I’ve been getting tons of questions about what happens to frequent flyer miles in a merger between American and US Airways, and what to expect from the various elite and upgrade programs that the two airlines offer if they combine.
And the answer of course is that for the most part we don’t know. But there are plenty of things we can make fairly educated guesses about.
To be clear, my predictions are just that — guesses about the future — rather than leaks of plans that have been made by any of the parties to a potential merger. I imagine that there haven’t even been any decisions made as yet, since until and unless a merger actually happens the two airlines remain competitors and I doubt that they are working through the nuances of their mileage programs just yet.
I have to imagine that the US Airways people remain in charge. Sure, it seems foolhardy to take the folks running the smaller program and stick them at the head of a much larger enterprise, perhaps the most successful part of the airline they’re taking over. But Parker’s enterprise, Parker’s people is my starting point. Hopefully the folks that have given us a really strong AAdvantage program will continue to drive things but I’m not banking on it.
Here are some of my guesses about what the mileage and elite programs look like after a merger between American and US Airways.
A combined US Airways – American Airlines will be a member of oneworld. This much we actually know, it’s been remarked upon by US Airways CEO Doug Parker, and if they weren’t going to stay in oneworld I bet we’d have seen a competing bid by a consortium that involved British Airways.
- That has its pluses and minuses. Star has more member airlines, which means it can be better for getting business class awards to both Asia and Europe — simply more partners means more options. But oneworld is better for flying to South America (American’s own flights and partner LAN’s — plus it’s expected that TAM will defect from Star to oneworld this year as well). And also better options for first class awards such as on Cathay Pacific and British Airways (the latter with fuel surcharges). Oneworld will be adding Malaysian shortly, and their first class is excellent.
We’ll get American’s award chart with few immediate changes. American has the bigger program. It also has an award chart tied to its own flights and oneworld partner destinations. Its system is set up to book those oneworld partners as well as partners outside of oneworld. The simpler IT task is to keep the American system for booking those partners and awards, and migrating US Airways Dividend Miles members over to it — rather than building the IT capability for the US Airways sytem to book all of American’s partners.
- That would mean American’s routing rules as a starting place — one-way awards, which US Airways doesn’t currently offer, distance-based awards, the requirement that an overwater carrier have a published fare between origin and destination, imposition of (still-generous) maximum permitted mileage rules, etc.
- They wouldn’t be likely to re-price awards in the immediate term. This is a big win for flyers, since US Airways really does seem due for a devaluation. It’s been about 3 years since they made changes to their award chart. They print/sell miles cheap. There’s been talk of US Airways going to a revenue-based program. But a merger distracts from all of that, and in the process of merging airlines usually try to avoid taking steps to anger their customers and instead tell them they’re going to get ‘the best of both worlds.’ American, incidentally, is overdue for a devaluation as well – it’s been even longer since they’ve bumped award prices than US Airways (or United or Delta).
- This also puts of the risk of a revenue-based program, that’s not the sort of wholesale change to expect in the honeymoon period after a merger.
We get a four-tiered program. US Airways already has one, inherited from the days of a 75,000 mile Platinum level at America West. Delta and United have 4 tiers (Delta’s tops out at 125k). So not unreasonable to assume that the rumors of AAdvantage looking at 4 tiers were true, if only because they look at everything their competitors do. It’s hard to imagine that the combined airline would simply rid itself of a 75,000 mile level which US Airways now offers.
American’s lifetime status program survives. But it’s devalued simply as a result of having four tiers.
- American offers up to Platinum (currently mid-tier status). They aren’t going to take away the lifetime status that someone has earned, it’s not as though they are ‘ending’ the AAdvantage program, telling lifetime elites that it was the lifetime of that program, and they get to start off with something else in a new program.
- US Airways has among the least generous lifetime programs now. Lifetime silver after 1 million flown miles, and no opportunity to earn higher lifetime status. While they aren’t going to take away anything from lifetime elites, they don’t have a history of greater generosity.
- So one imagines 1 million miles still qualifies for 25,000 mile status and 2 million lifetime miles still qualifies for 50,000 mile status. But 50,000 mile status will no longer be mid-tier, instead if they introduce a 75,000 mile tier it will be second from the bottom, third from the top. So that’s a bit of a devaluation.
- It remains to be seen whether earning lifetime status in the future will continue to come with upgrade certificates (along with more certificates at each subsequent million mile level). Since there’s no new upgrade certificates annually like United had been giving, there’s very little to take away and so I don’t expect anything that lifetime Golds or Platinums have now to be taken away.
American Would Eliminate 500-mile Upgrade ‘Stickers’. The combined program offers ‘unlimited complimentary upgrades.’ Currently only American remains among airlines award 500 mile upgrade certificates (2000 miles’ worth every 10,000 flown miles). They generate revenue from selling more to elites. And they give unlimited upgrades only to their 100,000 mile flyers.
US Airways doesn’t like giving up revenue sources, but if they implemented the American approach then existing Dividend Miles elites would see it as a big devaluation — even though I think the 500 mile system is actually better for lower tier elites.
While ‘complimentary unlimited upgrades’ are free, they’re harder to get. Every Platinum is requesting an upgrade every time. But when there are a limited number of free upgrade certificates, and Platinums and Golds are paying for upgrades beyond those, they do not request upgrades every time. So not every Platinum is competing against every other Platinum for upgrades on every flight. Those times a Platinum requests an upgrades they are more likely to get it. That also means the odds of an upgrade when it matters to the member are higher.
But my strong hunch is the combined program does away with the 500 miler system. Which is another blow, in my view, to American’s lifetime Platinums who can now get upgrades if they’re willing to pay for stickers (beyond the ones they earn), but will have a harder time clearing upgrades in the future.
Here’s what I don’t have a strong (enough) prediction on:
- What happens to American’s 8 annual confirmed systemwide upgrades valid from any fare? Will top tier elites keep those?
- What happens to American’s approach to first class meal service — American certainly provides meals on far more flights, of much shorter distaces, than US Airways does. My gut says that we get something closer to the US Airways model, that US Airways management will see this as an area ripe for cost-cutting. But I’m hopeful that their view that they need to become a more premium carrier with the increase in corporate contracts that come from American and they won’t axe the meals. This isn’t a frequent flyer program element, per se, but I’m placing a 60% but not firm guess here.
- International first class, another 60% guess it eventually goes away but then it’s headed in that direction anyway since American has already announced that when they retrofit their 777-200s that those will no longer have 3-cabin first class — that only the new 777-300ERs will.
Do these guesses seem right to you? What’s most important in the frequent flyer program that I’ve left out that you’re wondering about? What do you think a combined program would look like?