Should American AAdvantage Members Be Worried Now That Joint Venture Partner British Airways Has Devalued.. Big Time?

With British Airways gutting their program — eliminating the principle that one mile flown earns one mile, reducing mid-tier elite mileage bonuses, and substantially increasing the cost of premium cabin award travel — I’ve had several questions about what this means for American AAdvantage frequent flyers since the two airlines aren’t just alliance members but are actually revenue-sharing joint venture partners across the Atlantic.

When American and British Airways introduced the transatlantic joint venture in 2010 there was some frequent flyer program alignment.

  • That is when American introduced US – London awards on British Airways (those has previously not been permitted with AAdvantage miles, so you had to fly from Canada, Mexico, or the Caribbean) but fuel surcharges started to apply on all BA awards. Previously American didn’t add fuel surcharges to those British Airways awards that you could book, such as Toronto – London – Johannesburg.

  • It’s also when mileage upgrades across joint venture airlines was introduced (using miles to upgrade on American, British Airways and Iberia).

  • British Airways introduced full mileage earning on all fares (the principle that ‘one mile equals one mile’), and they introduced three regular elite tiers up from the previous two. Mid-tier status earned a 100% bonus on flights, just like at American.

So there has been some coordination here between the two airlines. And many of the changes announced yesterday represent a rollback of precisely the things BA implemented when the joint venture launched.

American is focusing on rewarding premium travel (in their own way) this year too as a competitive response to United and to Delta.

This doesn’t mean the programs move in lock step. They don’t.

And we shouldn’t expect big change right away at American as they focus on integration. We’ve heard little other than the mantra ‘integrate before we innovate.’

Nonetheless as fewer programs remain that haven’t devalued, it’s hardly comforting.

  • We shouldn’t expect changes at American right away. American has shared details of their 2015 program and told us not to expect other big changes in the immediate-term.
  • American and British Airways already had substantially different programs, with BA charging for awards base don distance and American based on region, and with thoroughly different elite benefits.
  • I don’t see the BA move as predictive of American, however a fundamental operating principle I’ve subscribed to is that the best values – those that are several standard deviations better than the norm – don’t last.
  • In my view, American overall (top tier elite status, first class class, indeed most awards other than transatlantic business class) offers the most valuable airline program.
  • Thus there’s more downside risk to members than upside benefit, playing the probabilities.

My advice continues to remain to focus on American, that’s what I’m doing. There’s no reason to focus on earning less value now (with another carrier) and for the near-term simply because one would earn less value in the future. That American might not continue to be materially better in the future isn’t a reason to walk away from superior value now.


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. When booking AA rewards I avoid British Airways like the plague already due to their outrageous fuel surcharges. Most of my flights are to Europe so I am forced to fly into Germany and out of Germany to avoid BA. AA does have the best value I think as long as BA can be avoided with long haul flights.

  2. What American Airlines will do is crush competitors like Delta, United, and Jet-Screw, forcing those three stooges to match American. American with US Airways returning to be the world’s largest airline, with the ability to hedge fuel costs at $40.00 for 10+ years plus (remember when Southwest hedged $50.00 oil when it was $147.11?)…American can afford to crush the competition.

    British Airways is an example of a UK minority government with a Tory Prime Minister sucked by the previous Blair tax administration. When the Tories have more power like a John Major, and then Richard Branson stops kissing the communists at Silicon Valley, travel to the UK will be better and cheaper.

    Australia dumped the “Carbon Tax”, it’s time for Branson to shut the hell up when he burns the carbon more than any human. What Branson should do is dump his Outerspace garbage and double the size of Gatwick.

  3. American is well positioned to make significant market share inroads at the expense of United and Delta. They finally did their bankruptcy to solve their cost problems, and the merger with U.S. Air gives them the critical mass. United and Delta are forgetting that the point of loyalty programs is to encourage loyalty rather than pulling a bait and switch on the customer. As long as American, who pioneered loyalty programs, keeps their eye on customer loyalty, they will grow their business.

  4. for $75 a ticket close in fee and 50,000 aa points for 4 one way tickets from PBI to LGA – I’ll stick with Avios 30,000 points and no close in fees.

    They have not touched the economy and I don’t think AA will either.

  5. @Geoff

    I think Delta will revert their loyalty program back to how it was previously, and rather soon, after a few executive firings, and with big time AA competition. Then we’ll see a Delta loyalty promo saying “We’ve heard our customers! We’ve changed!”

    Happened before. I remember a time when Delta had this on-line game of a small icon going up a path that unlocked an instant 10K Miles in just a few minutes—-that was when Delta went after American. AA countered with a huge triple mile promotion for all flights (except those booked in Q). Delta’s current FF Mile program “de-hancement” keeps this AA EXP (me) from flying that airline at all.

  6. It would be surprising if BA didn’t reduce earning on BA flights on partner Frequent Flyer programs such as AA and Alaska. They did the last time they implemented a similar scheme 10yrs or so ago. Delta did recently for their flights to those crediting to Alaska. I suspect we’ll here more of a similar tone from United for those hoping to credit UA flights to other partner programs.

  7. I am trying to redeem avoid for pbi to Lga and can not find any flights on the BA website. Do I have to call BA directly? I searched all dates thru May and nothing. Miami is way too far for me because it is a two hour drive. Any suggestions?

  8. @Susan – US Airways flights aren’t currently showing on the BA.com website, it’s a known technical glitch they are supposedly working on. Search for flights, say, at aa.com and then call BA to book. Ask them to waive the phone booking fee.

  9. With all the miles AA have given away for credit card signups over the last year, I think we will likely see a huge devaluation in the AA award chart in the near future.

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