Breaking Up With American Airlines and Credit Card Balances Over $1 Trillion

News and notes from around the interweb:

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 »

More articles by Gary Leff »

Comments

  1. Agree. $1T on CCs is not a bad story or new story. The Journal reported it a while back, and it is not a negative thing. It means people are willing to spend again.

    Could people get caught with their pants down at some point in the future? Sure, that is why CCs charge such high interest rates.

    Now, that AA breakup story, that is the one to read.

  2. I think it’s a win-win for Nomadic Matt and AA to part company. Nomadic Matt benefits by being a free agent, and AA doesn’t really care if it loses his low revenue tickets. It’s bad business to lavish lots of perks on customers who aren’t particularly profitable.

  3. @iahphx. Agreed. American Airlines is a rich airline, awash in profits and they do not need me to fly them. I am planning to fly elsewhere, but I am sure they will not miss my revenue. There are plenty of rich people, stupid corporate travel, and brainless Ma and Pa Kettles to take my place.

  4. @iahphx

    They will care if they lose all of their low-revenue ticket holders.

    I will agree with your last point, I never understood why they rewarded behavior solely based on mileage flown.

    But Gary has many times over the years made the point that it’s “the margin” that counts. “Low revenue” flyers may be considered as such by the airline, but often, status locks people in to an airline, incentivizing them to pay more for their preferred carrier. That extra money is pure profit, and by discouraging that behavior, the airlines will feel it in their pocket book.

    I’ll admit what drives me nuts is that actual flying earns so little miles these days. I do next to no domestic flying, and use credit card miles for my big trips. There was a time when status and RDM had me buying *a lot* of discretionary trips, albeit at low fares. Now? Nobody gets that money.

  5. Though Matt’s analysis was very solid:

    “And thus the current dilemma: If you are a low-spending but still frequent traveler, does it make sense to stay loyal to an airline in this day and age?

    “The answer, I’ve come to realize, is a resounding NO.

    “As someone who likes the concept and perks of loyalty, it saddens me to say this, but unless you are spending a lot of money on one airline, loyalty — at least to airlines — is an antiquated concept.”

    My guess is that I’ll be breaking up with AA this year as well.

  6. Regarding the entitlement-hurt posted by Nomadic Matt – I agree with those who say Matt should stop whining. But I also agree with Matt. The logical extension of his behavior would be that if he somehow managed to get on flights for free for several years then was discovered and made to pay a modest price for future flights, he would be just as pissed. Sorry, a business needs to survive, and that’s by generating a revenue stream for themselves. OTH, what AA has done to the availability of awards, legitimately earned, is indeed a big FU to their loyal customers

  7. @madguy — I agree with you that it’s not a good business practice to make standard award inventory scarce. It feels slimy and deceptive. The gatekeeping function should be in the difficulty in EARNING the miles. It is good business practice to make it harder to earn miles and status on cheapo fares. But once you have the miles, you should be able to reasonably spend them. Kind of like the way the hotel programs are run: how much worse would those programs be if they had airline-like capacity controls?

    I know everyone wants to feel they are a valuable customer, but the reality is that if most of your flights are on deeply-discounted coach fares, you’re probably a far less valuable customer than you think. If Nomadic Matt knows what he’s doing (and I assume he does), he probably generates little to no profit for AA. Just like I am certain I generate little or no profit for them. Discretionary travelers who know how to game the system are just not “desirable” customers.

Leave a Reply

Your email address will not be published. Required fields are marked *