Why American Will Introduce a Higher Top Elite Tier – and What It’ll Mean for United

Last month I wrote that more levels may be coming to the top of American AAdvantage. Here’s why I believe it is inevitable.


American Airlines Airbus A321T

What We’ve Learned from Past Mergers

US Airways was the first US airline to offer 4 levels of elite status. When American West acquired US Airways they had 25,000, 50,000 and 75,000 mile elite levels. US Airways had 25,000, 50,000 and 100,000 mile levels. So instead of making a choice between the two systems they just went with all 4 levels.

When Delta and Northwest merged they each had 25,000, 50,000, and 75,000 mile levels. But they became the world’s largest airline, and while their customer bases and flight operations grew proportionately it became easier for customers to stay on a single airline for all of their travels and so there were more elites. Instead of adding a 100,000 mile level they went with 125,000 — keeping four levels, with the highest level of any US airline for top tier.

When Continental and United merged they were like America West and US Airways: 25,000, 50,000 and 75,000 mile elite levels at Continental (like Delta and Northwest, to which they had previously been linked, had) and 25,000, 50,000 and 100,000 mile levels at United. So they followed the US Airways model of adopting 4 levels.

But unlike US Airways, United really had 5 levels because Global Services, the revenue-based status that grew out of United’s old VIP program (and which was far more robust than Continental STARS), was actually top tier. Global Services began outside of MileagePlus, there were actually Global Services Premier members (versus 1Ks) and even Global Services members who were not MileagePlus members at all. But it was eventually integrated, and unlike at Delta and American, United’s revenue-based status gets priority in the upgrade queue and other waitlists in addition to to other benefits.

Where American Stands

With American’s merger with US Airways, they didn’t keep 4 (all) status levels. They kept American’s elite program, more or less, so 25,000, 50,000, and 100,000 mile levels. There are a lot of former US Airways 75,000 mile Platinum members that were unhappy in the transition since they no longer had status above 50,000 mile flyers.

Why American Needs a Higher Tier

As with Delta, there’s a recognition that as the world’s largest airline with a much more comprehensive route network it’s possible to stay on one airline now and so there are more customers flying more miles with the airline.

As if that wasn’t enough, American now makes it much easier to qualify when buying premium fares.

That means more top elites, and therefore more top elites flying coach more of the time.


American Airlines Airbus A319 Economy

Perhaps the most common reaction I saw among elites to this change was that there would simply be more elites. There aren’t any revenue restrictions to cull the bottom out from the elite pool in AAdvantage like with United and Delta (who have minimum spend reuqirements). And with bonus qualifying miles replacing the alternative ‘points’ method of qualifying on high fares, it’s be easier to earn status on a mix of expensive and cheap fares.

However as Bridget Blaise-Shamai from AAdvantage pointed out to me, this isn’t the case, because American actually inflated elite ranks last year. That’s because, as she pointed, they were running an elite qualifying points promotion for the past year, and that’s gone away. “We’re not inflating any elite group as a result. Some customers will be getting status faster, but there won’t be more people [with status].”

American likely needs four elite tiers, and a top tier with more than 100,000 qualifying miles. What may make most sense is to ape Delta: 25,000; 50,000; 75,000; and 125,000 miles. (While an imperfect method, you will do better than 50% by simply betting any given airline will do what Delta does.)

Alternatively American could make their top tier, Concierge Key, a true elite tier like United’s Global Services.

United is in a Similar Spot

United of course still has a 100,000 mile top tier and will inflate its elite ranks with a similar premium fare qualifying miles bonus.

They may not care as much, because their true top tier – Global Services – isn’t inflated by this. But members qualifying by miles certainly will.

If American goes to 125,000 miles for a top tier matching Delta, one imagines United has a good chance of following.

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. So you can see United 1K becoming United 1.25K :p

    I actually wish they got rid of Plat and get a 200K tier

  2. Woth noting that With United you have to spend 12k to get 1k. That narrows the pool of elites pretty substantially.

  3. Wouldn’t it make sense to give double segment credit for first class, as well? Seems shorthaul passengers are penalized, but maybe because the buy-up is less.

  4. @Dcesquire – Bingo. No CC waiver for the 100K level = smaller group size. I actually think United’s approach is original on this. Offer the CC waiver on 25K, 50K, or 75K but for 100K you must hit spending levels.

  5. While you may say Global Services is a fifth tier to the UA program, it is not as integrated as you suggest and is offered to high-yield (corporate) customers (CIPs, Commercially Important Passengers/People) and guarantees 1K status but an enhanced level of priority services. The spend requirement is well over the 1K requirement. I suggest that AA has a similar enhancement to its ExecPlat elites who also qualify for their ConciergeKey (or whatever it’s called) CIP program, but it’s not considered an added tier to the AAdvantage program. Why would there be a need to formally add another tier to AAdvantage, other than a 75K one that would addressed the slight that fell on many US top tier elites when the programs were merged? At the moment, the new EQM accelerator really only applies to those buying full fare premium tickets, and it is quite likely these purchasers are also CKs/CIPs and recognized as such.

    So other than the fact that more people might be buying discounted premium fares that are showing up on some routes as quite attractive, the impact will likely be these folks will be earning another .5 EQMs over the previous PQM 1.5 multiplier credit. The benefit to them is that they are likely to cross the 100K ExecPlat threshold and get to the 125K and 150K levels where additional SWUs are going to be issued. This will separate out the majority of ExecPlats who will lose half their SWUs when qualifying for 2017 status, but the minority will still get 6 or 8. Other than possible software programming issues, there must have been a logical reason for AA not to adopt the $ spend component when it went to revenue-based but excluded this measure from elite status qualification.

    DL has had a 125K tier for many years, IIRC even before its merger with NW. Since neither CO or UA had this tier, nor did US or AA, can’t really see why it’s even being speculated about other than to draw more clicks (and pennies) to the blogger’s account. Can’t see any rationale in the post to support this prediction.

  6. I think AA will put minimum spend requirements in place as well as raise EXP to 125K. Wonder when they will let us know….

  7. @DavidB – Global Services gets priority for upgrades, as a general matter Concierge Key does not.

    Delta’s 125k tier did not predate the NW merger. The NW-Delta deal was announced in April 2008. Delta released details of the Diamond level in July 2009. Worldperks was merged into SkyMiles in fall 2009. Diamond went into effect for 2010.

    And American talked about plans for increased customer segmentation at their leadership conference last month.

  8. Given the consensus that a fourth tier will be added, I am wondering if a 3MM level will be added to the lifetime program. If I recall correctly, that would be consistent with Delra and United. I’m at 2.7MM, and it would certainly incent me to shift more travel back to AA than dole it out among various carriers as I have been lately.

  9. Two things that should be noted:
    1. Delta has a higher top tier requirement (125 vs 100K) but allows carryover of qualifying miles to the next year once you have qualified, whereas United requires 100K all in one year.
    2. The ultimate goal is clearly to reward full fare business class passengers with privileges that already come with a full fare business class ticket, while reducing loyalty rewards to the minimum level possible.

  10. AA already has higher levels. It’s called Concierge Key and it has more than one level.

  11. I am not sure why UA GS or AA CK should need domestic upgrades. If they are not buying F direct for domestic flights – then why are they given that premium status?

    People are either given GS or CK as a corporate travel manager or they are buying premium cabin fares on long haul international flights. If you can spend say $12K RT for an international flight – why are you not always paying $1K to $2K for a domestic F transcon?

  12. I hope AA does not add a revenue requirement or another tier.
    –As a flyer that spends his own money for fun, a revenue requirement is a non-starter. That is why I left United/Continental after being a captive customer for years.
    –Raising the top tier to 125,000 would make me think hard about whether or not it is worth maintaining any status. I like being on top of the totem poll, and am will to fly extra miles and pay additional money to maintain it. However, it is a real drag sometimes. 25% more, most likely forget it. Just become a free agent.
    –That means for American, 105,000 miles to about 5,000, if that.

  13. One major difference between DL and AA is that, on DL, you can get half way or more to Diamond just off credit card spend. Of course, I don’t know how many people actually do that, but on AA, the best you can do is 10k EQM a year (20k EQM if you have the now-discontinued Barclays cards) and you can’t earn PQM at all on UA except with now-discontinued cards.

  14. This is kind’ve confusing to me. AA must have put a lot of thought into their announcement last year, considering they had one program with 3 levels (AAdvantage) and one program with 4 levels (Dividend Miles), and chose 3 levels. Second, it is no surprise that Delta and United had spend requirements, but they chose not to. I suspect the reason for waiting is because they wanted to see whether the added incentives for premium cabin flyers would prove more effective with customers. I have no idea on the 3 v 4 levels. All that to say – they made their big changes less than 6 months ago, why are they already thinking of making more, what I’d call “significant” changes (rather than “tweaks” like Exp Plat from 100k to 125k requirement).

  15. Only problem Gary if they do create a level above 100K, is its just not worth it. Sure if you are lucky if you do pass the 100K miles, and have someone who is willing the money for you to get there is it just is not a good value proposition.

    The new AA Ex-Plat level where you earn what a measly 11 X miles per dollar is just not good value. I feel the best value in the AA program today is flying paid business class on partners for the later part of 2016, earning 100% miles. Who cares that you can earn 3X eqm s on a $5000 flight SFO-JFK, I would rather fly in J on Cathay Pacific from New York to Singapore and earn even more miles flying Cathay then I would flying AA from New York to LA. Better food, better lounges and better service plus more miles.

    Who cares that it is technically easier getting AA Ex Plat, especially when the few miles you earn on an AA ticket is laughable in my opinion.

    I would rather put my budget flying other premium Oneworld partners and earning far more miles as a Platinum then the very few additional perks an AA Ex Plat provides today. Its obvious AA isn’t really that interested in my business as an Ex Platinum, why should I waste so much of my time and money on the airline to achieve any higher status????

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