A foolish man once said, “We will cut our way to growth.”
American Airlines is finding out that its massive devaluation to its AAdvantage loyalty program last March is taking a toll on its profit.
There is some disagreement over exact numbers, but View from the Wing pulls this nugget from a recent AA SEC disclosure–
Other revenue is now expected to be $5.24 billion, up $330 million year-over-year. The first quarter reduction versus prior guidance is primarily due to lower than expected AAdvantage credit card acquisitions as first quarter promotions were not as effective as planned.
It may be easy to dismiss this news as just a bad quarter or the fact that CITI has tightened its terms and conditions to cut down on churning cards, but let’s face it: the AA program has taken a huge beating.
Oh, Delta has too. Let’s not forget that. At least AA gave us notice.
But there is something fundamentally dishonest about the AA program. I again refer you to View from the Wing who points out that AA simply is not releasing award space on its own flights. With variable-priced AAnytime (standard) awards, flying on AA metal is often ridiculously expensive.
With few compelling award chart sweet spots and virtually no saver space on the routes that matter to most people — domestic flights (though int’l flights are no better) — AA is simply not worth investing in from the redemption side. Better to direct your spending into flexible currency like Chase Ultimate Rewards, American Express Membership Rewards, or Starwood Guest.
One Caveat
If you’re stuck with oneworld, AA still makes a lot more sense than British Airways, Iberia, or Qantas in almost all cases. The zone-based award chart and general lack of fuel surcharges (except on BA and Iberia) means that longhaul redemptions still remain much more lucrative than with other oneworld programs. But not like before. And with AA essentially devaluating unofficially by not releasing much saver award space, the value derived form this program continues to shrink.
No wonder profit is down. There is a happy-medium somewhere and it appears AA has drifted too far from it.
I couldn’t agree more! But it’s not only American. United is just as bad in not releasing seats so we can actually use our miles that we have legitimately accrued!! So now, we just fly with the airline with the best schedule for the best price and loyalty be damned!!!!
The low availability combined with a horrendous web site probably has a bit to do with it.
Wife is joining me on a trip to Europe in a few weeks. Tried AA and it was grayed out for 2 weeks! Seriously… tried BA, 1 flight, but bad times. Tried UA and got 30+ flights on multiple *A carriers with great times/connections at low mileage rates. Didn’t look at DL
I think AA will really need to look at this closer. If they get the reputation that you can’t redeem AT ANY PRICE, it really diminishes their usability in my mind. Along with their web site showing limited One World partner availability.
As much as UA has taken the hit for their IDB policies lately, I find their mileage program quite useful and their web site offering good availability.
i am one of many who used to fly cheap fare to get status. now like many of them this year i have not flown one single segment, and have burned many files the past year, and close AA credit cards.
The values of AA miles is in the toilet. Not long ago, they limit annual purchase to 60 k miles, now you can get a bonus of 100k miles, is this it’s way of QE? so many miles/dollars floating around, price/redemption for everything goes up, while AA pockets ahead of time by selling those miles, and limiting how they can be used.
Eh… I typically travel a couple hundred thousand miles a year and am EP. This year I’ve purposely stayed away from AA. Have under 20k. The program and airline have gone massively downhill for the frequent traveler.
Eh… I typically travel a couple hundred thousand miles a year and am EP. This year I’ve purposely stayed away from AA. Have under 20k. The program and airline have gone massively downhill for the frequent traveler. The system wide upgrades are nearly worthless any longer and that’s upgrades and eligible routes aside not to mention overall service quality. Is becoming a flying greyhound.
I agree completely and have been a member since 1993. It’s insane. Thank God I use JAL fairly often to use up my miles. Maybe one day American Airlines will wake up and smell the roses!
Mike Hinshaw
I used to go out of my way, and out of pocket, in order to get AAdvantage miles — often irrationally so. AA cured me of that, and I’ve been flying on whichever airline has the best fares and routings. With my inability to fly on EY or QR due to the laptop ban, the withering of JL, and the absurd fuel surcharges on BA, AAdvantage Miles have become even more worthless to me. CX is about the only valuable partner where AAdvantage redemptions are still practical. Don’t even get me started on the scam that they call AAdvantageBusinessExtrAA.