Goodness gracious, but this is getting like a broken record. American Airlines this week announced major changes to its AAdvantage frequent flyer program, joining its competitors Delta and United as predicted here. Starting August 1, 2016, American will award points based on dollars spent with the airline, instead of based on distance flown, as it has until now. I can already hear the howls as mileage balances drop like rocks.
“The only people who are going to be really pleased are the uber-flyers, who are already doing quite well,” says George Hobica, founder of airfarewatchdog.com.
American makes no bones about this. In announcing this change, Andrew Nocella, the airline’s chief marketing officer, called it “rewarding our most loyal customers with the benefits they value the most.” On the other hand, passengers without elite status, or those looking for good deals, are about to get hosed.
To see why, let’s run some numbers.
Kind of cynically (in my humble opinion), American’s website offers a “Hey, cheer up, guys! It’s not that bad!” itinerary to illustrate the change, a round trip between Dallas and London costing $1,894 in economy class (though, um, if I may say: an economy class ticket costing $1,894 is already that bad). Conveniently for American, the chart doesn’t mention the additional $228 or so in taxes which make the actual out-of-pocket for this ticket more like $2,122 (presumably since customers can’t earn mileage on taxes).
Under the current program, ordinary AAdvantage members (those who fly fewer than 25,000 miles per year with the airline) earn actual flight mileage, 9,500 miles for the round trip. Under the new program, they will earn 5 times the dollar amount spent on the base fare and nebulous “carrier-imposed fees” (don’t get me started…). The top-tier Executive Platinum members, who fly more than 100,000 miles per year with the airline, will earn 11 times the base fare and fees, with gradations in between for other flyers. Delta’s and United’s programs operate the same way.
Thanks to the high fare on this particular itinerary, ordinary AAdvantage members will find the difference negligible between the current and new programs; the accrual drops from 9,500 miles to 9,470 (5 x 1,894). No big whoop.
Fliers with Gold status (who fly 25,000 miles to 49,999 miles with the airline) actually end up a lot better. Currently they earn a 25 percent bonus on top of the flight miles (2,375 miles) for 11,875. Under the new program, that shoots up to 13,258 points (7 x 1,894) – hooray! Executive Platinum passengers do even better. Their current 19,000 miles (double the flight mileage) will increase to nearly 21,000 points (11 x 1,894) – double hooray!
On the other hand, Platinum members (who fly between 50,000 and 99,999 miles per year with the airline and currently also receive double flight mileage) may be wondering what the #*@& happened when they receive a mere 15,152 (8 points per dollar spent x 1,894).
That’s for the expensive, international flights, but what about less expensive domestic flights, the core of American’s business? Here’s where, Hobica says, “the rich are going to get richer, at the expense of those who travel less frequently or spend less on airfare.”
Let’s now say that instead of London you’re flying from Dallas to New York, 2,782 miles round trip. Regular AAdvantage members currently earn those 2,782 miles, up to 5,564 (double the mileage) for Platinum and Executive Platinum members.
I found an airfare on this route for $278.20 round trip; subtract taxes for a base fare of $232.56. This means that instead of 2,782 miles, regular AAdvantage members would receive only – I hope you’re sitting down – 1,163 points (232.56 x 5), about a 58 percent drop. Booooo! Even Executive Platinum members don’t end up so great, with only 2,558 points (232.56 x 11), a 54 percent drop and less than what regular AAdvantage members currently earn. Double booooo!
Under the new program, to earn awards remotely approaching your previous mileage, you’ll have to buy a first class round trip ticket on this itinerary. I found one with a $528 base fare, which gets you 2,640 points (for regular members) to 5,808 (for Executive Platinum).
American is also changing the rules for qualifying for elite status. In addition to flying a minimum number of miles as under the current system, you’ll also have to spend a minimum amount of money per year with the airline, called “elite qualifying dollars.”
Then, once you have the points (why bother even calling them miles anymore?), there’s the problem of actually using them. Hobica says that airlines are “raising the number of miles that you need to cash in for a free trip. On some routes the cheaper ‘anytime’ awards are really hard to get unless you want to fly at a terrible flight at a terrible time. Desirable flights at desirable times require a lot more miles.”
Big picture: the best days of frequent flyer programs are probably behind us, a result of “too many miles sloshing around, and they’re not as valuable as they used to be. They may kill the goose that’s laying the golden miles,” Hobica says, “and people are going to stop being loyal.”
And after all, aren’t these supposed to be loyalty programs?