As my 2016 travel planning came to a close I had to choose a carrier for one last long-haul flight, a trip home from China. I strongly considered American Airlines for that journey, even with a less convenient schedule. The miles earned on that flight would not do much for me in terms of AAdvantage status; I was already over 75,000 (Platinum Pro, which didn’t really exist) and well short of 100,000 (Executive Platinum). With some flexibility in my travel plans I considered that a decent option. Except that American was not offering Platinum Pro qualification in 2016. The new tier would only be eligible for passengers who hit the target numbers in 2017. So I took the more convenient flight and made my way home, comfortable in my decision to not spend extra money or effort with a company that would not provide me incremental value for my spend.
Upon further review I’m incredibly happy with the choice I made.
This week American put Platinum Pro on sale, sending emails to members with the opportunity to buy access to the new program tier. Reported prices range from $800 to more than $1500 (my offer was $899) and the purchase allows members to immediately realize the benefits of the new status level for the duration of the 2017 program year. Such buy-up offers are common for the AAdvantage program. They are not reserved only for the year-end “near-miss” members and the variations in pricing and tiers suggests that the company is actively testing customer thresholds and motivation factors. And I’ve never been less interested in such a purchase than I am right now.
I was never particularly interested in it anyways, to be fair. At $599 for Gold status (another offer I’ve received in the past) the pricing simply did not line up with the potential benefits. And even if I could come up with some fuzzy math to suggest that the $900 would be a smart expense for me (which would be a spectacular feat of numbers manipulation), the approach this time around is tremendously off-putting. The company had the opportunity to earn my business in a natural way, allowing qualification based on normal activity. It chose to block that from its members, a decision I’ve questioned frequently since it was initially announced. But at the time the company at least made the argument that it wanted customers to qualify for the benefits. Turns out that qualifying is just a cash transaction, not loyalty.
Generating the incremental revenue is almost certainly good for the company in the short term. But the longer-term impact of defining specific price points on the benefits is a risky proposition. Converting points into a fixed value currency is happening relatively quickly across the industry. But the other benefits, the less defined rewards for choosing to move business to a particular company are also much harder for a consumer to quantify. What is access to priority boarding or security lines really worth? How much should an upgrade cost (assuming it is available)? Does the priority handling from customer service really have a price tag? Without the associated cash transaction it is much easier for American to maintain the exclusivity of those benefits and the allure of earning them “naturally.” With a price tag it is far easier for consumers to see what the value is for a la carte purchases rather than striving for status.
Ultimately decisions like this are part of a much larger shift in direction for the airlines. The points side of loyalty programs remains the golden goose, at least for now. It is well monetized and there is considerable evidence to suggest that move was strategically advantageous to the programs. Trying to bring the experience side of the loyalty programs into that monetization effort may prove to be similarly successful. And it is not just one airline on this path. LCCs are most well known for the ancillary sales of just about anything and that includes preferred seating, priority boarding, and more. Legacy airlines have dabbled in selling priority boarding and security access as well as the full premium passenger treatment, with American’s Five Star and United’s new Signature Service offerings. But broad expansion of those services runs a significant risk of alienating the true “road warrior” travelers even more than the ever decreasing upgrade numbers did in recent years.
I am not one of those road warriors. I travel plenty but my schedule is often more flexible and I can shop around plus or minus a couple days to get a deal and a preferred carrier. I mostly buy the services I want (usually in the form of discounted premium cabin fares) rather than trusting that elite status will deliver those benefits for me. And maybe that’s good news for the airlines as my incremental spend is slightly higher when I do make a purchase. But I’m also no longer loyal to a program; I’m loyal to me. Not because of the changes in the points but because of the changes in the services on offer to elite members and the fact that I can just buy them ad hoc for far less money. It will be interesting to see how others respond faced with a similar choice.
Then again, I know that at least some people are biting on the Platinum Pro offer. So maybe selling loyalty is better business than it appears on the surface.
Header image: AA Platinum Pro card from aa.com
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