Anyone who says American Airlines isn’t concerned about the shift to revenue-based earning by Delta and United Airlines should probably reconsider after this morning’s announcement. American Airlines is going to reward passengers for buying premium fares, and in a big way. It is not a straight revenue-based play; earning is still tied to fare class and status rather than directly to fare paid. But passengers flying on premium tickets can now earn big with the AAdvantage program. The new rules take effect for travel starting 1 January 2015.
The bonus miles are big, especially on long-haul flights and for top-tier elites. In the examples on its website American notes that Miami-Sao Paulo up front will now net an EXP more than 22,000 points, up from just over 10,000 under the old program. Alas, if you’re buying that route as an advance-purchase discount business class fare (I saw ~$3900 for an I fare on that route just now) the earn is only 27k, not 44k. And it is still less than would be earnt at 11 points per dollar under the Delta or United program. For a walk-up fare (~$9200) American lags even further behind the other two when it comes to premium earn rates (~44k v ~75k, or more if you buy one-way tickets).
So, that’s the logistics of the increased earning rules. But the big question is whether this is a signal from AA that AAdvantage will ultimately go revenue-based or not when the new, combined program is finalized. And I’m not 100% certain there is a clear answer.
Surely this shows that American realizes the need to “keep up” with the competition and reward big spending with big points accrual. And the systems are not in place yet to reward directly by spend so fare class is still the defining factor. The company is distinguishing between full-fare and discount fares so the reward isn’t simply for buying a premium seat; it is also tied to buying the higher fare premium seat. That very much says to me that the program wants to reward spend, not distance traveled.
Shorter flights get less of a reward. This could be seen as tied to fares as well. Domestic premium flights are way cheaper, even per mile, than long-haul ones on average. It could also be seen as tied to distances as, well, lower bonuses for shorter flights.
I’m still convinced that American’s hesitancy in following Delta and United is a combination of technical and not wanting to change too much too quickly during the merger integration. The combined company has offered reciprocal benefits more slowly than the other two big mergers did and appears to be comfortable having things uneven until a single platform is chosen and all the technical bits can be put into place. That just leaves me more convinced than ever that revenue-based earning is coming and that this is just the first step in that direction. Imagine being able to advertise that your customers can now earn even more points than they could after the massive bonuses introduced earlier in the year.
Yup, I still bet that’s the end game for AAdvantage.
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