Which Rumors About American Make Sense? And What’s the Earliest American Could Go Revenue-Based?

Reader C.W. emailed me,

Yesterday, was flying DFW-DCA in F and overheard some discussion behind me. Individual doing the talking sounded like he knew a thing or two – we were on one of the new 738s with AVOD and he was discussing delivery of the aircraft, also discussing his ride on the inaugural flight of the new 773 to London. So this guy didn’t strike me as a Joe off the street.

Anyhow, he was stating to his seatmate in no uncertain terms that AA was going revenue-based for the 2016 qualification year. He talked about the recent change at United, the comparison to Delta, and stated that AA would base qualification solely on points tied to fare price during 2015. He also mentioned that new tiers above EXP would be added.

So… plausible?

Yes, but the person offering these opinions is making predictions and not sharing actual knowledge.

It could certainly play out this way, but I am 100% certain that nothing has been decided.

Timing in this prediction is right for a program change, sort of:

  • The American and US Airways programs are expected to be combined in 2015. The focus now is integration, and the American AAdvantage President has said no major changes before integration happens.
  • So any major changes – if there are any — would come at the earliest for 2016.
  • We know that 2015 qualifying miles at both US Airways and American will get combined for 2016 status. Any announcement about how qualifying miles will accrue during 2015 will have to come this year and that’s unlikely prior to integration.
  • So for elite qualifying it seems like a revenue requirement for 2017 status based on 2016 flying could come to American, but it’s unlikely before that.

But nothing has been decided:

  • Nothing is certain two years out. There’s no question that American is aware of and has look at rewarding premium passengers more, they were an early adopter of an alternative elite status qualification scheme for high revenue passengers (“points” which are tracked in parallel with miles).
  • United is following Delta. United adopted almost Delta’s exact revenue requirements for elite status. Then United adopted Delta’s exact revenue-based earning. United has no vision of its own. American won’t just follow blindly, and in any case the integration gives them time to come up with their own vision if they need one.
  • And the integration gives them time to watch the results at other carriers, learn from others’ mistakes, and either go their own way if customers flock to them in the interim or adjust if they believe they’ll accrue more business or the same business at a lower cost.

The bottom line is that the rumor is one of many things that American could do. C.W. passes on a specific only about elite qualifying and of course doesn’t make a prediction about mileage-earning.

Just because they could do it doesn’t mean it’s what they will do, and there’s no question that there’s not yet a final answer. We’ll have to wait until the 2016 program year at the earliest, it would seem, to be able to call this prediction valid or not.

But in general bloviating frequent flyers telling war stories aren’t the best way to get the inside scoop in my experience. (It also follows that if I turn out to be your seat opponent, you can feel free to keep your noise cancelling headset on while I tell you what I think!).


About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. Depending on how you look at it, there already is a tier above EXP, it’s Concierge Key. There’s really no benefit to doing anything beyond making Concierge Key an actual in-house (read AA only) status, since OW only has three status levels, and EP is already the highest.

  2. I predict AA will zig while everyone zags. If everyone is doing revenue based, AA would be smart to stay mileage based and if feasible, make it even better.

  3. I just don’t see how they can stave off a redemption devaluation until 2016-2017, and I would consider that a major change.

    With UA’s massacre, AA is the cheapest legacy carrier [other than Alaska] in almost every market.

  4. Gary, your post is based on 2 things:

    1. A trust of American despite their recent less than trustworthy actions.
    2. Interpreting the line of “no major changes until integration happens” to mean they can’t announce changes in 2014 to take place as a part of the integration.

    The ideal time to make a shift to revenue based for status qualifying or mileage earning is during the integration otherwise it’s going to be more expensive to redo things twice. The real question is whether or not AA feels strongly enough now to make those changes part of their integration plans.

  5. I can guarantee AA goes revenue based, however they would need many IT changes in order to meet that by end of year. Steve Belkin your partner gave a talk about a year or so ago at mile point saying status was dead and everyone should be a free agent. I agree 150% that all flyers need to be free agents and those here know it makes sense to have flexible miles and a few programs to work for good tickets. I could see AA going in the same direction as Delta. Remember they have the US Airways CEO running things.
    AA mileage redemptions on domestics are a lot worse. Many involve more stops, routings through CLT and other places. Getting AA non stop or decent equipment is tougher already. But they do have some IT issues as well

  6. @David Very interesting comment. We know these companies are into Big Data and data points. If AA has issues getting the software ready for 2015, they can wait out the year and see how things shake out. If AA were to attract business that way, both Delta and United would be pretty unhappy about it. Delta was first in going revenue based. Im one of those people that feels they knew others would follow.

  7. That was me Gary overheard. I had recently discussed the airline industry with a reputable psychic, so that’s how I know what is coming with the AA Mileage program in 2016.

  8. Thanks for your thoughts on this – and believe me, I sure hope the guy was full of it! I stay away from DL and UA for a reason…

  9. Does anyone here really know how difficult it is to integrate 2 very different airlines? The logistics are incomprehensible for most people. This isn’t bank merger.

    There are many IT systems that are totally incompatible. AAdvantage and Dividend Miles are the tip of the iceberg. Integration of the 2 airlines comes first. Any changes to the FF programs comes later. We have all experienced airline merger problems. US Air has had many problems with mergers since the late 80s. I think they are a little smarter about this now. That’s my only prediction. Any changes will not happen until at least 2016. I work for an airline, so I know firsthand, about merger problems.

  10. @Gary — 100%?? You were also certain that AA and US 2014 EQMs would be combined for 2015 status, remember? 🙂

  11. @Gene while I think they’re behind in the integration relative to where I expected, I mean, can you really conceive of that NOT happening? Anyone? 😉

  12. @JohnB – yep, and this one is especially complicated because it forms the world’s largest airline, the largest airline ever, and because in some ways US/HP were never fully integrated to begin with!

  13. @PainCorp many Concierge Key members don’t really see the difference, it can help during irregular operations and it gets you Flagship checkin at those airports which offer it like Los Angeles and Miami… but it doesn’t even get you flagship lounge access when traveling domestically or upgrade priority (though I suppose it’s possible a good agent could help to clear some things for you).

  14. Sorry Gary, but you’re obviously not in tune with how strategic planning operations function within the industry or you choose not to accept the existence of such strategic planning. I can assure you that the airline industry, like every other industry, place enormous emphasis, funding and weight into strategic planning.

    Your comment of “nothing has been decided” is at best naive, at worst, misguided, practically untruthful – meant only to appease, maintain and protect the PR contacts that you have within the airline industry and what’s actually discussed.

    … “but I am 100% certain that nothing has been decided” …..
    Absolute certainty is the privilege of an uneducated mind. 🙂

  15. “I predict AA will zig while everyone zags.”

    Following the herd is safer for a manager’s career. Gary Kelly (CEO of Southwest) went all-in on his “no hidden fees” brand strategy. Institutional shareholders have not liked it one bit. They will probably give Kelly the boot the first time the numbers aren’t right. That’s what you risk by zigging when others sag.

    Even if American would benefit from thinking differently they are likely to meekly follow the others. It takes courage to stand alone and defend that position against the herd of money managers.

  16. There was an article on Bloomberg the other day. Basically, it said that AA needs to go to a revenue based program as fast as possible or risk losing high-value flyers that can yield more “miles” at other airlines.

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