Reader Ryan wanted to know,
[W]hat do you think would be a ‘worst-case’ scenario for US/AA miles devaluation after the programs merge in Q2?
Plenty of folks thought that combining US Airways and American frequent flyer programs was a chance to implement a brand new program on day 1, a revenue-based one like Delta and United.
I predicted from the beginning that:
- The primary focus would be on integrating the airlines
- When you merge you don’t want to alienate your customers
So the merger would be reprieve from devaluations, for the most part. (Not exclusively.)
And indeed, we know what the 2015 program looks like and I don’t expect a big upending of the award chart in the second quarter of 2015 when Dividend Miles gets migrated over to AAdvantage.
I don’t necessarily expect big devaluations in the third and fourth quarters, either, since the merger won’t be done when the mileage programs combine. Next up is the single operating certificate, and then the single reservation system closer to the end of the year.
That said, I do see some eventual devaluations if only because American is currently more generous than their major competitors and partners. In this hobby, deals and opportunities that are several standard deviations better than the median offering don’t last. And some of the current American award chart sweet spots qualify as that.
Nearly a year ago I hypothesized what a future award chart might look like.
Where I Don’t See Big Changes:
- I don’t see big increases to transatlantic awards. American adds fuel surcharges onto their primary transatlantic partner’s flights. That means their Europe awards are already more expensive than the industry norm, and there’s not a ton of room to bump them up.
- I don’t see big increases to awards in and between North and South America. Competitors have kept awards in the Americas relatively steady, so American will likely follow suit.
- I don’t see big increases in economy awards, which matches what competitors have done.
- I don’t see big increases in Africa awards. American’s chart to Africa is already expensive, and British Airways awards to Africa doubly so with fuel surcharges.
- I don’t see big increases to the Middle East and ‘Indian Subcontinent’. Those awards are already expensive, and have been since 2008.
Where I expect the biggest increases is North and Southeast Asia, and possibly Australia (the latter especially if American alters is routing rules to allow transit via Asia now that they no longer offer distance-based awards).
American’s awards to Asia — such as 55,000 one-way business class to ‘Asia 2’ and 67,500 for first class are just so much cheaper than competitor carriers so I see premium awards to Asia getting more expensive eventually.