More Levels May Be Coming to the Top of American AAdvantage, “Segmentation is the Word”

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.

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. Unfortunately its a devaluation, however you want to label it. Saw this a mile away more than a year ago…

  2. Well, the current EXP (to be instituted) is already segmented. 4 SWUs at 100K, 2 more at 150K, 2 more at 200K. PLT level loses their 100% FF mile bonus. I bet there will be no change, but better incentives at the PLT levels and 6 SWUs at 100K with 2 more at 150K.

    Me thinks AA is worried about their current change to their FF program…..it’s a bit harsh and they know it. Let’s face it, if I were in charge of the current PLT/EXP segmentation, it wouldn’t look like that, it would be much better.

  3. The writing was on the wall. Look at the number of EXPs out there. It seems that every Tom, Dick, and Harry is an EXP.

  4. I think they’ll finally add in a 75K level to match the others (this would be good for me since I usually fly in that range). But I don’t see any further changes to the previously announced EXP level.

  5. AA is going to play from the DL playbook. The 75k status mile level at AA is to end up being but another vehicle to reduce the value customers in the aggregate have gotten from the AAdvantage program while pretending as if it’s an enhancement for AA PLTs in the main (even when it isn’t).

  6. I believe we’ll see a 75k-level added. The previously-announced changes made PLT benefits hardly any better than GLD. As far as I can tell, the only extra benefits of any value are an extra mile-per-dollar when they go revenue based, earlier MCE selection, and Oneworld Sapphire status.

    It’s ridiculous that a 99k mile flyer gets almost the same elite benefits as a 25k mile flyer. I’ve been PLT for the past 3 years, and currently have no incentive to “stretch” for it this year.

  7. To what extent is this a “devaluation” versus applying a new way to slice up the same pie?

    Also, if there is a new level, where will LT Golds and Plats fall in the pecking order?

  8. Oh, also, any speculation on whether elite benefits (baggage, boarding, upgrades) will be available on the otherwise stripped down fares? That would truly be fantastic, so I imagine it won’t happen.

  9. Hi Lucky, had a friend receiving an EXECPLAT status challenge (must be completed before mid May) for only 35k EQM, have never seen such a generous offer before. My guess is AA is starting to see a falloff in qualification intentions towards their elite tiers and are freaking out, the new 75k tier makes it easier for a couple of on-the-fencers, thoughts?

  10. Gary, I need to correct you on something you have posted. I DID NOT attend the American Leadership Conference on Wednesday. I never said that I did. Even if I had attended, (and I am scheduled to next week) the session is off the record to those who DO attend. But I have subscribers who attended and sent me notes alerting me that there was more segmentation coming. But this information was not shared by American Marketing SVP Andrew Nocella publicly at the meeting. This is information came from my subscribers who were in attendance. Information on the new lower priced fare offering WAS provided by President Scott Kirby at the session.

  11. Oops. “This is information that came from my subscribers who were in attendance.” Sorry for the typo.

  12. My apologies, Holly, I realized that I *assumed* that if you were posting about things going on at ALC that you were in attendance. Re-reading what you wrote, alongside your comments, “Reports coming from” suggests hearing from others. Which makes sense, I wouldn’t think you’d tweet what you heard there directly, since as you mention and as I wrote in my post in my experience these events are ‘off the record’ for journalists in attendance. That’s how it was handled when I’ve been there. Thank you for clarifying, I will update the post.

  13. As Tommy Lee Jones said, ” I….DON’T…..CARE…..”

    I’ll be in the front cabin and the rest of you can fight for “upgrades” to whatever class of service AA deigns to give.
    I’ve hear done of the perks of paying for first class is going to be the opportunity to reject someone you don’t want to have sitting next to you, in favor of my dog.

  14. Well then I guess I’m above average because I fly about once a month, but fully intend to go elsewhere after 40 years if they devalue my miles at all.

    So my question is if the changes supposedly coming in April will affect flights I’m buying now out until summer?

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