Expect the Worst Changes to Elite Benefits at American in 2018

American Airlines is introducing premium economy on their Boeing 787-9 aircraft which will go into domestic service in October and will launch internationally in November.

The airline won’t actually sell tickets for premium economy right away, for the first few months of the service the seats will be treated like “Main Cabin Extra” — bookable by elite frequent flyers for free, and eligible for buy up by other passengers.

It’s pretty clear that upgrades will be offered one cabin only, meaning once they start selling premium economy as a separate cabin early next year that economy tickets will upgrade to premium economy on aircraft with that cabin — and not to business class.

Back in May American Airlines President Scott Kirby shared that they planned to offer domestic premium economy as well.

I expected this to be something akin to what Delta has done with their extra legroom product. American offers Main Cabin Extra which is just extra legroom seating. Delta bundles their extra legroom with free drinks and snacks (depending on flight length).


Extra Legroom Main Cabin Extra Seats

Delta treats their Comfort+ seats as a separate fare class, with ‘upgrades’ from an exit row aisle seat in regular economy to a middle seat in Comfort+. With Delta looking to upsell over 70% of domestic first class seats, the fear is that Comfort+ becomes the new elite upgrade (Delta is trying to upsell those, too).

On this morning’s American Airlines earnings call Scott Kirby, in response to a question about an hour in, added some color to domestic premium economy.

Update: The call is now archived online. Here’s the quote from Scott Kirby 1:02:10 into the call.

Basic economy I think will start to have an impact in March of next year. Premium economy while we’ll roll it out at some point in ’17.. we’re going to treat premium economy like a separate cabin, essentially, so different than what other airlines might call premium economy today, more expansive, more what it looks like, more how it’s treated internationally or how we’re going to treat it internationally.. as a separate cabin, and because of that it will have an impact on the frequent flyer program so that will probably be for 2018 really because we’ll need to tell our frequent flyers in advance how it impacts the frequent flyer program.

My takeaway:

  • American plans to treat domestic premium economy as a separate cabin, which he contrasted with how competitors (read: Delta) handle it. He described domestic premium economy as being closer to what they envision for international.

  • He explained that they won’t see a revenue impact from this until 2018 because of the impact it will have on the frequent flyer program and the need to tell AAdvantage members about it in advance.

The one good thing here is Scott Kirby’s internalizing the need to tell customers about changes to their benefits in advance. That’s a big swing from how US Airways used to make changes, and the approach first introduced after the merger (the April 8, 2014 massacre).

The bad news is that domestic premium economy will come with major changes to elite benefits. American hasn’t said what those are, but it seems likely that centers around upgrades.


American Airlines Domestic First Class

What do you expect the introduction of a new domestic cabin to mean for elite upgrades?

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. If it’s going to be similar to international premium economy, then how is that any different than domestic first class?

    Grrrr, airlines!

  2. the 3 majors are all going to take their comfort plus, MCE, etc. products and homogenize them into a domestic premium economy product that will be a separate class. if you want to be upgraded to business/first, you’ll need to book PE. it is so clear that this is coming. enjoy your economy upgrades for now…

  3. My plan is to ride the gravy train until it dries up. And then tell stories about flying back in the “good ‘ol days.”

  4. Ken, my being a “stupid flyer” has enabled my family and I to travel across the world in F/Biz as well as some really great hotels such as the Park Hyatt Vendome one of the world’s great hotels, Park Hyatt Dubai etc. It also affords me First Class auto upgrade 90% of the time. All for being loyal so not such a bad deal. And as a disclaimer yes I am a business owner and pride myself in having a whole lot of Loyal Customers, thats a simple business school 101.

  5. Gary, any clues as to whether premium economy hard product be different from today’s MCE? Or will it just be lipstick on a pig, where the lipstick is some booze and a meal.

    While the analogy to international might imply better hard product, I font see how they could retrofit the cabins on the timeline he is talking about.

    This will make my decision on whether to requalify for exec plat in 2018 much easier.

  6. If they do reconfigure the planes for this new domestic premium economy product, I fully expect for the size of the existing F cabins to be reduced.

  7. Just listened – I think he’s referring to international – he corrects himself at the end to say “how we’re going to treat it internationally”

    Basically the change for 2018 will be that you can only upgrade to business from premium economy international.

    And the $1bn number includes both basic economy and this change.

  8. @Greg he seems to say they are going to do premium economy domestic the way they are going to do it with their international, and in contrast to how others (presumably Delta) do it. Delta is adding a separate premium economy cabin internationally, but not domestically. And that’s a contrast he appears to be drawing.

    American is introducing premium economy internationally at the end of the year, and charging for it in 2017. The domestic premium economy, he’s saying, won’t have a revenue impact until ’18.

  9. @Beachfan we don’t have any sense of this yet. My assumption has been free drink and free buy on board item. Not sure what separate cabin will mean.

  10. Honestly I’m
    Kinda okay with all
    This

    Right now I’m EXP but with SWUs going from 8 to 4, the ridiculously complicated EQDs ans revenue system plus increase miles needed – it’s just not worth me trying to hit EXP anymore.

    I live in New York and fly to Sydney and London plus la and Miami. I will make 50k – platinum level – easy

    I could never fly JFK-SYD (21 hours) in economy at my age (37)

    So I am more than happy to buy premium economy and pay whatever that is to Sydney. I’ve flown it in Qantas and it’s very comfortable. I will then use miles and copay to upgrade to biz. And if it doesn’t clear I’m
    Happy in PE

    Likewise on 6 hour flights to LA and 7 hour flights to London .

    This system
    Will work fine for me

  11. As an EXP with AA, if they take away my ability to select main cabin extra seats when I buy a regular coach ticket (aka exit row seats), I’m done with AA and will take my business elsewhere. I chose AA and have been loyal to them for many years for exit row access as an elite. The upgrades are nice to first/biz when they clear, but the extra leg room is a deal breaker for me if that’s what is happening.

    Funny how DOJ sued to block a major healthcare to go from the big 5 to the big 3 (http://money.cnn.com/2016/07/21/news/companies/doj-anthem-cigna-humana-aetna/) but they did not block the airline mergers to do the same thing.

  12. At least domestically and on shorter international flights I’m OK with this as it looks like a nice product. On a flight where I need a lie flat seat I’ll book an award or revenue seat on a partner unless AA offers a good discount on a Business seat.

  13. I get it, AA is about to throw frequent flyers like myself under the bus. When they went broke and needed us, they gave us a fairly good deal. Now that money is flowing their way, they don’t need their loyal customers anymore. I have been platinum for many years, even made platinum exc one year. Well, is time to start shopping around. Just to make sure you are angry, they are flying with empty seats in business/first and not honoring the upgrade list. Perfect!!!

  14. @Ghostrider5408: wrote: “the Park Hyatt Vendome one of the world’s great hotels”
    Lol… you need to travel more Ghostrider. I stayed there last year and while it is a nice hotel, there is no way it is one of the world’s great hotels. Not even close. Not knocking PHV, but lots of hotels are much better (but of course you can’t stay at those places with Hyatt points).
    Of course if you are comparing the PHV with a regular Hyatt or a Holiday Inn, then yes the PHV would look like one of the “world’s great hotels”.

  15. as a PLA or EXP for thelast 15 years, my reaction is “who cares”? since I am done with AA as of jan 1 2017…
    they now have the worst program of all and run a mediocre airline
    for my schedule, United works just as well and I even get more miles if I fly air canada and credit united, who were very happy to status match…
    so long AA….

  16. Maybe they could brand it as First Economy and people wouldn’t get so bent out of shape about being upgraded to a seat that is even better than the legacy domestic F seats…

  17. I feel the same way as doug. Been loyal for 13 yrs. Flew them 1 long-haul/month with stopovers. Being in the bay area I have several choices to go directed with other carriers. So long American, now I just need to burn my 8 system-wides (which are having a hard time getting cleared). They could have done so much more with program (with the bigger group of loyal fans) that would have put them leaps ahead of the competition. I understand the mileage devalue (business sense 101), but loyalty perks are dropping as well. Most of my upgrades cleared at the gate, so make me feel good by giving the 8 system-wides.

  18. This is race to the bottom and very similar to the PC and laptop era, consumers will win. As people start dumping loyalty to airlines and stop paying a premium to fly to get EQMs and MQMs, we will see lower economy fare. Because of less upgrades. we will also see business class fares come down even more. For now, I am seriously looking at switching from AA to AS or DAL (because of MQMs through CC spend) for next year.

  19. soooo, in order to be treated better than “luggage” on the WORST domestic airline, we need to cough up more $$$ OR miles? NO THANK YOU. Lucky and Doug are dead-on in their responses.

    Wanna “stick it to the man” and need/want to burn some of your AA miles? Can’t find ANY saver awards EVER like myself and don’t want to waste them on overpriced award tickets with fuel surcharges? Use them for HOTEL awards. Login to your AA account and go to: https://www.useaamiles.com/carhotel/

    You can stay at some pretty nice boutique hotels on the cheap by doing this. Example: Belmond Hotel Monasterio Cuzco, Peru – a former Orient Express Hotel. Basic rooms usually go for $385 a night (sumptuous breakfast included). This isn’t saying much, but it’s the nicest hotel I have ever stayed at. TIP: if you don’t login on AA.com, the price for the Hotel Monestario is 87,320 (53,200 if you ARE logged in).

    SO how does this package taken from the Hotel Monestario’s site sound?:
    “Journey to Machu Picchu: Includes: Luxury accommodation • Daily buffet breakfast • Welcome
    amenities including fresh fruit and coca tea • Round-trip journey on the luxurious Belmond Hiram Bingham train, from Poroy train station (Cusco) to Machu Picchu • A one-day entrance ticket for two people to Machu Picchu with a guided tour of the ruins • Full brunch and dinner on board the train • One afternoon tea for two at Belmond Sanctuary Lodge”

    BTW, DON’T use miles for vacation/car awards. You will not get as big a bang for your buck. Do a price comparison yourself if you don’t believe me.

  20. Essentially, there will be F class – domestic
    Business class domestic – called Premium economy
    and regular coach / economy

    3 fare classes, 3 cabins

  21. @Brad:
    Haha I can’t tell if you were being serious – you’re saying it’s better to burn 53,200 miles for a hotel night that would cost $385 – giving you a whopping 0.7 cents per mile? That is an atrocious value for your AA miles, even with the recent devaluation. I’m glad there are people like who who will burn miles that way – that leaves more J/F awards (yes, they are still out there) for the rest of us.

    And I completely disagree that using AA miles for cars/vacations is a bad deal. My wife and I are going to Door County (Wisconsin) soon – we burned 1K miles +$217 to rent a luxury car from Budget that was otherwise going for over $700. By far my best redemption yet!

  22. Kirby didn’t sound too confident about when basic economy would begin to affect RASM and PRASM. And his statement on premium economy didn’t make much sense to me. It was confused and confusing.

    Also I don’t understand waiting until 2018 before premium economy will affect the frequent flyer program. Surely Kirby now knows how the frequent flyer program will be decimated and could just announce the changes now to become effective next year when that product roils out. Not that I’m advocating it.

  23. Premium Economy = less fliers in 2018 = huge recession coming. We saw this before when JL dished out premium economy in 2000—-where did that go? Right into the onsen.

  24. @Stu
    I think Brad’s being serious. Sadly .7 cents a mile is pretty close to what AA miles are now worth. Almost 0 economy saver awards without spending a night in an airport and almost 0 biz savers period. I booked a RT from SFO to DFW on AA for $140 RT but the best award ticket I could find on AA.com would have been 19 hours of total travel time for 25k miles. While I’m still holding out hope I’ll be able to use my 65k remaining AA miles, .7 cents isn’t sounding too bad.

  25. @Ivan YMMV as usual. For example if I wanted to fly OKC-LAX tomorrow the cheapest AA fare is $464, however there are multiple saver awards available, giving me almost 4 cents per mile. I’m not at all trying to defend the mAAsacre that AAdvantage has become under LCC leadership, just saying that you can still do better than 0.7 cents per mile.

    And if they’re selling a r/t for $140, who cares about saaver awards?

  26. 1: Not a Delta Fanboy. In fact, I’m status challenging over to United, and will have 0 status w/ Delta next year.

    But

    What AA’s talking about is nothing like what Delta’s doing.

    Delta has “upgrades” to “Economy Comfort Plus Premium” (or whatever the hell they’re calling it this week, but for DM / PM flying alone those go through when you buy your ticket.

    And a “one cabin upgrade” is from any sort of Economy, to Domestic 1st.

    2: If AA’s “Premium Economy” is two seats with a big enough arm rest in between that you don’t have to be in physical contact with the person next to you, great! That’s a worthy upgrade.

    If not, then it’s “Economy”, nothing more. And making that the “upgrade” with gut the AA program.

  27. It seems to me that if they intend to treat domestic PEY like international PEY, the “new domestic F seats that are also the new international PEY” would become domestic PEY, too, which would mean they’d need to introduce a new domestic F seat (or use a business class seat, but that seems unlikely). If that happens, it’d be a pretty awesome change, I think. Pay a bit more and be guaranteed to get what used to be the first class seat, with the potential to upgrade into something even nicer. I’d be majorly impressed if they go that route; that would truly be “going for great”…but it will surely be something less awesome than that

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