May I present to you a quote from the American Airlines earnings call dated 23 October 2015 from American President Scott Kirby (bolding mine):
On the commercial side, we have a huge backlog of projects in terms of all kinds of areas, but two big areas are the Frequent Flier Program and doing more innovation within the Frequent Flier Program.
I won’t go as far as to opine that Mr. Kirby flat-out lied to a Wall Street analyst, although I would be willing to bet quite a bit that he was well aware of what these changes were when he used the word “innovation” above. If the 2016 AAdvantage program is Mr. Kirby’s idea of “innovation” American Airlines as a company has a lot to fear, especially with revenues down like they are.
American Airlines created AAdvantage in 1981 and destroyed it in 2016
I don’t believe I’m being dramatic here. Ok, not too dramatic. American has claimed previously that it has 100 million members in its AAdvantage program, and I am struggling to find a single one who benefits from these changes. From the biggest revenue spender on down, nobody benefits. Citi, who issues numerous American-branded credit cards and entices people to spend money with the promise of thousands of AAdvantage bonus miles (and floated American a cool $1 billion during bankruptcy in exchange for untold numbers of miles to use in future promotions), had its value proposition (the value of those miles) slashed almost in half with a simple press release.
American asked its loyal flyers to stick with them through bankruptcy and a merger that no customer wanted. Nobody wanted to see a merger happen for this exact reason. We stuck with American and this is what we get. 44 days of notice before the new status earning program begins?! In what world is that considered innovative?!
Where was the innovation?
In the race to the bottom between Delta, United, and American, everybody won.
American outright copied the Delta mile-earning plan, which United also completely copied. Should we seriously believe that in the highly litigious world of copyrights and trademarks (as it applies to the airline space) that Delta wouldn’t have a problem with United and then American copying its mile-earning plan number for number? Come on.
(not to mention how misleading it is to still call it a “redeemable mile” since it now has nothing to do with any sort of measurable distance)
We all knew the award chart would be devalued, and a few guessed two years ago that the new American chart would be similar to United’s revised award chart. And so it was. Not quite as bad in some areas, but I’d also like to point out that if the only defense of a new program is “it’s still not quite as bad as United in business class redemptions to Europe” then you know it’s a stinker. Not to mention that statement isn’t accurate. American may charge less than United for business class redemptions to Europe, but American pulled pretty much all premium cabin award space to Europe on its own metal over two years ago, instead pushing its customers onto British Airways, who adds $400+ of fuel surcharges on these tickets even with oil at $46/barrel. By no small coincidence American and British Airways are part of a revenue-sharing alliance. Sure sounds innovative.
What would’ve made the Earning “Award Miles” changes less terrible for me
- I would’ve hoped American wouldn’t promise innovation and then outright copy the competition. In my full-time job, if I promised my clients innovation and then presented them with a copy of something that my competition had done for years, I would be rightly laughed at.
- I also would’ve hoped American would respect its customers more and quit using the term “award miles” to talk about what we used to know as redeemable miles. There is no longer any correlation to a unit of measurement, either for earning or redeeming these points, quit calling them “miles”.
- If American (I never thought I would say this) would be more like Spirit Airlines and clearly listed the taxes and government fees charged on a ticket. American instead is trying to support garbage legislation like the Transparent Airfare Act of 2014. There is nothing that prevents American from clearly defining what portion of your ticket is base fare and carrier surcharges vs. government taxes and fees. Right now it’s very difficult to see, which means it’s very difficult for customers to see how many “miles” they will earn for a flight.
- Oh yeah! Actually tell us when this new scheme will go into place! Right now the language is “the second half of 2016”. A 6-month window?!
Instead of all of that, we are left with a carbon copy of Delta and United. The large majority of travelers will earn fewer miles with this scheme (proven here by Gary Leff for the Delta program), which would be understandable if American didn’t also significantly devalue those miles as well…
What would’ve made the new Award chart changes less terrible for me
- I wish American would’ve either kept off-peak economy awards at the same levels or use the same dates to define “off-peak”. Instead they made both worse. Off-peak economy awards to Europe went up 12.5% and the off-peak period was reduced from 213 days to 106 days per year. The changes are worse for Asia. Not only are off-peak periods now country-specific but the off-peak awards increased 30%.
- I wish American would finally make the investment in the time of its members and the stress levels of its reservation agents and make more partner availability searchable at AA.com. The paltry amount of partners for which you can search for seats on AA.com is a joke. If British Airways can do it American can.
- American needs to release more premium cabin award space on its own metal. At least give this to your customers instead of sending us to British Airways for transatlantic flights, even though they’ll miss out on their “fuel surcharge” fun money.
Instead we have customers earning fewer miles that are worth less.
What would’ve made the new status changes less terrible for me
- I wish American would be consistent with EQM with British Airways for international flights and Alaska Airlines for domestic flights. That change was nasty and almost no respectable notice was given.
- I wish Executive Platinums earned more than 4 SWUs upon qualification and were not capped at earning 8 SWUs in a year. SWUs were one of the big differentiators between American top-tier status and the rest, and halving them significantly hurts the value of that status.
This is the one area I’m tempted to say was close to neutral, at least until status benefits are (my prediction, based on no insider information) changed for 2017 and beyond.
Ultimately I’ll still probably end up flying American but I will no longer concern myself with making personal investment (on top of my business travel) to earn top-tier status with them, Gold should be fine for me going forward (so I can standby on earlier flights).
Other than that, I’m going to stop being angry and start burning some of my American miles. I have too many and need to use some before the changes take place at midnight on March 21, 2016. I’d encourage you to look at doing the same.