The New American: The Last Frontier for Mileage Runs?

“Wait, weren’t you just on this flight?” asked the flight attendant as I boarded an American Airlines 737-800 in Seattle.

“…yes,” I meekly replied.

“Why are you back on this one, for some status thing?”

“…yes.”

[quietly] “I’ve always thought that was nuts, but we certainly appreciate your business.  Let me know if you need any beer or wine on the flight, our compliments.”

[to myself] “Mileage running may not be so bad after all!”

Mileage runs
Mileage running is a peculiar art.  It’s harder than you’d think to define a mileage run, because they mean different things to different people.  I guess the easiest definition for mileage running (or mattress running, for hotels) is “taking flights or staying at hotels solely for the purpose of earning status or points”  I’m kind of a nerd when it comes to words (I have a dictionary of Etymology at my desk next to my keyboard), so I like to look at words and meanings on a macro level.  A lot of people have equated mileage runs to those Extreme Couponing-type shows that show people in dangerous levels of obsession.  They’re not quite getting the point (pun intended.  point like an airline/hotel point.  GET IT?!  no?  geez, rough crowd).

“Rules are mostly made to be broken…” – General Douglas MacArthur”

Let’s talk about loopholes.  When people are faced with a loophole and decide to use it, what they’re really doing is abiding by the rule itself instead of the spirit of the rule.  I’m reminded of Tim Ferriss’s story of winning a national tournament in Chinese Kickboxing by exploiting two rules: 1) weigh-in took place 24 hours before the tournament, and 2) if either competitor left the ring more than three times, they were disqualified.  So what did Ferriss do?  Used dehydration techniques to lose about 20 pounds to make the weight class he was targeting, then rehydrated almost all of it back by the next day, and then used this extra weight to simply repeatedly shove his opponents out of the ring over and over again until they were disqualified.  Did he obey the rules?  Absolutely, to the letter?  Did he abide by the spirit of the rules?  Eh, who’s to say?  He participated in the tournament in a way the organizers didn’t intend.

Needless psychobabble that thinks way too hard
It’s fair to say the same thing about mileage runners.  With the advent of air travel, airlines offered a service primarily based on need (“our customers need to be in LA for that business meeting”).  Even for leisure travel the logic applies (“our customers get tired after swimming 100 meters, there’s no way they’ll make it from Houston to Grand Cayman, they need a plane to get there”).  So, applying this on a macro level, we can say a mileage run is “a flight that is taken for a different purpose than the airline originally intended”.

Nuts and bolts
So, having obviously accepted my logic, we move to a byproduct of that definition.  People most typically take mileage runs to earn airline status or rewards attained by flying certain numbers of miles/points/segments.  (For further reading about American’s AAdvantage Program and how status is attained, read my outlines of the program here and here)

An example of a mileage run is the true conversation I had with a flight attendant at the top of this post.  In December of 2012, I was short of reaching American’s Executive Platinum status by about 4,000 miles.  I managed to find a roundtrip, same-day flight to Seattle and back for $254 that routed through Chicago in both directions, which would give me 5,045 miles and the most glorious of all airline statuses.

But why?
So why would I do it?  American has three status levels (for now): Gold, Platinum, and Executive Platinum.  (There’s a mystical fourth level of status called Concierge Key that’s only spoken of in hushed tones, we won’t get into it here, in fact I’ve probably already said too much)  I was earning status through miles flown, which for Gold is 25,000, Platinum 50,000, and Executive Platinum 100,000.  I had flown a lot in 2012 and was 95% of the way there, in fact I had taken many needless extra flights while on work trips just to get closer to my goal.  Basically, it’s all about opportunity cost.  The opportunity cost of one more flight would be less than flying 45,000 miles more than was necessary for Platinum status, as there would’ve been no discernible benefit from flying 95,000 miles as a Platinum as opposed to 50,001.

So, having flown 96,000 miles, my marginal cost would be $254 for over a year of free upgrades (both domestic and international), first class lounge access, and other nice accoutrements of Executive Platinum status.  When you phrase it like that, I know all of you are thinking “well OBVIOUSLY you should go on a mileage run then”.  So, imagine I didn’t have 96,000 miles and instead had 0.  Depending on my status goal for the year, it makes exactly as much sense to do that Seattle roundtrip when I’ve flown 0 miles for the year as it does when I’ve flown 96,000.

So what makes a mileage run?

A mileage run is usually measured by how many cents it costs per elite qualifying mile.  This is abbreviated “cpm” in the mileage running community.  Let’s take my example from above.  I spent $254.00 on the trip, which is 25,400 cents.  I earned 5,045 elite qualifying miles for the trip.  So, it cost me 5.03cpm for that mileage run, which actually isn’t a great number.  (quick aside: you’d never do a mileage run to earn redeemable miles, as American will routinely sell you those for as little as 2cpm, depending on the promotion they’re running)  Many consider the threshold for calling a trip a mileage run to be <6cpm, but the purists in the community want to see something <3-4cpm for a true mileage run.  You will find those from time to time, usually as a result of a mistake airfare.  An example of this would be the China trip I took in January 2014.  American left a zero off the fuel surcharge, which took about $400 off the price of my PHL-PEK roundtrip.  The routing on that trip was PHL-MIA-ATL-ORD-PEK-NRT-DFW-PHL for $440.62.  I earned 17,852 elite qualifying miles for the trip, which resulted in a fantastic 2.46cpm!  Definitely mileage run material, and I know you’ll enjoy the trip report coming in a week or two.

So why is American the last frontier?
American and US Airways recently announced a merger to form the new American Airlines.  They actually announced it quite a while back, but the US Department of Justice put a brief hold on it in the name of competition, but the airline, by convincing the DOJ that the merger would be the most beneficial for their labor costs, price flexibility (increases), and shareholders (with little mention of those stupid things called “customers”), eventually received approval.  When the merger was announced, emails went out to both airlines loyalty program members with clips of Kevin Bacon in Animal House yelling for everyone to “stay calm, all is well!”

Airlines will rarely make drastic changes to loyalty program around the time a merger is announced, that’s when loyal customers are the most likely to jump ship.  So the new airline has kept things relatively quiet, aside from issuing some higher redemption values for trips to Hong Kong on the new DFW-HKG route.  While this was being settled, a very crucial thing happened: both United and Delta added spending requirements for status qualification.  So the game has changed a bit.  Here’s the United chart for 2014 status qualification:

United 2014 Status Qualification (http://www.united.com/web/en-US/content/mileageplus/premier/qualify.aspx)

So, let’s take my China trip and act like it was on United Airlines instead of American and imagine each roundtrip earned 20,000 miles (to make the math easier) (I work in finance, we don’t do math).  If I took that trip 5 times on United I’d have earned 100,000 miles.  That’d normally qualify me for Premier 1K status, hooray!  BUT WAIT.  Those five trips, at $440 apiece (which some of the more extreme mileage runners will do) would’ve only cost a total of $2200, and my elite qualifying dollars would be even less, since taxes don’t count towards my total!  Those five trips wouldn’t even earn me the very basic Premier Silver status.  Many other bloggers have agreed: mileage running for status on United is dead.

The Final Opportunity?
American has a very confusing system for the dates your status is effective.  Right now we’re in the 2014 qualification year and are almost at the end of the 2014 membership year.  Easiest way of explaining is that the qualification year is the time period when you earn your status (January 1 – December 31, 2014 for this year), and the membership year is the time period when you use your status (the 2014 membership year ran from March 1, 2013-February 28, 2014).  To make it more confusing, when you earn status with American, you earn it until the end of the next membership year.  I’ll put it this way: the status you earn in 2014 with American will last until February 29, 2016 (excluding status earned by status challenges initiated before June 16, 2014).

I predict that in the next few months the new American will announce a new AAdvantage program, complete with new award chart, new status levels, and new qualification criteria.  The new award chart shouldn’t be terrible, most predict they’ll take the higher of American and US Airways current award prices (although American could try and differentiate from United and Delta and switch to a distance-based program like the British Airways Executive Club).  US Airways currently has four levels of status, I anticipate the new American will too.  I believe they’ll add a level between the current Platinum and Executive Platinum levels at the 75,000 mile point.  And, finally: I predict the new American will add a spending requirement to their status qualification.

All of that comes together to mean one thing: if you’ve ever considered mileage running for status, this year on American might just be the last opportunity for those of us in the USA.  The status you earn now will be grandfathered from the new requirements until February 29, 2016, so it might be time to spend a little more to get that aspirational status before all the benefits are  jumbled in the new system, as “waiting until next year to go big” might not cut it anymore when it comes to earning the highest status.

So, what do you think, flyers?  Agree or disagree?  Or is everyone already planning their move to Alaska’s Mileage Plan?

4 Comments

  1. Andy, First off, I would like to say that I like reading your trip reports because they are informative and witty. Being based in DFW area myself, its good to know the different routes (mileage redemption or otherwise) that i can take to get somewhere and maximize my mileage earning on AAdvantage. You share that with the world and i cant thank you enough for it.

    I have been in the mileage game since my parents enrolled me in Qualiflyer (the Swiss Air FF program, if you remember). I have then joined Miles and More (Qualiflyer was moved into it), AAdvantage, Executive Club and all through the years, i have seen some mileage devaluations especially with Miles and More. 2013 and 2014 seems to have brought a global wide devaluation with most operating airlines. Although disappointing from a travelers perspective, I guess that is what the companies need to showcase its revenue and profits to the shareholders.

    While I completely agree that American AAdvantage might be on its devaluation route along with the others, I am sure there will be someway to balance it all out when the credit card companies start offering more and more miles as sign up bonuses to compensate for it. For the seldom flyers that truly only acquire miles by flying, this is definitely an unwelcome change. As for the CC churners and Manufactured Spenders, it shouldn’t be much of an issue. Sure, it might take slightly longer to acquire enough miles for that RT ticket in First but it will be worth the effort in the end.

    Finally, I am looking forward to more of your trip reports. Please keep em coming.

    SK

    Reply
  2. i flew mke->ord->sfo->ord->mke; it was the same plane in sfo that i got off and on, with different flight numbers so different segments, which was the (painful) way i was achieving status. same staff – i sat only 2 seats away from the seat i had been in to get there, after hanging out in the airport for an hour. i was very surprised but none of the staff said anything to me!

    Reply
  3. Hi there!

    I’ve been “in the game” as an amateur for a few years. I’ve earned about 400k American miles, and tens of thousands more among other cards.

    I’m finally looking into the status thing and I have a few questions I can’t seem to get answers to anywhere.

    1) so people will pay cash for tickets (because redeeming miles doesnt count toward EQM) in hopes of earnings EQM, to ultimately earn status? I understand this can cost a few thousand dollars…so basically people are cool with spending a few grand to get this product that allows for free unlimited upgrades (assuming platinum status)…? The idea being that you’re paying a few grand, but the payoff is worth many thousands of dollars more, correct?

    2) for someone like Ben Schlappig — how does he just travel indefinitely for next to nothing? I know that platinum status has a 100% rebate, but only up to 100k miles. Is he just dipping into his cache of miles, presumably booking coach and using his unlimited upgrades to fly first and business class? And by this point…he’s gotta be running low on miles, right?

    Just trying to wrap my head around the whole “free” notion…because from what I understand, you apparently DO need to spend a decent chunk of change in order to gain these statuses.

    Reply
    • Ben, you’re absolutely right about your last sentence. This stuff does cost money, and if not money then definitely time. I pay a good bit out of pocket to earn American status every year because those benefits are worth it to me with the amount I fly.

      I’d start burning some of those AAdvantage miles!

      Reply

Trackbacks/Pingbacks

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