American Airlines Loyalty Points program replaced Advantage earlier this year. Some data points have demonstrated its generosity, but is it too generous to stay as it is?
Initially, I Didn’t Love Loyalty Points
I wasn’t shy that Loyalty Points put undue stress on flyers looking to earn American Airlines status actually flying the airline. At that time, I noted that a new American Airlines flyer would need to spend more than $27,000 on American Airlines tickets (excluding taxes and fees) to earn Executive Platinum status, the top tier for which requirements are published. In just the last few years, mileage and segment requirements shifted to spend, initially requiring $10,000 spent on airfare in the old Aadvanatage program to earn the status. In the last few years, Executive Platinum elite status qualification moved to a revenue requirement of $15,000 spent on airfare with a remaining segment requirement. To push that above $27,000 during the COVID lockdowns was an absurd notion.
Some might suggest I wouldn’t admit when I am wrong. Here it is, for everyone to see, I was wrong about Loyalty Points. To be clear, it’s not any easier than I stated for a new flyer to American and really for any flyer with American to earn status actually flying on the airline. No, I was right about that. I was wrong in my estimation of just how little the airline actually cares about whether customers fly the airline – they solely care about income which has been great news to those who have embraced the new system.
Truly Rewarding Spend
In a post I published a few months ago, I highlighted the lucrative opportunities to gain vast amounts of Loyalty Points – which now count toward status – for hotel stays with Rocket Miles. In some cases, a single $300 stay was enough to earn entry-level Gold status on American along with enough miles for a domestic roundtrip (usually.)
Some enthusiasts have been even more ambitious and posted that they received the airline’s elusive ConciergeKey status with very little flying activity but high levels of spending in the program. Boarding Area’s own, Gary Leff, was one such recipient. Matthew covered his reaction to seeing this news yesterday and I don’t really have more to add on that particular instance. Gary wasn’t alone, as he pointed out. Other members of AA Loyalty Points Facebook groups were also shocked but delighted to see that the same behavior was rewarded, though their spend seemed to be on a wider variety of participating outlets.
The notion that American Airlines would reward spending across the program so long as it benefits the bottom line is something I didn’t properly take into consideration. During an investor call in the past, one banker asked if the airline should spin off the frequent flyer program independent of the airline. Management said it felt the two needed each other to work properly together, but that highlights just how independent the loyalty program has become and what an important revenue source it is for the airline.
Frankly, the move makes a lot of sense. Rewarding customers who earn loyalty points that have a material effect on American’s bottom line is the most logical way to incentivize behavior. Award travel (redeemed from those points) is usually very inexpensive for the airline and allowing those who participate heavily with the program to earn elite qualifying miles in the program as a result of a non-flying transaction of value to American makes a lot of sense. It’s a very honest way to run a loyalty program without the illusion of being a successful, profitable airline.
I’ve personally considered making a run for Executive Platinum status this year and haven’t started the process because they seem so easy to obtain, why rush? I don’t have to fly American or even member oneworld airlines to be a Loyalty Points guy and hold high status within the program. End-of-the-year mileage runs on partner airlines be damned.
Increased Requirements Coming?
The question that remains in the back of my mind is whether American Airlines increases its requirements for status even higher to fend of swelling elite ranks at the top. Blame it on years of airlines (and hotel chains) changing the rules of the game to their favor – but if anything seems easy in this hobby, it usually goes away.
From a math perspective, there’s little reason to raise requirements. Customers are responding with lots of financial impact to the company, reducing the benefits of those transactions may disincentivize how active customers are.
However, if a number of true American Airlines elite travelers who fly on the carrier with regularity are outranked for program perks and crowded out by those exercising their elite choice rewards for international upgrade space, American will likely be forced to act.
I’ve focused a lot on the top of the program but the lower levels return even less for the airline in terms of revenue to achieve them. Recent offers from Motley Fool have paid over 9,000 Loyalty Points for a $99 transaction. New Verizon Business accounts offered as much as 14,000 (halfway to Gold) for a purchase that was even further reduced by American Express offers. I fear the lowest tiers will be the first to see hikes which scares off those that may be new to our hobby.
I was wrong about American Airlines Loyalty Points because I was still stuck thinking that it was an adaptation of the Aadvantage program. Unlike Aadvantage miles earned, which only counted toward redeemable miles, in the new program members earn points that can be used for redemption as well as status. There are trememndous ways to utilize the program, gain status, and nearly free travel for purchases customers may already intend to make. However, I fear that this will lead to an increase in the program requirements or a reduction in program benefits. I hope that I am wrong about this too.
What do you think? Have you embraced Loyalty Points? Do you think American will adjust the program following the overly generous approach?