Yesterday I referenced an interview with Doug Parker, Chairman and CEO of American Airlines, where he said that American and US Airways would combine frequent flyer programs in the first six months of 2015.
I noted that was intriguing because American has been clear it won’t combine reservation systems until the end of 2015.
Instead of a big bang, combining everything at once, it appears they’re going with a phased-in integration. That to me was news — both the timeline, and that it appears to differ for the frequent flyer program and the airlines themselves.
What I didn’t highlight were Parker’s reported comments about revenue-based frequent flyer programs.
Parker was asked whether American would follow Delta and United in moving to frequent-flyer program based on revenue accrued instead of miles flown. Such a move was “not even on the plate right now,” he said. “We have to get the two frequent-flyer programs merged first. If it makes sense to make that innovation, we may do that, but to try to change the program now would be foolish.
That actually didn’t strike me as newsworthy, although people generally seem somewhat surprised by it. I wasn’t, because it’s exactly what I’ve been saying for the past two months since United copied Delta’s announcement of revenue-based mileage-earning for flights next year.
The mantra at American is “integrate before we innovate” — that is the phrase used across the entire company with most everyone at American you speak to.
The big challenge the AAdvantage program faces now is combining with US Airways Dividend Miles and becoming the world’s largest frequent flyer program with in excess of 100 million members. All of their focus is on getting that transition right.
I’ve said since the beginning that you don’t want to alienate your new customers in a merger. The airline doesn’t want to lose their US Airways customers, already concerned about the loss of Star Alliance. They have American customers antsy about new leadership. If only for the loss of meals on some shorter flights.
For sure, they could have come out with a new program in a big bang — combine US Airways and American, and give all members something different at the same time. But they’re not even combining programs and reservation systems at the same time, because they want to make sure they get it right and minimize the risk of the sort of disaster we saw with United and Continental (and with US Airways and America West).
The delay gives them time to watch the rest of the industry develop. If they somehow seem to lose market share to United and Delta, and attribute that to not having made the same switch as those airlines, then no doubt they have the ability to move to a revenue-based program. US Airways even had one in the can more or less, which got shelved with the merger.
But if they thrive, and even attract business they don’t think they’d have otherwise gotten but-for the United and Delta changes, they well could not. In other words, they’ll look at the data.
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