We now have a picture of what the 2016 AAdvantage program is going to look like. Not ironically, it looks a lot like the programs of Delta and United, but not exactly like them. American’s managers were right to focus on getting US Airways and American onto the same reservations system before making any big frequent flier changes. Now, that the October 17 computer merger is behind them, they’re out with the new 2016 AAdvantage program.
This Happened More Quickly Than I Expected
I am not going to review the particulars of changes to the program or award charts as that has been done across the blogosphere since American’s press release yesterday, and in reality, for weeks prior. In all honesty, I half expected that the AAdvantage program as we know it might have remained in place through 2016, just based on getting the IT work done to support what they now propose. Instead, they’re moving forward with changes to elite qualifying miles for the new program year, and will award redeemable miles based on ticket spend later in 2016. In short, they’ve been working on what was introduced yesterday for more than a few weeks.
It’s Not All Bad
While moving to a revenue-based program is likely bad for a majority of members’ redeemable miles earning, it’s not all bad. Speaking about my own travels, which tend to be short-haul domestic, I am earning more miles under SkyMiles 2015 overall, than I was before. If I spent more of my time on longer haul flights, I doubt I’d be as cheerful. I expect a similar trend for my American flights. Further, American maintained something that I value greatly – its elite upgrade program.
The fallacy of “unlimited complimentary upgrades” leads to unlimited demand for a very limited product. It is not unusual at all for a Delta upgrade list to stretch to 60 or 70 names in premium markets. While American grants complimentary upgrades to its Executive Platinums, Platinums and Golds must “pay” for their upgrades with 500 mile upgrades that are either earned or purchased. Incidentally, I don’t find the new $40 price point for each purchased 500 miler to be that daunting. The result of such a system is that lower tier elites only request upgrades that matter to them, making the possibility of actually getting an upgrade for those members more likely. My upgrade success rate as an AAdvantage Gold member speaks to this.
Elimination of elite qualifying points is not an issue for me. I’ve only ever qualified by miles or segments anyway, and my Gold status is by virtue of AA’s million-miler program. If you are one who buys a lot of more expensive fares, you may find the new EQM structure advantageous.
Some far smarter than me have speculated that this will lead to a swelling of elite ranks. Personally, I think the jury is out on that unless the percentage of American’s customers buy full fare and even discount first/business tickets is larger than I believe it to be. Best (or worst) of all, there’s no minimum revenue requirement elite status. We’ll see how it goes.
The World Won’t End
The purists in (I can’t believe I’m about to say this) “the hobby” are going to be hurt by this change. That said, those same purists are likely earning the majority of their miles through methods other than flying. Alaska Mileage Plan is an option. If I lived on the west coast, Alaska would be my primary airline. However, I believe it’s wishful thinking to think that Mileage Plan accrual on AA flights won’t be negatively impacted by this. Further, Mileage Plan in its current form might live on for a year or three, but their competitive situation with Delta in Seattle will eventually arrive at some kind of equilibrium.
I’ve been through the internal discussion with myself about Mileage Plan and Delta a few times, and I might even think about it for American flights too. In the end, the answer always boils down to where I spend most of my time and that is on Delta and American airplanes so that is where I credit my flying. Although I know a case can be made for Mileage Plan depending on your travel patterns and ticket buying habits. If you’re flying on someone else’s dime, tend to buy last minute fares, and fly more short hauls than long hauls, you may find a move to a revenue-based AAdvantage program to be beneficial. It all depends on your specific travel profile.
-MJ, November 18, 2015
@john – “Since you have no control over my opinions or ability to voice them as I see fit, by your own definition your incessant whining and carping about them makes you a ranting, raving lunatic.”
One could say the same thing about your responses to me.
Thanks for the spirited discussion. This is one of those where it may be that we just have to agree to disagree. Comments closed for this post. Now Let’s all go celebrate Thanksgiving.
@Brian L, “The point I am making, which YOU are ignoring, is that there is no point in whining about things that 1) you have no control over, and 2) do not affect you. You don’t control what AA executives make, and their level of pay has no impact on you. Whining about such things makes one look like a ranting, raving lunatic.” LOL! Since you have no control over my opinions or ability to voice them as I see fit, by your own definition your incessant whining and carping about them makes you a ranting, raving lunatic. @MJ Happy… Read more »
@john – “The point I made, which you ignored, is that boards have a vested interest in overcompensating executives because it helps their own compensation levels.” The point I am making, which YOU are ignoring, is that there is no point in whining about things that 1) you have no control over, and 2) do not affect you. You don’t control what AA executives make, and their level of pay has no impact on you. Whining about such things makes one look like a ranting, raving lunatic. “It would be different if shareholders approved executive pay.” Probably, but that’s not… Read more »
Obviously a lot of passion about loyalty programs and American’s changes in particular. Wishing everyone a happy Thanksgiving!
@john – “Who do you think sets six-digit board compensation for attending four meetings per year? Board members are executives themselves, and it is a scratch-my-back-and-I’ll scratch-yours arrangement. Executive compensation at US companies is a joke!” That is irrelevant. The point is, the people who decide executive pay think the executives are worth it. They get to make those decisions. You don’t. “You seem content with AA’s decision to play second fiddle to delta.” I am indifferent as to who plays second fiddle to who. I have about the same amount of miles in each program, and am able to… Read more »
@Brian L “That is irrelevant. The point is, the people who decide executive pay think the executives are worth it. They get to make those decisions. You don’t.” I guess I missed the part where I said I set executive comp at AA. Or are you taking the absurd position that no one can criticize executive pay unless they set it? The point I made, which you ignored, is that boards have a vested interest in overcompensating executives because it helps their own compensation levels. Just look at the package Smisek got for being fired from UA. But hey the… Read more »
@john – “It makes no sense to pay huge salaries and bonuses to executives who merely copy others no matter how effective their copying is.” It makes sense to the board of directors, apparently. And they’re the ones who matter. “You could hire chimps or at least people who would work for a lot less to copy and get the same result for a much lower price. That would save hundreds of millions of dollars every year which clearly increases shareholder value.” Then why aren’t they doing that? “Also I expect management and the board to increase the value of… Read more »
@Brian L, FYI the board only reviews the salary of the CEO. The board also approves the formulas of certain executive annual and long-term incentive compensation plans. But to the extent the board does review and approve some executive pay, that is not like the good housekeeping seal of approval. Who do you think sets six-digit board compensation for attending four meetings per year? Board members are executives themselves, and it is a scratch-my-back-and-I’ll scratch-yours arrangement. Executive compensation at US companies is a joke! At AA it is a belly laugh. Since the news of AA’s changes became known in… Read more »
[…] the dust settles on American’s recently announced 2016 AAdvantage program, I find myself in a reflective mood. The bottom line of the changes is that […]
@john – “I wonder how AA management justifies their inflated salaries and mega bonuses when all they do is copy DL and UA.”
The only realistic measuring stick for whether or not these salaries and bonuses are justified is whether or not the airline is making money, and whether or not the board of directors and shareholders are satisfied with the financial condition of the airline. That’s just the way it is. Whether or not they’re copying UA/DL is irrelevant. And anyway, if DL is making money, why on Earth SHOULDN’T other airlines try to emulate them?
I must disagree. It makes no sense to pay huge salaries and bonuses to executives who merely copy others no matter how effective their copying is. You could hire chimps or at least people who would work for a lot less to copy and get the same result for a much lower price. That would save hundreds of millions of dollars every year which clearly increases shareholder value. Also I expect management and the board to increase the value of the business by competing with and beating business rivals. I’m sure delta shareholders and management are thrilled that the largest… Read more »
What I was concerned would happen, has. While I did not “know” that AA would go revenue-based, I thought they would, and it was going to disappoint a lot of people that have made the move from Delta and United.
I wonder how AA management justifies their inflated salaries and mega bonuses when all they do is copy DL and UA. The problem I see with AA basically duplicating the DL program is AA is an inferior airline.
The only advantages AA have are providing access to first-class awards (now at greatly more expensive prices) and first-class inrernational lounges for EXPs.
Once I burn my AA miles and use my AA SWUs, I see no reason to continue to fly AA. Had AA kept SWUs at 8/year that would have made a difference.
Besides premium partner awards, AAdvantage was always overrated anyway IMO. It is almost impossible to find international J/F awards on AA metal, so the only option for transatlantic flights is BA, fuel-surcharges and all. Everyone knocks Delta, but I can still easily find low-level J tickets on Delta metal, and their partners don’t do fuel-surcharges.
Unfortunately I’m one of those folks who earn miles the BIS way in coach, so very disappointed. Boss likes us to use AA but I may push for the direct flights of SWA once this cuts over next fall.
@deltahater – That is what the other 90% of blogs on BoardingArea are for. I appreciate that MJ gives a personal, fair, and reasonable approach to the industry. It’s quite refreshing from the same song-and-dance (although I admit I enjoy reading both perspectives!). 🙂
MJ, I think you lost perspective here. Let me elaborate. I too, am off the loyalty wheel and I fly who suits me best at the time.So I get where you are coming from. But, you are a blogger. People do not follow you to hear on how this hobby affects you personally. Just because you are off the loyalty wheel, does not make this AA devaluation a non-event. I suspect your readers expect you to give an unbiased review of the devaluation through the eyes of your READERS, not your own personal gain or loss due to the change.… Read more »
You were an apologist to Delta with their changes, and I expected the same for AA. The problem is now they are all the same, and none are worth spending extra time or money on. Price rules now, and I feel this is the time for gulf carriers to step in and dominate the international market.
Tyler, I’m not apologizing for anyone. It is what it is. Some get hurt, a few benefit. Personally, I’m a lot happier now that I’ve gotten off the elite status hamster wheel and stopped caring about what the airlines do with their loyalty programs. This year, I’ve purchased a few first class fares, a lot of cheapest fares, and I’ll even admit in public that I bought a Southwest Business Select fare a few days ago, but only because it was the lowest priced, best scheduled option for me 3 days in advance. I’ll drop from Platinum Medallion to Silver… Read more »
While I think the people it hurts most are those like myself who save up for aspirational first class long haul awards, like Cathay Pacific from the U.S. to Hong Kong, while disappointed it’s implementing the award chart changes so quickly, it’s about what I expected and pretty much puts it on a par with United for partner flights.