Do AAdvantage Changes Impact My Loyalty To American?

A few days ago we learned about the changes coming to the American AAdvantage program in 2016, and they’re drastic, to put it mildly. They impact all aspects of the program, from elite benefits to mileage accrual to mileage redemption opportunities.

2016-AAdvantage-Program

One question I’ve been asked over and over the past couple of days has been “so, does this impact your loyalty to American going forward?”

Does it impact my loyalty to American? Absolutely. Does it impact me maintaining Executive Platinum status? Nope, probably not. Let me explain.

Before I do so, I’d like to clarify I have no hard feelings whatsoever towards American. They made a business decision, which is totally their prerogative. I’m sure they’ve crunched the numbers, and they’ve done what’s right for them and their shareholders. So I totally respect their decision, and just as they can do whatever they want to the value proposition of AAdvantage, we can do whatever we want with our business.

Loyalty vs. patronage

For years I’ve been loyal to American. And I’m using the term “loyalty” in the literal sense — a strong feeling of support or allegiance. Yes, I had an emotional connection to a large, faceless corporation.

As far as I’m concerned they’ve genuinely offered the all around best value proposition in terms of their loyalty program, from award redemptions to elite benefits to mileage accrual. I of course tried to be unbiased, but when people asked me which airline they should fly, my answer tended to be American, because I believed in their all around product offering for the frequent flyer.

With these changes that edge is gone. But it likely won’t change the fact that they’ll be my primary airline.

For example, I’ve had an AT&T phone plan for as long as I can remember. Do I feel any loyalty to them? Absolutely not. But it has just been convenient, and switching costs seemed too high (in the cell phone industry even picking up the phone once to talk to someone seems hellish to me).

I won’t have to fly as much to earn Executive Platinum status

With the new AAdvantage program, American is eliminating elite qualifying points.

AAdvantage-Elite

Under the current system you can qualify for status based on elite qualifying miles or elite qualifying points. You earn one elite qualifying mile per flown mile, whether it’s in discount economy or full fare first class. However, you earn anywhere from 0.5 to 3.0 elite qualifying points per flown mile.

For those of you who have a hard time conceptualizing this, let me given an example. Say you fly 30,000 miles per year in discounted first & business class, and 40,000 miles per year in discounted economy.

That’s a total of 70,000 actual flown miles.

In 2014 that flying would have earned you:

  • 70,000 elite qualifying miles (the actual number of flown miles)
  • 65,000 elite qualifying points (in 2014 you earned 0.5 EQPs per mile flown in discounted economy, and 1.5 EQPs per mile flown in discounted first/business class)

In 2015 that flying would earn you:

In 2016 that flying would earn you:

  • 100,000 elite qualifying miles (1.0 EQM per mile flown in discounted economy, and 2.0 EQMs per mile flown in discounted first/business class)

This means it will be significantly easier for me to requalify for Executive Platinum status. The difference between discounted first & business class fares and economy fares can be quite small nowadays, so I actually find myself booking paid first & business class quite a bit. That’s especially true for travel originating outside the US, where there are some incredible deals to be had.

So it will take even less effort than before to requalify for Executive Platinum status.

Elite benefits are still valuable

The reality is that I have to fly domestically quite a bit, and there’s sometimes no easy way to “maximize” that kind of travel on miles. I still value free upgrades, free same day changes, etc.

Furthermore, I’ll still get four systemwide upgrades per year, which are good for two roundtrip upgrades to Europe, Asia, Australia, etc.

So realistically let’s say I fly the following, at a minimum:

  • 50,000 miles per year domestically on American
  • 30,000 miles per year internationally on American (using my four systemwide upgrades)

American-Business-Class
Those four systemwide upgrades are still worth it to me for upgrading to business class!

In and of itself that would already likely allow me to requalify when you factor in premium cabin bonuses. But the reality is that I also do a fair amount of paid premium cabin travel on partner airlines given how cheap they can be, like my upcoming trip to London in British Airways business class.

All of this is simply to say that I’ll be able to requalify for Executive Platinum without even trying.

Other than that I’ll be a “free agent”

Previously I’d choose American over other airlines when all else was equal, and even in some cases when it cost me more. And that’s simply because I was loyal to them, and earning miles based on distance flown often made it worthwhile to fly American even when they weren’t the most convenient option.

Now that AAdvantage is revenue based, it’s really easy to crunch the numbers. American’s new loyalty program feels like any other “punch card” program. I’ll earn 11 miles per dollar spent, and once AAdvantage miles are devalued in March 2016 I probably value them at ~1.4 cents each. So I’ll basically be earning a “return” of 15% on flying American.

I can easily factor that into my math when deciding which airline to fly, but those numbers certainly don’t encourage me to fly American internationally or when there’s a more convenient airline otherwise.

Bottom line

With these changes to AAdvantage, I view the program as competitive rather than industry leading. I’ll continue to have to fly a fair amount, and getting status with an airline still makes sense. In my case that will continue to be American, simply because it’s easy to qualify for Executive Platinum status, and I still value their partners for award redemptions, even if prices are significantly higher.

Etihad-A380-First-Class-74
I‘ll still want to redeem for Etihad A380 First Class Apartments, even when the program is devalued

But I certainly won’t be telling people “oh, you have to fly American, they have a fantastic loyalty program.”

How do these changes to AAdvantage impact your loyalty to American, and/or the amount you’ll fly with them?

Comments

  1. Good post Lucky, an honest answer. AA has determined that above market perks were costing them too much. Totally within their right. I,like you, will still travel AA quite a bit but incremental revenue and some trips just won’t go to AA or OneWorld partners. AS and unfortunatately WN may see more of my business. Hey, I may even fly United from Denver versus connecting on AA but blind use of AA is likely winding down in Q2 of 2016.

  2. Good post Lucky, an honest answer. AA has determined that above market perks were costing them too much. Totally within their right. I,like you, will still travel AA quite a bit but incremental revenue and some trips just won’t go to AA or OneWorld partners. AS and unfortunately WN may see more of my business. Hey, I may even fly United from Denver versus connecting on AA but blind use of AA is likely winding down in Q2 of 2016.

  3. The changes will get studied and some sweet spots will emerge.

    If you are considering a change to DL. Don’t bother. The waters not any greener over there.

  4. Still sticking with AA. UA’s fare restrictions on GPUs and Deltas insane spend requirement is enough to stay loyal. Most of all, I cannot accept the fact that I would not have access to those CX F lounges at HKG (which is where I fly the most) by switching out of OneWorld!

  5. Isn’t there more an opportunity cost question too though about what other programs you would rather credit to and focus on for both for elite perks and RDMs. Obviously location/home airport plays a big role in that choice, but say you were living in Seattle still. Why would you not just credit nearly all your flights to Alaska at this point?

  6. So in the end realistically what you are saying is:

    By American switching to this new program you will indeed fly them less.

    You will get your 100,000 EQMs and then fly whomever based on the price to some extent, where if one airline is 20% less than AA it is now a better deal to fly that airline.

    This was my point that I passed onto them as well, that they no longer maintain an advantage that has me paying $250-350 more to fly AA.. ie $1400 AA ticket vs $900 UA ticket to Asia, I paid $500 more to fly AA, now unless AA is $1000 or less, I’m still better off flying UA or another carrier.

    Considering the fact that they don’t release that many seats anyway, I don’t understand making this change… sure it’s a liability on the books having the miles, but only soo many tickets each year can be redeemed anyway, so it bottlenecks with people earning a crap ton of points that cannot use them.

    Now, as Kettles realize they will NEVER earn a free ticket anymore, they just choose to fly whatever airline is cheapest all the time. Most Kettle’s can not contemplate the idea of spending $5,000+taxes on airfare over a course of time that would get them that free ticket, so AA lost all competitive advantage of being able to charge more.

  7. Well, you are banned from United, so your only other option is to switch to Delta, which is probably not an option for you.

  8. Also been “loyal” to AA in the same sense for years and would routinely pay above their competitors to fly them, because of what I believed to be better service. Moved to SAS territory and was dreading switching to *A / UA and went out of my way to fly Finnair.

    Now I don’t feel as bad about letting go OW, but I sure will miss my EXP and the AC AAngels.

    (Writing this while on an UA status run for *S Gold…)

  9. Does anyone have an idea when the switch over to revenue basec program will happen? I know they said later in 2016, but anything more specific?

  10. I have a CX J award with AA miles and I’m waiting to for F availability to upgrade. Is it still free to do? I know it will require a lot more miles now.

  11. I agree with Ben, although I am not sure I would be quite so nice/diplomatic about it. Yes, AA has a right to do that, but I also think that people need to let AA know what they think and not be too sympathetic.

    While they might need to make some changes, doing them without enough notice is what really ticks me off, even after promising they wouldn’t do that.

    They want people to be loyal, but are not respecting/being loyal to their frequent fliers.

    I was top tier at HP for many years, then US (even with the increase of 25k to be top tier) since that merger and now am EXP. Like Ben, there is a good chance I will keep EXP as it is helpful, but, living in the NW, I will now be using Alaska and probably earn MVP75K.

    Prior to this change, even with all other changes, I have still been loyal. I don’t fly other carriers. I either buy a ticket on AA or use miles. Even when AA is more expensive, I just paid it and flew if I needed to. Now, I will book more on AS and possibly other carriers that I can credit to AS if they are cheaper. I, too, have been purchasing more biz/first tickets. I will now just do that on other airlines.

    Bottom line for me, unless something changes, my days of being loyal to AA (US) are gone.

  12. Ben you totally ignored the opportunity cost of not flying a superior airline. Of course you can qualify for EXP. The question is why would you want to. As an EXP and delta DM, I can assure you delta surpasses AA in operations, service, domestic lounges, food and international business class product. AA has an Advantage only in the ability to access first class flights and lounges which, of course, is no Advantage unless you fly a lot of international flights.

    In short I wish you actually provided an objective pros and cons analysis that would inform us loyal readers. IMO by devaluing its ff program, AA has succeed in cementing its position as no. 2. The largest airline in the world apparently subscribes to the theory of leading from behind. DL shareholders are rejoicing.

    Thanks for your blog.

  13. @Lucky: Are you still banned from flying on United? I agree that both for road warriors, such as most of your readers, and aspirational, occasional flyers as well, American has been the better option. However, as to partner airline long haul first class international awards, after the AA program changes, AA and UAL will be quite comparable. Since most U.S. based international leisure travelers are not traveling to the Middle East to book low cost fares to accrue milage and status, but to Europe, Asia and South America, in that order, and taking into account the Star Alliance network, I think UAL might now have an edge, particularly for those who acquire points/miles through ancillary means, recognizing UAL’s poor service standards.

    Hopefully if you are still banned by UAL, they will reconsider as, even with posts from your associates, I think that is of vital importance for your blog to remain relevant.

  14. AT&T and T-Mobile are literally the easiest carriers to switch between, they use almost identical technology. You just have to go online to T-Mo, pick the plan, and they’ll send you the free SIM card. Pop that sucker in your phone and start keeping more dollar bills in your pocket.

  15. Lucky, would you actively try and over qualify as well and earn the additional SWUs? Or would you credit some flights to BA (since i believe you are going for BA Gold) amd/or AS to redeem for CX/EK (and hopefully Hainan at somepoint!)?

  16. This post offers no real analysis if you’re unable to consider a major airline as an alternative. Free agent is disingenuous too if you’re not free to choose one of the big three. I don’t care why, and really in my opinion it’s petty on the part of the airline, but you should disclose that an airline is out of consideration for your loyalty or free agency if that’s still the case.

  17. Lucky thanks for the update on a previous post I was like for once he didn’t respond ha. I suspect a 3 way comparison is on the horizon with your opinions?

    Thanks

  18. I was trying to qualify for AA Platinum and fly like hell next year because I would get double miles. I was supposed to leave for a trip yesterday but a death in the family made me cancel, it would have been the remaining miles that I needed for platinum. At first I was stressed because I needed to figure out how to rebook the trip by year’s end to get the 13,000 miles I would need.

    But then I stopped to think: I would only be getting double miles for about half the year and then that goes away, and I do most of my travel in the Fall anyways. My husband is exec plat so I don’t need the lounge access that comes with Platinum because I get it from him. So, because AA changed its program I no longer had an incentive to chase status and continue flying with them. I had insurance for the cancelled trip so I am going to pocket the $2,000 for the airfare and not rebook the flight before the end of the year, AA just saved me a bunch of money. It’s also worth noting that I live in DC and there are LOTS of foreign airlines flying out of there so every time I go overseas I almost always had a cheaper option than AA, I just stuck with AA because of the miles, so now I can forego that and save money and usually fly better airlines (Hello Etihad, Emirates, Qatar!).

    AA’s switch only screwed them, not me.

  19. Hey Ben, If these changes aren’t enough to shake your loyalty to AA, what would you see as the tipping point, if any? That would be an interesting post.

  20. Good post Lucky. With the new revenue earning miles, fewer SWU and more miles to redeem. The new AA Executive Platinum will be treated more like a Platinum because it was too much for AA.

    If the benefits dropped even lower to match maybe the current gold level it still may make sense fo be “loyal ” to them just for as you say domestic upgrades.

    its just too bad that AA doesn’t value us a little more.

    But you are right we have a choice.

  21. I agree with the comments here. I will likely still go after EXP for a few years, and continue to evaluate my domestic upgrade %. Should that drop below 50%, then I might just move back to UA, where I have Lifetime 1K and Lifetime UA Club, and not worry about having to do mileage runs or play for club membership. Say 50% of travel was necessary, and 50% was mileage run weekend, I might just drop the mileage run weekends and travel when I want/need to. Then I could double my ticket costs for the same yearly total spend, and likely buy F in many cases.

    For me, it comes down to upgrades. If AA continues with the current program, priority based on ticket time, plus good A class availability, then it makes sense to stay with AA. But if upgrades drop to the point of UA 1K upgrades and it becomes difficult to redeem miles on AA – the UA looks just as good. My AA Lifetime Gold at least gives me some priority if I need to fly a Legacy US flight up and down the East Coast.

  22. @Roger – Great point. Ben should really let us know which carriers are in the running.

    @John – Ben’s response surprised me a bit. Your question is excellent. What WOULD it take for Ben to switch, if these changes weren’t enough?

  23. @Russell, I have lifetime Platinum on AA and consider it almost worthless. I also maintained UA 1K until they went revenue based. I did an AA challenge to get EP on AA for 2015. My experience is that as an EP a higher % of my domestic upgrades cleared than on UA as a 1K. Shortly after AA issued SWU’s to the US FF’s SWU,s stopped clearing. I refuse to fly Internatioal in Y, so I cancelled the tickets, eating the losses, I will now purchase discounted J or use my large bank of miles in both AA & UA for all of my International travel, but unless price forces me, I will stay off of AA iron so others can occasionally get an SWU to clear. I think you made a wise choice to stop chasing AA Plat. I have never understood chasing anything short of top tier status to get benefits that come with a CC.

  24. Come on Ben. You haven’t been loyal to AA, you came over in mid-2011 telling us UA was still your primary airline and you had been encouraged by friends to see what AA/AAdv had to offer. This was after allegedly, UA restricted/suspended your privileges in MP and ability to on UA. Since then we haven’t seen a single TR and posts related to UA have been minimal. You are new to AA, some of us *have* been loyal. I have flown AA for a quarter century, been EP nine of the ten past years. It’s not like you are a devoted faithful AA pax.

  25. Is it worth flying on AA codes to earn EQM x 2, when there are cheaper options with partners with an earn rate of only EQM x 1.5?

    At what point is it better to fly with a partner airline, if only cost and EQM are factors for consideration?

  26. If your travel is flying around the US, then things may not seem so drastic. I guess this is the large majority of AA FFs.
    However if you are buying miles and redeeming for say, SYD-LAX or any port in the USA, then you will need 37.5% more miles to do so in premium cabin. Coupled with the drop in the Aussie $ and the upward trend of the $US, it will now cost the Aussie traveller almost DOUBLE the cost of 2 years ago. I for one will be looking at other options outside Oneworld for later travel in 2016. Did I ever have any degree of loyalty to AA? Nah, not a bit, and the feeling has obviously been reciprocated.

  27. @glenn t

    Assuming distance is constant, a partner airline’s fare has to be 25% cheaper to obtain the same value ($/EQM) as flying AA. (AA earn EQM x 2; Partners earn EQM x 1.5 – Cheap Business fares)

    Now, where AA and a partner operates on the same route (e.g. LHR/LAX) the effect of code-sharing, in this case with BA, eliminates the price difference.

    However, on routes where code-sharing does not apply, there are opportunities for variable routing and purchasing on the basis of price (e.g. OSL/LHR/LAX/MEL vs. OSL/LHR/SIN/MEL). Given that distance is no longer constant, the simple formula to account for the price difference is not applicable.

    Theoretically, where distance is constant, a partner airline fare has to be 25% cheaper. As such, if the partner airline base mile increases (due to different routing), the decrease in fare would not need to be as much as 25%. While I’ve created an excel table, I’ve not been able to come up with a simple formula to off-set any increases in base mile with the decrease required in price. Any ideas?

  28. Lucky, with your traveling pattern, why r u not going with BA Gold/ BA Gold Guest List? U will hit lifetime BA Gold easily (and maybe lifetime GGL) and there are perks for 2 with GGL.

    I think you have explored only if u have problems maintaining OWE w AA, but may have not ventured to see alternatives outside US carriers.

    BA gold gives u lounge access on domestic sectors too.

  29. Nice summary of how I feel. I still have a lot of AA points left in the bank and will prob find ways to burn them all before March. Use to pay extra hundreds more just to fly AA, that will not happen anymore, the business will most likely go to the most convenient or cheapest to my future destinations.

    Will most likely switch to Delta or United since they have better connections and deals to Aisa from BOS.

  30. I switched over from UA after they gutted their program. I was using AS to credit my DL and AA flights. I tried to buy AA flights since they earned more miles. (My opportunities to actually fly AS are very limited.) I’ve found AA operations to be very unreliable (at least the regional operations that get me to DFW post-merger). I look forward to not feeling pressure to fly them to get the miles. Actually I’m relieved. I figured this arrangement would be short lived … I never had any doubt that AA could resist the urge to go revenue based.

  31. I still cannot get my mind around “it will be easier to get status now” reasoning personally… I get that it will be easier and one will need to fly less to prequalify for status now if you buy business or first… But for someone who pays 6-8cpm per year to get EXP status, i dont see how it will be easier for me to requalify for EXP next year..

  32. Ben – interesting post. I agree – competitive, but no longer industry leading.

    I am curious – as somebody who is likely to be able to qualify for mid-level status only with one carrier, would you suggest looking seriously at Alaska given their strong transfer partners? Or would you still go for AA first and foremost?

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