Scott McCartney‘s Wall Street Journal Middle Seat column this week is on the declining value of airline elite status.
There’s a common narrative that air travel is a microcosm of society with ‘the rich getting richer and the poor getting poorer.’
- That’s never really been true, since it’s not ‘the rich’ as much as middle managers earning elite status as a result of having to travel extensively for work. (The rich may travel more comfortably, and don’t necessarily have to travel because their boss tells them too.) Historically free upgrades have accrued to relatively comfortable (by world standards) workers but hardly the wealthy.
- Meanwhile the price of premium cabin travel has come down markedly making it far more accessible than it used to be to purchase (although still ‘expensive’ of course).
But the perks of status are far less meaningful than they used to be, and they’re likely to become less valuable.
- The single most coveted and valuable perk has been upgrades but upgrades have become far tougher to get. Years ago only 10% or so of domestic first class cabins were sold for cash, with the rest available for upgrades and awards. Delta predicted they’ll sell 70% of those seats for some amount of cash in 2018. Delta now even considers extra legroom coach seats an ‘upgrade’.
- Availability of international upgrades is harder. Confirming upgrade space is much harder than it used to be as airlines hold more seats for sale. United even makes you buy more expensive tickets (the lowest fare classes aren’t eligible for elite upgrades) even to waitlist for an upgrade, a version of a lottery — if you spend more for the change to upgrade and don’t win, you don’t get a refund for the difference you’ve just given the airline more money for nothing. On American it’s harder (since January) to use confirmed systemwide upgrade certificates even on domestic flights — a far cry from 14 years ago when those used to book into revenue first class inventory.
- The international upgrade benefit may get worse now that American is busy rolling out international premium economy and Delta prepares to bring premium economy online (with United a good chance to follow). Airlines usually allow only a one cabin upgrade, and assuming that happens here a coach upgrade would only get you the equivalent of a domestic first class seat for long haul international rather than a flat bad (and those upgrades may be tougher as there are usually fewer premium economy seats). Alternatively, you’d have to buy a more expensive premium economy ticket to be able to play the upgrade lottery to business.
American reduced the number of systemwide upgrades their top tier elites get from 8 to 4, but even with fewer upgrade certificates out there they’re harder to use. (Elites can still earn 6 or 8 certificates flying 150,000 or 200,000 qualifying miles, but overperforming elites used to be able to request additional certificates beyond 8).
Of course as I told Scott McCartney, American gets much of the heat for diminished value of status because of recency effects.
Gary Leff, co-founder of the frequent-flier community InsideFlyer, says top travelers are complaining a lot about American lately because the airline is making changes after its merger with US Airways. American was considered the most generous for top customers, because Delta and United had already weakened some perks, he says. Now there are few major differences between the three big airlines, Mr. Leff says.
A week and a half ago I wrote that the biggest benefit to status is help when things go wrong. You pop to the top of wait lists when you need to be re-accommodated on another flight. And your status may be a persuasive tool with some employees to do more for you than your benefits or airline procedures require, for instance when I am upgraded and I have to be moved to another flight some agents in some clubs are willing to preserve my upgrade when rebooking me.
A week ago I wrote along the same lines in response to a story of terrible onboard treatment, “I’m beginning to think the primary benefit of frequent flyer status isn’t in the published benefits, but a presumption from (some) employees that you’re less likely to be a threat to the aircraft.”
All of which is to say that I care about my American Airlines Executive Platinum status far less than I used to. Airlines want customers to buy the product they want to fly on each trip, but that means flyers will buy it from whomever has the best schedule and price on that trip. I used to go to AA.com whenever I needed to travel, and buy the ticket American was offering. Now I fly a mix of American, United, Delta, Southwest, Virgin America and Alaska. And I’m not alone.
Gary, this is so true. I am a former Ex Plat myself I am so thankful that I’m a leisure traveler now. At least if I’m traveling on my own dime I can make the right decisions for me. Living in Dallas, I usually have to select either AA or SWA, but at least I have some options.
I live in DFW as well. Switched to SWA for almost all domestic travel if they fly to the destination. Much better service and pleasant in flight experience. For international, I just use miles I earned from credit card spends to get confirmed tickets on business on foreign airlines. I have only stepped on AA metal only once this year and I feel so even better about traveling.
While I generally agree on the premise herein, kudos to AS for allowing upgraded on award tickets starting 5/20.
I’m currently in Miami on my way home on a PHX-MIA-SJO-MIA-PHX award trip and happy to report upgraded on 3 out of 4 legs as an EXP! First positive move I’ve seen from AA in some time!
I would think that getting closer to a market-clearing price on premium products is probably bad for the arbitrageurs but better business for airlines, since presumably they can more efficiently match capacity to demand, and if they enhance their product in a way that gets them more business, it shows up more clearly in their bottom line, plus it gives the benefit of a more efficient market overall for consumers, not just the ones who pay attention to blogs. “Buy what you want” is a lot more transparent than “master these byzantine rules and you get Krug”.
The major players have an oligopoly so are willing to risk loyalty for a high return on investment to stockholders. The key is that it isn’t a monopoly (yet). In the past I tended to travel almost exclusively on AA, UA or Alaska and wouldn’t even consider Southwest at any cost. But after UA’s addition of Economy Minus I find myself prioritizing Southwest over the legacies. Sad to see this race to the bottom. Thankfully SWA remains different and offers many non-stops that I’ve been missing out on. Never thought I’d see them as the premium to the legacies but I do now!
Everyone knows the game. When things get too easy the bar/thresholds get raised . Till people can’t meet them or switch alliances. Than it gets lowered. This is life weather it’s meeting quotas at work or top tier status with airlines/hotels.
I’m already there. I certainly log my miles to the programs, but I don’t seek status anymore. I’d much rather just pay for F than hope for the best.
And the truth is, paid F isn’t much more expensive than coach used to be for a lot of routes, so it’s not that painful. I do wish more carriers moved to the inclusive model of F that AS uses (and HP used to use), where paid F includes lounge access. Priority Pass is OK and the domestic carrier lounges aren’t all that, but since I’m not loyal to a carrier anymore, I’m also not paying for AA, DL, or UA lounge access.
You were quoted in the paper? Wow, congrats. That’s really great.
@MIKE HARRIS – I thought I just read that AA doesn’t allow upgrades on their award tickets – even for EXPs? Glad to hear AS allows it – may start shifting some business to AS now.
This makes me think of my dad. Loyal to American for decades – flew them almost exclusively, spent hundreds of thousands on their credit cards, became lifetime Platinum. He used to get domestic upgrades fairly frequently, and international upgrades were not that hard to get using miles.
Now American devalued his status by inserting Platinum Pro above him. He rarely gets domestic upgrades now, and international upgrades with miles are almost impossible to come by. I know it’s within American’s rights, but it does not make it less infuriating. Might also make them lose loyal customers over time.
[Nasty comment about @Mark deleted, albeit deserved.]
While the situation you describe is increasingly true, and “playing th field” booking those cheaper-than-in-the-past premium cabin fares on the airline with the best deal and routing, having achieved at least mid-tier lifetime elite status in a program of one or more of the three major alliances is still a good fallback.
As of this month ExecPlats can be upgraded on their AA metal award tickets within the regions covered by 500-miler and (for ExecPlats) comp upgrades. Priority is based on the value of the fare class so would be after revenue ExecPlats but ahead of other tiers.
More whining that “things aren’t what they used to be.” Guess what, the market has changed, and there’s less competition, especially for the type of flyers that elite programs want to target. Of course the programs aren’t as good.
And this AA EXP is 4 for 4 on SWUs, plus one more on miles & money, so far in 2017. All on Y–>J international long hauls. 2 cleared at booking. I’ve cleared every SWU I have ever requested over multiple years of EXP-ness. Not even remotely hard to use in my experience.
Ditto. I fly quite a bit.
2015 280,000 BIS Miles on AA
2016 300,000 BIS Miles on AA
2017 Book Business by price, equipment, and schedule.
So far this year I’ve flown Thai, Qatar, United, Air China, JetBlue and American. If I am any kind of example, they aren’t getting the results they want with the new system. Booked Air China today round trip FLL to PEK for $2600 in Business. American wanted 3X that. In previous years, I would have booked Economy on American to Asia for anywhere from $1500 to $2500 and then used SWU. This year the same trip gets them nothing from me.
I’m with @doublejade. Based in Austin, 15 years of execplat has now switched to (1) is there a nonstop (often scored with a hidden city angle). (2) does SWA or JetBlue fly there, (3) can I get there with United for discounted first, and then (4) can I leverage my lifetime AA status to get there.
I’ve bought AA once in the last 18 months, when I used to buy 40-50 tickets per year, at an average of $500-$600/per roundtrip (a few biz across the water in that time).
Not sure how squeezing the frequent flier program is working out for AA, but I’m not seeing it.
What I really enjoyed was blogging about how I arbitraged through 1M advantage points when AA did the first overnight devaluation. There were so many holes between the US and AA systems at that time…I would burn the points on biz travel just to reduce my points exposure.
Will be interesting to see what this all becomes.
I agree with DavidB. Lifetime mid-tier elite status is now the “sweet spot” for many of us. That makes travel much more comfortable and convenient – access to E+ seating on UA, lounge access on international flights, shorter lines at check-in and at security, and lower award booking/change/cancel fees. The incremental value of top-tier status is simply not worth what it takes to achieve. I used to go out of my way to fly UA; for the last few years I’ve been a “free agent” (flying on many different airlines; along with ensuring I have a good mix of miles in various airline, hotel, and bank programs, so I can almost always access the best deal; and focusing much more heavily on the bank programs recently).
When the downturn comes and planes aren’t full, the frequent business travelers worth to the airlines will increase again. Though I expect things won’t return to what they were 5+ years ago. In the meantime we have to create our own elite experiences.
TOM says:
June 9, 2017 at 6:09 pm
@MIKE HARRIS – I thought I just read that AA doesn’t allow upgrades on their award tickets – even for EXPs? Glad to hear AS allows it – may start shifting some business to AS now.
Tom – typo on my end…AA not AS. AA started allowing upgrades on award tickets starting 5/20. As EXP, happy to have been upgraded on 3 of 4 segments – and my companion/daughter on 2 of 4 using 500 mile coupons.
I must say that AA ticket agents are not well trained on this. Took us 65 mins in PHX to have companion ticket issued at counter upon check-in. Simply needed to buy one more 500 mile upgrade coupon – sad it took that long to figure out.
But first positive move in AAdvantage Program in many moons! In all fairness, just wanted to point this out, thread topic notwithstanding.