cases a ~ 20,000 mile roundtrip premium over flying United. United still has great award availability though Star Alliance especially for business class to Europe and Asia. And United doesn’t add fuel surcharges onto any awards.
I hate United’s devaluation because I love first class awards on United’s partners. Those awards now have just batty prices, like 280,000 miles roundtrip to Israel or to India and that’s the price for saver award inventory (as all awards on United’s partners are).
But for most of the world, whose focus isn’t on first class, things will continue and United will remain a good redemption program that also has generous award routing rules making it easy to piece together awards.
It’s in first class that American has the most room to increase prices, but complicating the award chart and gouging customers doesn’t seem to be the current thinking in Dallas. If there’s no US Airways merger, they need to continue to offer a superior value proposition not chase away customers. American has done a good job poaching United elite flyers over the past two years unhappy with United’s changes, by becoming much more generous and aggressive with status matches. Offering a better award chart seems like it could be in the cards too.
Meanwhile if there is a merger, then they won’t want to chase customers away immediately either and would be likely to maintain some semblance of the current value proposition that both US Airways and American are offering. Changes are likely to come int he form of harmonzing (slightly upwards) award prices between Dividend Miles and AAdvantage — not exploding the award chart like United has.
American Already Did Their Major Devaluation Three Years Ago
When American launched their joint venture with British Airways they began to add fuel surcharges onto award tickets that involve British Airways travel. Adding on taxes and fees you can pay around $1000 on an award ticket flying British Airways. (There are much more modest fuel surcharges assessed for travel on Iberia.)
So while American’s award chart is cheaper for travel to Europe, British Airways is their primary partner.
There isn’t a ton of transatlantic award availability on American’s flights (awards to Asia are a totally different story). Iberia has decent availability on some routes, as does Air Berlin. But the bulk of partner routes, and partner seats, involve BA and fuel surcharges.
And customers hate fuel surcharges. They get sticker shock when they go to redeem for a ‘free’ seat. And they complain to AAdvantage. In some sense American has already done its devaluation, and they know that they are more expensive than their competitors for many awards.
Delta adds international origination surcharges to European-originating itineraries, and fuel surcharges to travel on some partners like China Southern and Air Tahiti Nui, but this doesn’t affect nearly as many passengers.
BA’s fuel surcharges will help protect us from an American award chart devaluation.
We’ll Get a New Award Chart … But it Won’t Be Awful
If American and US Airways merge, we can say goodbye to the best values in the US Airways award chart like 90,000 mile business class awards between the US and Asia (Hong Kong and to the North). American’s current business class price to Hong Kong is 110,000 miles. US Airways charges 120,000 miles South of Hong Kong. I’d expect that the bulk of Asia will cost 120,000 or a little bit higher. That’s a big bump for US Airways customers, but for American’s customers it would be in the range of 10%.
Southeast Asia has the most space to go up on the AAdvantage chart, but destinations like Africa, India, and the Middle East shouldn’t get more expensive at all. Europe has cheap mileage pricing but fuel surcharges on many awards so that shouldn’t go up much.
We’ll see harmonzing between the US Airways and AAdvantage charts — and harmonizing upwards — but I don’t expect pricing that’s materially higher than what either airline currently offer. US Airways charges 160,000 miles for first class to Bangkok or Singapore or Bali. American charges 135,000 miles. So I wouldn’t be surprised to see that first class award go to 160,000…. but not 260,000 as at United.
The Future is Reasonably Bright, But…
Mileage currencies devalue so I have little doubt that American will devalue in some form or fashion in the future — simply because the program offers a mileage currency.
The best value awards never stay around, great deals eventually disappear, so 135,000 miles first class roundtrip to Asia on an airline like Cathay Pacific using American miles almost certainly has to go away and get more expensive.
But these awards shouldn’t get so much more expensive, in my estimation, that they chase us away from the AAdvantage program.
There are certainly changes afoot in the frequent flyer space, we haven’t escaped the stalking horse of the ‘revenue-based’ frequent flyer program even though Delta hasn’t rolled one out just yet, and I’ll offer some tips on defensive measures we can take. But I’m still accumulating AAdvantage miles.
My mantra remains, though, that it’s best to earn and then burn miles and not save them for some future time. Enjoy them now, then earn more, and redeem those based on whatever the future value proposition may be.
What’s Your Prediction?