American AAdvantage Addresses Revenue-Based Changes, May Introduce Elite Upgrades on Qantas

American Airlines was Down Under promoting their new Sydney service which starts next month, their joint venture with Qantas (which has yet to receive US government approval), and announcing new service to Auckland, New Zealand as well.


Sydney Opera House as Seen From Park Hyatt Sydney

American AAdvantage President Suzanne Rubin was there talking frequent flyer programs, and the Sydney Morning Herald reports on several possibilities for the program.

  • Reciprocal upgrades with Qantas “is certainly a topic of conversation”

    She said there might be opportunities for shared benefits, such as allowing Qantas frequent flyer members to upgrade on American Airlines flights using points and vice versa

  • American would look at co-brand credit card opportunities in the Australia market.

There are 100,000 AAdvantage members in Australia out of 100 million total, and 10 million Qantas Frequent Flyer members.

Currently AAdvantage is far superior for earning and redemption. AAdvantage mid-tier status will provide Qantas lounge access. The reason to credit miles to a Qantas Frequent Flyer account is largely for access to upgrades. Or, put more politely,

Ms Rubin said the Qantas and American Airlines frequent flyer programs were likely to appeal to different customers, perhaps depending on how often they travel to US.

“Depending on your specific travel needs, depending on what you value most as a frequent flyer member whether it is access to redemption seats or the status, it is important to understand both programs and how each one may best serve your needs,” she said.

Take a first class award on Qantas, Sydney – Dallas roundtrip, which I recently booked for 145,000 American AAdvantage miles. That same award is 336,000 Qantas miles.


Qantas A380 First Class

The American AAdvantage program, joint venture or not, can easily make sense for an Australia-based member (unless and until American substantially alters their award chart). There are fewer earning opportunities today Down Under. And AAdvantage elite status does require 4 American flights during the year. So it’s hard to be loyal to American exclusively if based in Australia (or New Zealand).

Down Under American was willing to address a shift in AAdvantage to a more revenue-based program, even though in the US they’ve remained silent on the leaked changing coming to the program.

American Airlines is considering a strategic shift in its frequent flyer program, which is now a relative outlier for favouring points earned based on the distance flown rather than the revenue from the ticket.

US rivals United Airlines and Delta Air Lines have shifted to revenue-based programs. Qantas also did last year, and Virgin Australia has long based its program on revenue.

Ms Rubin said AAdvantage members should expect the program will take into account other shifts in the industry as it advances its program in the future, but she added it wanted to remain a regular winner of customer choice awards. “There are many ways for us to do that,” she said, declining to divulge any details.

Tick, tock.

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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  1. If a ticketed AA award travel is canceled because the fight schedule changed (partner airline doesn’t fly on that day anymore) what is the obligation of the airline(AA in this case):

    Keep the same travel dates and accommodate you on a different airline and same class or,

    Accommodate you on next available dates in same class on same airline or,

    Tough luck, just suck it.

  2. If a ticketed AA award travel is canceled because the fight schedule changed (partner airline doesn’t fly on that day anymore) what is the obligation of the airline(AA in this case):

    Keep the same travel dates and accommodate you on a different airline and same class or,

    Accommodate you on next available dates in same class on same airline or,

    Tough luck, just suck it.

    Xxxxxx

  3. @credit

    Not particularly interested in being on topic, are we?

    In practice, the airline will be pretty willing to do 1 or 2 if award inventory is available (in some cases automatically rebooking you), IF 2 involves using their own inventory. They may even be willing to ask the original partner airline for 1, or do 2 on their own planes if award availability is NOT available, though this is more a “squeaky wheel gets grease” thing and is helped if you have elite status.

    In fact and according to the carriage of contract, all the airline MUST do is 3: fully refund your money/miles if they cannot transport you as promised as per the terms of the ticket to the final destination. But in practice 1 and 2 happen as well.

  4. Lucky also stated recently in an article on his blog and on Australian tv that qantas flyers are better off crediting to aadvantage. This just isn’t true.

    1) most Australian flights are between melbourne to sydney, sydney to brisbane and melbourne to brisbane. Crediting a discount economy flight on these routes to aadvantage will only net between 110 and 400 miles. Qantas guarantees a minimum of 800 points for even the shortest flight.

    2) there are limited ways to earn via credit cards. The only cards I know of are amex issued amex’s, which transfer to spg points at a rate of 2:1 (1:1 with almost all other programs). Amex also has limited acceptance in Australia, and since it is legal to pass on merchant fees often costs an extra 1.5% to use. There are a few options for visa/mastercards earning 1 qantas point per dollar. Also, easy to grab a couple of 40k-60k sign up bonuses per year, whereas in Australia amex doesn’t allow you to claim a second sign up bonus (even for a new card type) if you’ve held an amex in the previous 12 months.

    For australians chasing aadvantage points who don’t travel to the states at least a few times a year the best way is to just buy them.

  5. @TK I think my statement was more nuanced than that. AAdvantage elites still earn 500 mile minimums plus elite bonuses. A Platinum still earns a 1000 mile minimum per segment. I think you play both programs though. The reason to credit flights to qantas is upgrades largely.

  6. @TK

    The situation for us Australian based travellers is far more complex than your very simplistic analysis suggests.

    Just because the SYD-MEL/SYD-BNE routes have the most traffic, it does not follow that the ardent frequent flyer is stuck flying these routes! As ever, everyone’s travel patterns are individual.

    For starters, an exclusively domestic Australian traveller is theoretically better off on Virgin Australia rather than Qantas anyway: points and status are far easier to earn and points can be transferred into SQ KrisFlyer and SQ redemption rates can be 50-100% better than QF (first class SYD-LHR for 112,625 compared 192,000 on QF – and even cheaper to AMS at under 100,000 points one way if you forego the A380 suites for a 777 first cabin).

    But keeping to the AA or QF question…status (as Gary points out) is also a factor: with the status bonuses, an Australian flyer is almost certainly better off being a member of AA than QF since assuming the member is earning similar amounts of points on either AA or QF programs, the redemption rates on AA are 2 to 3 times better value for most premium redemption (first class SYD-LHR for 80,000 on AA compared 192,000 on QF; business CNS-PER 20,000 one way on AA compared with 36,000 to 50,000 depending on routing for QF). In any case, those of us on lifetime gold status with QF have little incentive to accrue to QF!

    Yes, the credit card earn route is limited in terms of accruing AA points: smart travellers with cash flow pick up the Amex card with a 100,000 bonus posted to MR (a one off as you say – need a 12 month break from Amex to recycle), a Citibank Prestige card with a bonus up to 80,000 points, etc. Crucially these points and those earned from ongoing cash flow are far better going to SQ KrisFlyer or Cathay Asia Miles since their redemption rates (again) are far lower than QF anyway.

    And there is little point paying the annual subscriptions and churning lower tier cards when you consider you can buy Amex MR points at will and simply transfer to SQ, CX, etc., as and when you need to. Save the cash and buy the points when needed…a one way first class to Europe on SQ would cost around just $3,000 one way! Don’t worry about the points , save the cash using best fare on the day and reinvest the cash saved!

    And yes, simply buying the AA points is the fastest way to turbo charge your AA balance (although the AUD/USD exchange rate has slashed the value of that strategy and the days of 100% bonus for buying US Airways are long gone).

    Gary nails it when he refers to a mixed strategy.

    QF points have their uses: redeeming for OneWorld short sectors (the one case where QF points are more valuable than AA points unless you hold Avios) and to be able to access the Emirates inventory, which can offer quite generous reward inventory, particularly a few days out from a flight.

    QF points can be relatively easy to accrue – credit card churn as you mention, offers on EpiQure (if you like wine) such as a 12,000 point bonus on 6 of premium wine (for $350); the annual 10 point per dollar gift Christmas gift card; the seasonal double point deals on the QF shopping mall (10 puts per dollar for David Jones for example), etc….estimate $10,000 spend on QF for coming year so get 120,000 point bonus for buying the gift others (indulging card point accrual), buy a dozen bottles of wine gets another 25,000 points, buy $2000 of christmas gifts from DJs, etc., for 22,000 points…earn points off the $10,000 of travel and you’re already at around 200,000 plus! Churn two QF branded cards and there’s 250,000-300,000 points a per annum.

    But AA points come into their own for medium to long distance premium redemptions!

    So build the QF points using the bonus cited above and book the fights to AA…

    An ideal FF strategy for an Australian needs to embrace more than the QF/AA dilemma anyway…for example being able to earn 5 points per USD for foreign transactions on Citibank Prestige and transfer when required to SQ at 2 for 3 rate (for now anyway) is an easy way to build a war chest of points to keep redemption options open (if you trust Citibank not to try to change their program without notice again!).

  7. All true points @gary and @platy and definitely the way to go if you fly enough to reach top level status in two programs a year.

    However I don’t fall under that category, often only hitting Qf Gold (OWS). I’m living in London now and expect to only barely make BA gold (OWE). I suspect most people would be in the same boat.

    I’d say your always best having status with the airline you’re flying. I really don’t see much benefit (beside the better redemption opportunities, which as @platy you’ve pointed out can be overcome by acquiring points through other means) to being an AA EXP if you do most of your flying around Asia Pacific.

    With having your status with Qantas the benefit is not just the shot at upgrades but also being able to use your status when flying jetstar, which most Australians will get stuck travelling at some point.

  8. Gary, you forgot to mention that the 336k QFF points for the redemption also requires a payment for fuel surcharges on QF metal, Nil surcharges if using AA miles.

    For my part I consider Qantas FF to be a ghost of a program and I refuse to credit any flights to it. I agree that it’s easier to earn QFF points outside of flying and I can continue to do that.

    There are so many QF WP and WP1 on some flights that the chances of upgrading are NIL anyway. Additionally, the system for upgrading is so opaque compared to AA that it’s hardly worth mentioning it as a benefit. QF would rather fly F & J empty or fly their own staff on those seats than, heaven forbid, upgrade anyone.

  9. What percentage of those 10M QF FF are from USA that don’t credit miles to their QF account – and use the account strictly as a tool to check award availability?

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