American Airlines rolled out Loyalty Points and changed the way flyers earn points and status with the program. But there are a couple of missed opportunities, one glaring.
How Loyalty Points Work
As covered here before, American Airlines Loyalty Points offer a number of miles per dollar that make those points both redeemable and elite-status qualifying. For example, if you were to buy $6,000 worth of laptops earning 10 points per dollar at Apple, and shop through American’s portal, you’d earn 60,000 Loyalty Points that could be used for both an award trip and to qualify for status. This gives American a piece of more of the pie, as customers engaged with the program would go out of their way to include American as part of their purchase process considering the above transaction would earn them Gold status (on the way to Platinum status) and enough miles for a one-way in business class to Europe.
Not all points count for both redeemable miles and status-qualifying, most notably Aadvantage credit card bonuses and their annual fees. American is offering a good bonus of 100,000 loyalty points on its Citi Aadvantage Executive World Elite Mastercard (that’s a mouthful) that comes with an Admiral’s Club Membership – but the bonus points mean nothing toward status. It’s not the same at other carriers, and it’s not the only place American is missing an opportunity.
American is looking to capture as much revenue as possible at every customer encounter. But there are some missed opportunities and I can’t quite understand why.
I have previously covered the formerly great (now dead) use of Rocketmiles to accrue a large number of Loyalty Points for a reasonable amount of money. I also covered how American killed that strategy, partnered with Rocket, and has gone to the far and away most generous program for third-party hotel bookings to last place amongst US carriers.
On my recent trip, an upgrade was offered for my return flight and I was ready to push the button on purchasing it but stopped short. The cost of the upgrade ($137) was the same as the price difference from coach to business class when I originally booked; this wasn’t a deeply discounted rate. For whatever reason, American Airlines won’t incentivize me to buy it (other than the product itself, which, in reality, is more attractive than Coach.)
A $99 Motley Fool annual subscription routinely earns 6,200 Loyalty Points that count for status and are redeemable for awards – a net value of about $65 to American. But selling that upgrade means keeping all of the money, awarding fewer points than that would with the deal I just mentioned, and filling a seat that heretofore, it hadn’t. What’s particularly curious, especially when the cost is the same, is that if business class is purchased as I am ticketing, a traveler earns points normally, if it’s added after the fact – it earns zero Loyalty Points. Even half the normal points would be an incentive to buy it – why not make them count?
Hear me out on this one. Signing up for an American Airlines credit card awards a bonus after charging a certain dollar amount in a specified period. These bonuses are one-time and do not count toward Loyalty Points and thus they do not qualify for status.
I previously held a few different American Airlines credit cards, though I haven’t for several years now. I’d consider grabbing one, even with a lower bonus, if some amount of that bonus qualified for status-earning Loyalty Points. It could be the difference between me engaging in the program I previously held top status with, and adding one or two cards to my wallet or not.
At the end of any booking on AA.com, travelers are offered the opportunity to buy miles through its Mileage Multiplier option, usually at terribly high prices for quantities of 1,000-10,000 depending on the ticket price. These, too, do not qualify for American Airlines’ status accrual.
What Other Airlines Do
Spirit re-launched its Free Spirit loyalty program and awards double the points on ancillary purchases. Ancillary purchases are key to any ULCC, but more and more, American and network carriers like it are looking to grow the sector as well. From buy onboard to wifi, to upgrades – every carrier wants to generate more ancillary revenue but what’s so clever about Spirit’s approach is that it will take its highest margin product and use it to incentivize the most desirable revenue. In the case of upgrades, American doesn’t and this seems like a missed opportunity if not downright foolish. Spirit, by contrast not only incentivizes these ancillary purchases but does so at twice the standard rate.
United Offers PQPs, Southwest Counts Its Sign-Up Bonuses
United’s updated credit card offers for both new and existing cardholders Premier Qualifying Points to push more sign-ups and subsequent purchases. Some of the recent offers award anywhere from 1,000 PQPs up to 8,000 PQPs but considering that in United’s program, top published elite tier, 1K status, requires 18,000 points so that’s a substantial headstart just for holding the United Inifite Credit Card. None of the American cards offer this.
Includes any points outside of transfers for qualification toward its Rapid Rewards A-List and Companion Pass levels. An old method of scoring companion pass covered on this blog to maximize the time the companion pass was valid was to sign up for both a personal and business Rapid Rewards credit card in December. One would then put holiday and end-of-year shopping on the cards before the end of the year and then qualify (with the bonuses and spending) for as close to two full years with the pass.
The switch to the Loyalty Points program whereby every point (save for a few) helped to qualify for elite status and Loyalty Points rewards at the same time and simplify an intentionally opaque system. It also appeared to go after broader transactions by offering at minimum a point for every dollar spent. It then served to reason that if American were to open points earnings across the board, the elite point threshold would have to be raised. While I don’t love the move entirely, it at least made sense that the new rewards program would raise the bar given that points were easier to earn. However, with the neutering of hotel earnings and a lack of Loyalty Points bonuses qualifying for status, it seems American has returned to the AAdvantage miles way of thinking. It seems they are leaving high-margin, low-cost opportunities on the table for some esoteric reason I cannot explain, nor can its peers who do not abide by the same approach.
What do you think?