In the least surprising press release ever, United announced this morning that they are essentially carbon copying SkyMiles 2015 and rolling out a revenue based program come March 1, 2015. I’ve been preaching on the inevitability of the move to a more revenue-based system for a while now as a consequence of historically high load factors, management discipline, and the fact that a mile as a measure of value is less accurate than ever. With that thought out there, I can’t help but say that Delta runs a superior airline to United in just about every imaginable way with the one possible exception being the frequent flyer program. But I digress.
The next question is of course, what will AAdvantage do? That’s easy, American AAdvantage will do what’s good for American, and that does not mean status quo in the long run. I firmly believe that if American had not filed Chapter 11 when it did, diverting US Airways management attention towards a run at AA, we’d have a revenue based Dividend Miles program today, or at least a date when we were going to see one. Life goes on, and so does the airline industry and that didn’t happen.
Management attention at American is focused on putting two airlines together, but you can bet they’re watching what happens across the industry with the mileage programs too. I don’t think we’re going to see any big pronouncements about AAdvantage immediately. I’m not convinced we’ll see anything for the remainder of this year, but anything is possible. One thing about having other priorities is that it gives management time to take a pulse on the changes that Delta and United have put forth. It also gives them an opportunity to run the numbers on AAdvantage as it is, take a look at what works and what doesn’t, and make some more informed decisions.
You’ve heard me mention the AAdvantage Elite Qualifying Point (EQP) before. While this is nothing but pure speculation on my part, I think EQPs could form the basis of a new AAdvantage program that rewards big spenders on the one hand, while not completely dynamiting the traditional system we’re all most comfortable with.
Eliminating a system of 1 mile earned for 1 mile flown and moving to this type of system which pays a little homage to the old way of doing things, but definitely rewards those who purchase higher fares while reducing rewards for those who only buy low fares could be a way forward. It is also more closely aligned to the way that American’s international partners do business. Much more closely than some crazy quilt dollar multiplier is anyway. The true-believers out there in the mileage running hobby aren’t going to like this system either, but I think mileage running in its historical context will soon be a thing of the past anyway. Thoughts?
-MJ, June 10, 2014
[…] said all along that AAdvantage is going to change. The real questions are when, and how? And that is open for a […]
[…] it is more likely than not, AAdvantage morphs into more of a revenue-based program, I have also speculated that it need not copy the changes that Delta has made, and that United has essentially mirrored. […]
[…] and reward higher spenders in the way that AAdvantage currently rewards. In fact, I’ve speculated that EQPs could become the basis of American’s program in the future. That didn’t work […]
[…] good thing overall, it remains to be seen how it will work in practice. I’ve said here that I think AAdvantage could chart its own course, and I continue to believe that. You’ll note that Mr. […]
@Weekly,
The minute my travel patterns change to where I’m not flying as much, I start spreading things around. I’ll also turn up the focus on cash back and other rewards programs, i.e. UR, Barclays, etc.
I’m likely to dial back my “loyalty” across a number of carriers. How about you?
@Dan,
I think it absolutely makes more sense to earn through other means. I’ve posted this before, but I’ll say it again here. If you aren’t earning elite status and miles through travel for which a high percentage is being reimbursed, you’re better off flying the cheapest airline and dabbling in other things like cash back….and certainly earning miles/points from credit cards. JMHO.
I hate to see this trend. I don’t know why (well I know why they think the need to) they think they need to do this. I quit flying SW cold turkey when they changed. I avoid Delta now and will also avoid United. Sad I say. I do question if it makes earning miles through other means more valuable except for status?
@Golfingboy,
It’s always seemed that way to me, but I’m not an accountant. 2015 will be an interesting year.
And this method is far more effective in enticing customers to buy more expensive tickets. With UA, it doesn’t matter how much your ticket is, it is all a flat 5-11x.
Fifty more posts, perhaps. But I promise this will be the only one from me….for now. 🙂
All this is is a random speculation guess. I’m sure we’ll see 50 more of these from all other BA bloggers. I do hope American realizes they don’t need to follow the pack and could actually create something of value though.