Today Marks The End Of A Mileage Era

Well, it’s August 1, 2016, which is the day that the American AAdvantage program goes revenue based for the accrual of redeemable miles. Last November we learned that the program would go revenue based at some point in the second half of this year, while in early June we learned the exact date.

AAdvantage-Program

This is significant because all three “global” US carriers now have revenue based frequent flyer programs. If you had told me three years ago that by 2016 all three airlines would have revenue based loyalty programs, I wouldn’t have believed it.

But it started with Delta last year, United matched, and now American is matching as well. The “innovation” cycle is now complete.

Delta-SkyMiles-2015

The reduced mileage earning for the average flyer is bad enough, though on top of that elite benefits are being reduced, a revenue requirement is being added for status, and there was recently an award chart devaluation. It’s incredible the degree to which the program’s value is being reduced over just a few short months.

My main objection to the current states of these programs isn’t necessarily that they’re less rewarding, but rather how damn complicated they’ve become. Between earning redeemable miles based on spend (on base fare, sometimes, unless you’re flying on a ticket issued by a different airline), elite qualifying miles based on distance flown, having a revenue requirement, etc., these programs have become a chore to make sense of.

With all of the “big three” airline loyalty programs roughly the same, I almost feel liberated. I can now choose the airline that’s best for my travels based on where I need to go, rather than primarily based on the loyalty program.

Just a few days ago I booked a JetBlue Mint Class ticket between New York and San Francisco for $549. American’s economy fare would have been $350, and I’m not even sure my upgrade would have cleared. For a 6.5 hour flight I thought it was worth paying an extra $200 to guarantee an upgrade to a far superior product (I managed to secure one of the “suites”).

JetBlue-Mint

Before American went revenue based I would have just instinctively booked American and not really looked at other options, which is perhaps a testament to how well the programs work sometimes.

I’ve already booked enough travel this year to requalify for Executive Platinum status with American, so we’ll see what happens next year.

Big picture this doesn’t change a whole lot for me:

  • The best way to earn miles is still through credit cards and purchasing miles, which continues to be as lucrative as ever; we’re simply earning fewer miles for actually flying
  • We’re seeing more discounted first & business class tickets than ever before, which to me reduces the value of miles, since in many cases I can just outright buy what I want, rather than playing a game to get those seats; when you can book ~$1,100 business class tickets from the West Coast to Europe, it’s silly to even look at redeeming miles

Qatar-Airways-A350-Business-Class-30

Bottom line

It’s amazing how quickly the US carriers have followed one another with these revenue based programs, and how much the value of the AAdvantage program has been eroded over just a few months on several fronts. Still, it doesn’t change the fundamental approach I take towards miles & points. The best way to earn points continues to be through non-flying means, and that’s as lucrative as ever.

How do the “big three” US carriers switching to revenue based programs change your approach towards miles?

Comments

  1. I suspect they will watch the revenue numbers for a month or two then respond with mileage bonus/promotions to try and win us back.

    It may take a year or two for people to lose status and perks. Once that happens, many will join you in booking the best option without regard to “loyalty”.

  2. I for one will look forward to discounted premium cabin fares. I don’t fly as much as some of you and being self employed I still have to “pay” for my tickets upfront. Also I often travel to the east coast which allows me other options like Amtrak and simply driving. I just booked a first class ticket on American 737-800 from NYC – CLT one way for $181. Its only a 2 hour flight but with two checked bags and one laptop carry on the extra $50 was worth it.

  3. Logical analysis. Fortunately I am able to earn through credit card spend and discounted premium cabin fares to Europe which for time being is combination which works for my needs.

  4. I have one AA trip on the calendar in the second half of the year. Otherwise, I’ve already moved on to free agent status. So far I absolutely love JetBlue, but I really love picking the shortest flight and the lowest first class fare, it is incredibly liberating to not care about status anymore.

  5. There’s various ‘end of an era’ moments in this game and some mean more to me than others. By far the biggest end of an era for me was the physical merging of US and AA which from memory was March 23, 2015. I couldn’t care less about what US was doing with its actual planes, what was very significant for me was the end of the Dividend Miles program. For me it was the most flexible, lucrative, generous, exciting and rewarding rewards program I have ever seen. You were really only limited by availability and your imagination. I booked and flew some of the most ridiculous itineraries I could think of, purely because I could. I look back on the era with fond memories and feel equally blessed (that I was able to do it), and sad (because its gone and its never coming back).

    I guess you might look on this AA era in the same way. This game is always changing (I am LOVING all the new discounted random J and F sale fares that are now popping up daily) because the industry is always changing but I’m grateful I get to enjoy the ride.

    Most people would love to be able to travel how we do, but most never will.

  6. Lucky,

    A few things:

    1) I disagree on the best way to earn miles. The best way to earn miles is to fly on business trips paid for by your business or employer. Customers flying on these types of trips are those that the airlines appear to want to attract.

    2) If we see discounted long haul travel increase, the best way to earn free travel (aside from accruing miles from travel you may have done already) may be with cash back cards, travel currency cards like Arrival, Pay with Points schemes, etc. At least with these currencies, you can typically travel when you want. Make sure to keep these in mind going forward

    3) With domestic airfare increasing, I am finding the best use of traditional miles is often short haul, last minute travel.

  7. Asian airlines are following close behind US Carriers. Cathay Pacific is one example and it is no longer easy to attain Gold or Diamond status. Even the base tier which is Green is now $50 a year. Their changes went into effect mid April now we have to deal with Club Miles in addition to Mileage.

  8. Might be a good time to revisit/review options for crediting AA/DL/UA flights elsewhere. Seriously considering crediting next UA flight to SQ KF.

  9. I’ve been a loyal delta flyer and hold platinum for the past couple years but I’m considering just flying whoever has the cheapest first class ticket now. I did status match to mosaic with JetBlue. I hope they continue to add more routes with Mint. Its a great product

  10. Just wait until the next recession reduces air travel demand. The airlines will feel the loss of loyalty keenly, and will fall over themselves to simplify their programs and make them more lucrative.

  11. My travel patterns haven’t led me to having airline status in almost three years now and, strangely, I don’t really miss it. Instead of flying inconvient routings and times to stay on my chosen carrier, I fly whoever is cheapest and most convient. I find myself in premium cabins about the same amount, but without the uncertainty of “will my upgrade clear?”, as I’ve either booked a premium fare (For less than I expected.) or I’ve had a paid upgrade at check in option presented.

    What I don’t think these airlines have thought through is what they’re going to do to their business, choosing to step over dollars to pick up pennies. There are tens of thousands of people who are blindly loyal to their chosen airline and who won’t have been following the minutiae of these changes like we have. As their loyalty is less and less rewarded, they’ll stop being slavishly devoted to a given carrier, meaning that the expensive and ill conceived routings they’re used to selling just won’t sell anymore.

  12. Seems like United has suddenly become my preferred airline in the US. Accruing all miles to Singapore gives me 100% for any economy class code as well as elite miles. An elite status in Singapore Airline’s krisflyer also lets me in priority wait list selection for those first saver suites, best use of any UR,MR,TYP transfer.

  13. hello ben/ lucky

    hi, great blog, i read this article and i earned the majority of my miles from flying, i cannot get approved for all of these or any of these fancy mileage credit cards, so what is your suggestion or suggestions for me?
    thank you,
    paul.

  14. @snic- best comment of the thread. The loyalty perks everyone got used to started in the Great Recession and now they’re being scaled back because the economy is better and the planes are full. Most of us have more money to spend as a result, so I for one am happy to see this. In fact for my last 2 vacations I’ve bought first and business class fares at a discount direct from the airlines, just as Lucky keeps doing. I’ve flown business class recently and the cabin is not even 1/4 full, but economy is packed like a slave ship. So it’s easy to see why there are specials on J fares. I’m going to hoard my frequent flier miles until Wall Street hits the next bump in the road and the airlines get generous with their rewards again.

  15. @Charlie McMillan

    The loyalty perks most definitely did not start in the Great Recession. I’ve been enjoying loyalty perks since the 1990s. There was a brief period around 2008/2009 where it got easier to enjoy the perks, due to decreased numbers of flyers, but that’s about it.

  16. What happens if I bought a S economy class fare and waiting to use my SWU to get a C class seat (biz) –
    As an EXP would this mean that my chances are now less because my USA-ASIA ticket return was only $900?
    Or does this have no impact on 2016 flights and the pecking order for who gets to use their SWU.
    A month out my flight is over half empty in J class and no C availability.

  17. I”m not a business traveller. I don’t have an office to pay for my flights. I’ve been to England twice this year, with another trip planned for October. I have plenty of miles on my account – but even with the three trips abroad and a couple of other domestic flights (including one first class) I won’t make United’s Premier Silver because of the PQD (I’ll fall short by several hundred dollars.) I just can’t afford to keep flying first class overseas.

    What irks me is that the PQD requirement is for US-based accounts only. My UK-based friends easily reach Silver (and higher) status based solely on their travel. I suppose I could try and game the system by registering with United a change of address to one of my UK friends’ addresses, but it shouldn’t have to come to that.

    Why are the rules different, and more difficult for US members?

  18. “Just wait until the next recession reduces air travel demand. The airlines will feel the loss of loyalty” — how do you reason this out? they should feel some loss of loyalty already now people will choose the cheapest fare, with traveling staying hot as for now. when it gets bad, doesn’t overall travel reduces as a result and they may come out with some perks. In down times perks alone wont make more people travel. They will still pick the cheapest fare. I think the big 3 are trying to milk as much as they can during the fat years and stay about the same for lean years.

  19. @Charles McMillen – “The loyalty perks everyone got used to started in the Great Recession”
    Ohhhhh no they didn’t. For me the late 90’s and early 2000’s were way better than the Great Recession. The 90’s were a time when AA Platinums could get upgrades on almost every domestic flight and the upgrades cleared at 72 hours – not at boarding; a time when an Alaska 50,000 mile flyer could get unlimited confirmed upgrades on every flight at time of booking AND get the class of service bonus for the free upgrade; a time when elite pre-boarding was 15-20 people not 75; a time when Amex transfers to BA were getting bonuses every year like clockwork, 50% bonuses as I recall (but somebody can correct me I am sure). There will never be a time like 1995-2004 for frequent flyers, except maybe the time when AA was selling the lifetime AAirpass for $250,000.

  20. If you really want to talk about the good old days of loyalty perks. Lets talk about the 1980s and early 1990s. (I was very young) It was a well kept secret that you could redeem a 2500 mile RT upgrade (no limit on segments) on Delta and then they credited you miles for flying F. The cabins were never full and the upgrades were confirmable anytime starting at ticketing. So, I’d fly across the country every week in F and get more miles in class of service bonuses than the award that I’d redeemed. As @Steve said, there were a lot fewer frequent flyers out there then. There was one level of elite Delta status – Medallion.

    There are a lot more “road warriors” these days and a good number look for opportunities to travel to maintain their status, just as some hobbyists do, but the hobbyists are spending their own money! I’ve always wondered how much total travel would drop if elite programs disappeared. I don’t think it would just be less loyalty; I think there are people out there who would travel far less.

Leave a Reply

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