I am currently on vacation. While I am away, I will be posting select “Best of” content and some new posts as well, including my Diary of a Trans-Atlantic Cruise. Given the hubbub created by a comment from American Airlines President Scott Kirby during the company’s recent quarterly earnings call regarding “innovation within the frequent flyer program” I thought I would add some more rampant speculation with this post from 2014. In it, I opine that American will ultimately move to a more revenue based program, but it might not necessarily look like a carbon copy of Delta and United. For the record, I’m not holding this out as gospel, just one option that American might choose to pursue. Which road will AAdvantage take? Only time will tell. (Featured image credit Shutterstock)
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?
Originally posted June 10, 2014