Aviation journalist Holly Hegeman
attended reports what she’s heard from the American Airlines Leadership Conference and shared,
“Segmentation” isn’t the word customers want to hear. It’s not “relationships,” “value,” or “loyalty.” It generally suggests extracting more revenue, and providing less value except to a subset of members.
American brings thousands of employees to Dallas for a day of presentations from senior executives about the direction of the airline and opportunities for networking. Some outsiders attend as well. I’m out of the country, and haven’t heard if ground rules have changed this year, but it’s been off the record. The event certainly provides a window into the themes and buzzwords being used throughout the airline, the narratives that are developing.
We get from Holly that one theme at the event this year is that we can expect more segmentation at the top of AAdvantage in addition to the bottom of American’s customer base.
We learned during American’s third quarter earnings call last October that the vast majority of customers fly American no more than once a year, and that there’s increasing competition from low cost carriers on American’s routes. American is responding by introducing new fares that are closer to what’s offered by those low cost carriers.
That’s not the only kind of ‘segmentation’ we’ll see apparently. Already top tier elites earn fewer upgrade certificates after 100,000 qualifying miles flown, with an opportunity to earn back some of what was taken away by continuing to fly past that number. And mid-tier elites will earn a lower mileage bonus for flying when the AAdvantage program goes revenue-based later this year.
It sounds like we’ll see further ‘segmentation’ at the top of AAdvantage coming as well, though it’s not clear where or when. It’s a reasonable bet that this will not benefit most elite members of the program, although presumably the highest revenue customers or those who exceed qualification thresholds by the most may not see as much or anything taken away.
Update: Holly Hegeman clarifies in the comments that her tweet was based on information shared with her by others at the event, rather than information she heard there directly.