There was a sigh of relief across many frequent flyer circles today as a couple of snippets from an interview by Business Travel News with American Airlines CEO Doug Parker made the rounds. (HT: Pizza in Motion)

In response to a question regarding upcoming milestones from a customer standpoint, Mr. Parker responded:

“There are a series of them, but the next major one will be the integration of the frequent-flyer programs. They’re separate today, and we’re planning to integrate those [in the first half of next year].”

During an onstage appearance at the GBTA convention, Parker was asked whether American would follow Delta and United in moving to frequent-flyer program based on revenue accrued instead of miles flown. Such a move was “not even on the plate right now,” he said. “We have to get the two frequent-flyer programs merged first. If it makes sense to make that innovation, we may do that, but to try to change the program now would be foolish.” (emphasis mine)

I’m not exactly sure when I thought American would get around to merging AAdvantage and Dividend Miles, but I’m pretty sure I did not think it would be during the first half of 2015. They’ve got some wiggle room if the back-end systems preparation does not go as well as planned. All in all, I think it’s a good thing that the programs will be coming together a little sooner than I anticipated. While the two airlines are offering some reciprocal elite benefits, ensuring elites enjoy true reciprocity and equivalent benefits is not happening yet, and it may take a program merger to get it there.

I suspect the biggest sigh of relief followed the blurb about a move to a revenue-based program saying it was “not even on the plate right now.” To me, this is not surprising. Having only been tacitly involved in one merger in my airline life, suffice it to say that there is a lot going on behind the scenes as two airlines become one. American is making the right call IMHO by not making major changes to its frequent flyer program for a couple of reasons. First, there’s too much other work to do that needs to be done right. Second, while they’re accomplishing that work you can bet that it will be someone’s job to measure the effect of changes at Delta and United.

Overall, I think management is taking a smart approach to the merger. While I tend to think the idea of rewarding based on spend is a 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. Parker did call revenue based programs an “innovation.” Whether that is an insight into what he’s thinking or not is beyond me. What will happen? Only time will tell.

-MJ, August 8, 2014

MJ Logo5