The PSS integration is complete. Most of the labor union contracts are resolved. And American Airlines needs something to do next. Speaking on this morning’s quarterly earnings call President Scott Kirby chose two specific areas to focus on: Fares & Loyalty.
The fares thing is a specific response to Spirit and Frontier and mostly involves even more unbundling of fares and amenities. For those who love the crazy-cheap fares we’ve seen lately in many markets American isn’t likely to cut those off soon, but passengers might end up without points, paying for seats or otherwise not getting the level of service historically associated with travel.
On the loyalty side of things the future state is even less clear. Kirby suggested that “Innovation within the frequent flyer program” is next on the agenda for the company but did not expand beyond that. And “innovation” can mean all sorts of things. But the trend in the industry these days is towards revenue-based programs. Even American in its current state has offered up small nods to AAdvantage members in an effort to grab more high fare purchases via bonus points. It is hard for me to believe that the net result of this “innovation” will be anything other than a significant shift in that direction.
That said, there is still room for variation in terms of what American chooses to offer on this front. But as the company which invented the frequent flier program it is not clear just how far AAdvantage will stray from what others are doing. And, of course, the news could be a lot of nothing. That’s quite unlikely given that it shared top billing in the earnings call.
My guess at this point is a revenue-based program for earning which includes JV partners and more “granularity” on the redemption side as well. I believe the company will stop short of true revenue-based redemption but that the roadmap will have that in place.
And, despite the inevitable hand-wringing and whinging from the peanut gallery, no real negative impact to the company’s operations or earnings based on those changes.
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I know I’m biased as I sit on my moderate stack of AA miles but….. I think AA has a real opportunity here to win market share through the loyalty program. Everyone else seems to be devaluing and for good reasons but AA needs to find a unique way to “innovate” in this space if they want to grow loyal customers and steal loyal customers from others.
Weve had 9 months of AA with a much “better” program vs AA and DL.
Plenty of time for people who care to switch and be stolen.
I cannot think of any recent (10+ years) examples where a loyalty program has been the basis for a significant movement of profitable customers from one carrier to another. Happy to take any ideas if you’ve got them but I do not believe that’s what will really happen.
Indeed…the way to “innovate” here is by NOT copying what everyone else is doing. Following is not innovating, it’s what you do when you can’t come up with your own ideas. They invented the wheel when it comes to loyalty programs…there’s no need to re-invent it. At least watch how disappointed United & Delta customers get over the next year or two when they actually realize how little they’re actually getting out of their “new and innovative” “loyalty” programs. They’ll start turning to the only aspirational mileage program, which is AA. Also, perhaps once businesses realize their employees are trying to book full fare to earn decent mileage on UA/DL they will institute an American-first attitude as well.
And, despite the inevitable hand-wringing and whinging from the peanut gallery, no real negative impact to the company’s operations or earnings based on those changes.
It’s not like US-based AA fliers have a lot of places to go. BA, if you stay in alliance? Mileage earning is highly dependent on fare class (cheap fares get you very little). UA or DL? Revenue-based earning.
AA’s operation is going to be more important going forward than their loyalty scheme.
At least those Eskimos in SEA still provide a worthwhile place to stash DL flights and, if need be, AA. For now. (!)
Which is great until you want to mix partners or fly to the many parts of the world where AS doesn’t publish a chart. Oops.
None of the programs are perfect. And some are very, very good with the changes, depending on personal travel patterns.
First time visitor and maybe my case is a useful example. Long story shortish:
– UA MM but less mobile these days (kids!)
– ORD based, most travel now is ORD-HKG or ORD-LHR
– I pay my own way, so usually go for lowest fare, but do Prem Econ or Business if it’s a good value
Have been UA loyal for the last 10 years but now with gold locked in, there’s no real reason to accumulate on UA these days. AA had a good sale over the summer and I flew ORD-NRT-HKG for $3k return — hadn’t flown AA in 5+ years. Seat sucked (old plane) but I was reasonably impressed by the soft product and was thrilled to see I earned miles based on mileage not cost. So I’ve started flying AA and CX exclusively. FF earning on miles is a huge differentiator for me, along with good value pricing on CX’s Prem Econ.
Basically, if AA keeps mileage-based earning, I’m guaranteed to stay. If not, who knows…