With US Airways flights scheduled to be entirely on the American Airlines platform come October 17, and IT resources focused primarly on the merger integration, American AAdvantage is simply running out of time to make big changes for 2016.
Even Delta and United Gave 6-12 Months Notice for Big Structural Program Changes
When Delta announced it was imposing minimum spending requirements to earn elite status they gave a year’s notice.
When United announced their (same exact) minimum spending requirements to earn elite status they gave more than six months’ notice. [In fairness, they needed a few months to be sure they could copy Delta.]
When Delta announced revenue-based mileage earning (earn miles based on dollars spent, rather than distance flown) they gave 10 months’ notice.
When United announced revenue-based mileage earning, they gave more than six months’ notice. [Again, they needed a few months to be sure they could copy Delta.]
American Has Gone to Some Lengths to Give Advance Notice of Changes for the Past 16 Months
Ever since the April 8, 2014 changes without to the AAdvnatage program — elimination of distance-based awards, elimination of free stopovers at a North American gateway (plus elimination of the US Airways 90,000 mile business class Asia award) — the program has made sure to announce even the smallest tweaks with advance notice.
For instance we got two months notice for them to close the loophole where US Airways charged the same amount for business and first class awards domestically (so Cathay Pacific first class, New York – Vancouver, was the same price as business class, and first class on New York JFK – San Francisco and Los Angeles flights were as well).
We also got about six months’ notice that the cost of extra availability ‘AAnytime’ awards would go up for peak holiday travel.
As recently as the end of last week, American has said they do not have plans for changes to their award chart at this time. They almost certainly will at some point.
Reservation Systems Won’t Be Integrated Until October 17
American is draining down US Airways operations: flights October 17 onward are all being sold as American Airlines flights, and are being managed on the American Airlines platform.
Starting October 17, all flights will be run off of the American systems. Very little customer data will be affected — frequent flyer accounts have already been moved over to AAdvantage, and so have pre-existing reservations on US Airways flights for October 17 and beyond.
But that’s the date that all agents will have to be working on the American platform that they aren’t as familiar with. They’ll be using Qik to keep things easy (it automates lots of functions, which isn’t great for getting agents to bend the rules unfortunately).
IT resources are fully committed to integration still, even though by all outward appearances things are going well. (If it stays that way you’d expect American’s Chief Information Officer to be able to write her own ticket, anywhere, after pulling off perhaps the biggest corporate data migration in history for the world’s largest airline.)
And things don’t immediately change focus once flights operate on the American platform. There’s going to be a lot of troubleshooting. It’s not just reservations and activity at the airport. For instance, crew scheduling, you have pilots and flight attendants from US Airways being scheduled for American Airlines flights and who will be transitioning to new platforms.
Though the heaviest lifting will (hopefully) be over October 17, IT work will continue and they won’t stand down and turn to other priorities right away.
Most Big Changes Across the Airline Have Been on Hold Until US Airways is Integrated Into American
There’s a long list of changes that the former US Airways management wants to make at American, but that’s had to be put on hold until they complete integration.
For instance they’re anxious to be putting more US Airways aircraft on legacy American Airlines routes, and vice versa — getting the right aircraft capacity in place for the right route.
And there’s opportunities for more ancillary revenue. There are domestic flights that go out with empty first class seats. There are international business and first class cabins going out half empty at off peak times (e.g. American’s 2:45pm London – New York JFK flight on Wednesdays), they should be able to find ways to earn something on those.
And there are changes they could make to the frequent flyer program. American President Scott Kirby two months ago said “we would have loved to make some modifications to the frequent flyer program” and — unclear whether with respect to the frequent flyer program, or regards ancillary revenue (but in the next sentence), he said “shamelessly copying some of things competitors have done.”
There Won’t Be Enough Time Left to Make Big Changes for 2016
The calendar presents a problem for making big changes in the 2016 program year. Changes to elite qualification need to be announced before year starts — Delta gave a full year and United 6 months, but as a technical matter even they really can’t change those rules mid-year.
And wholesale changes to earning and burning would simply take greater IT resources than they’ll be able to commit in time to take effect for 2016. (We could see them announce something tomorrow, though they’re on record saying they aren’t currently planning to change the redemption side, but it seems risky to commit to that before the merger integration effort is complete.)
So I still expect any 2016 changes to be evolution, not revolution.
There Will Be Changes in the Future… But They Shouldn’t Be All Bad
I don’t think there’s any question that American is more generous than Delta and United for lower-spend customers. Elite status can be earned based on flying or spend (“points”) and without any minimum spend amount.
For instance once that status is earned, American gives a full 100% bonus on flown miles (on the cheapest tickets) for their 50,000 mile flyers. At United and Delta the base earning on cheap long distance flights is much lower, and the elite bonus gets cut in half.
I’ve often argued that when something is several orders of magnitude better than most offerings, you’re going to get reversion towards the mean.
US Airways had a revenue-based program on the shelf before the merger.
They’re already able to do quite a lot of revenue tracking, that was a capability that the Ventana system upgrade gave AAdvantage a couple of years ago.
There’s no mystery in any of that.
We’ll certainly see the program evolve, with bigger changes announced in 2016 and going into effect in 2017 — in other words, with AAdvantage showing members at least the minimum respect that United and Delta offered their members when making big changes.
I don’t know precisely what changes those will be. As members we’ve benefited from extra time without big changes making the program less generous as a result of the merger. And we could wind up having dodged some bullets to the program’s generosity as a result of that delay.
That’s because fundamentally Delta didn’t need to spend as much on marketing to fill its planes in recent times. But the current revenue environment has softened. Lower fuel prices, and the expiration of the Wright Amendment, mean a more competitive airline environment. American announced a nearly 7% hit to the revenue they’re deriving from each seat as they battle Southwest expansion at Love Field, Spirit Airlines expansion at DFW, and growth from other carriers across other markets. That’s not a time to cut back on marketing spend. The current soft-ish revenue environment could cut against some of the big changes they’d otherwise make… if they’re smart.