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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