American Airlines has eliminated its award chart and gone dynamic (sort of) removing any remaining veil surrounding its loyalty program and the airline’s ambitions.
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American Airlines Eliminates Its Award Chart (*Kind Of)
American Airlines moved from a (semi) fixed award chart to a dynamic (kind of) award pricing. Let me first explain the difference between fixed and dynamic awards and why neither its previous nor current award charts qualify.
Fixed Award Chart
The term fixed award chart means that a single rate applies to an award flight between two points (in this case, regions of the world.) For example, American Airlines traditionally charged 57,500 miles between anywhere in the continental US and anywhere in the European region. The price for a short 5-6 hour flight from Boston to Dublin is the same as a 13-hour Los Angeles to Istanbul (if American operated such a flight.) It’s a great deal for those on the west coast, but not as good for those on the east coast.
The good thing about a fixed award chart is that the goalposts don’t move. Members of the program can save up for a trip over time and receive a predictable value for participating in the program. The negative side of the fixed award charts is that a limited number of award seats are available so even those willing to pay more do not have the option to do so.
American Airlines’ prior award chart was mostly fixed but had some variables for fuller flights to allow those with more points the ability to secure the flights they wanted even if the price was higher.
Dynamic Award Chart
A Dynamic award chart adjusts the price of an award in line with demand. Flights with fewer available seats cost more than flights with a high number of available seats. Southwest, Spirit, and JetBlue Airways all use dynamic awards whereby the value of a point is more or less fixed at about 1.4¢ (Southwest and JetBlue) down to about a cent on Spirit.
Oddly enough, “dynamic” is essentially fixed to the cash price of the flight. If a flight costs $140 on Southwest or JetBlue, you should expect to pay 10,000 points. If that price drops tomorrow to $80, the cost will drop to 5,714 points and if it goes up to $200 it will cost 14,285 points. The goalposts move as the flight prices change and what might have cost you 20,000 points last year could be 30,000 this year or 15,000 depending on the price available at the time of booking.
Kind Of/Sort Of
With American’s prior award chart, it was kind of fixed, in that awards often cost more than the stated chart because all of the cheap seats have been purchased. However, in a dynamic system, the awards will also go down to as low as possible. For example, during the pandemic, trans-continental flights from Los Angeles to Boston sold for as little as $16 each way. On Southwest, this flight would have cost 1,142 points in a true Dynamic award program, but American didn’t lower the program below its floor of 5,000 points.
Due to busy flights with few open seats, it’s hard to tell just how low American will go and how truly dynamic it will be. This writer assumes its past behavior will predict future performance: The program has no upper limits for how dynamic it will be, but does have a basline minimum for how low it will go in a new dynamic program. It was kind of fixed before, and it will be sort of dynamic now.
A Sea-change In Loyalty Programs
As I mentioned in this article for Forbes, American’s Loyalty Points program represented a sea-change whereby loyalty programs removed some of the veil of just how important transactions with its partners are to the carrier. It adjusted earning for elite status to include more or less all transactions (except service adjustments, credit card sign up bonuses, etc.) The carrier had added a revenue component to elite qualification years ago, but now the airline has made it clear that it’s a business and it wants more share of your transactions.
There was a veil that lasted for some time that frequent flyer programs were there to reward frequent flyers. If a flyer was loyal to an airline long enough, they’d get that free trip to Hawaii by flying the airline over and over. With the shift in Loyalty Points (I believe based on nothing other than hunch that United is next to move in the same direction) that veil went away. And now, much to the chagrin of flight attendants pitching credit cards, that goal post of a trip to Hawaii is no longer in view. It could be, it might be, no one really knows.
Dynamic award charts lift the final veil that American Airlines and its Loyalty Points are anything more than an ATM, that loyalty is a one-way street, and that the business is really a marketing program that happens to own an airline. The financials have made this clear for years, and it’s true of most of the major flag carriers in the US, but American is simply now saying the quiet part out loud.
Loyalty programs like American Airlines Advantage/Loyalty Points have always been about earning money from customer transactions with the promise of future travel goals. By obscuring the value behind images of palm trees, loyalty programs had the advantage of driving marginal purchases through that veil. But with a question mark for award prices and a dyanmic when it’s conveninent approach, will consumers continue to perform for the airline?
What do you think? Without the goal posts, how long before consumers no longer see the value in driving their marginal business toward the airline? How long before other carriers do the same?
American has very unfortunate hubs. The only real money maker or one they seem to give serious attention to seems to be DFW anyway. I think JFK will go down in the drain once the JetBlue partnership ends.
I live in Dallas, fly often to Chicago, and tend to fly to locations like Dublin, London, and onward from those cities. To me AA’s hubs are “fortunate,” so obviously that is a really subjective statement. AA is based at DFW. Delta is based at ATL. United is based at ORD. I mean, people just know this going in. These are not fortunate or unfortunate. These are facts and where we live, work, and choose or maybe need, to fly, are what are fortunate or unfortunate.
The new pricing is a bit nuts so far. Helping a friend buy an award domestic lie-flat. Price was 87,500 and jumped in a day to 147,500. ONE WAY. Still was originally cheaper than the other airlines, if you can believe. It’s Hawai’i, but already has dropped a bit. Cash price was better once they changed to dynamic. That was unfortunate for my friend,
This sounds like the Flying Blue approach- particularly in case it also includes cheaper award pricing for flights with a connection as opposed to direct ones (e.g MAD-CDG-BOG is cheaper than just taking the same CDG-BOG flight on its own). Can come in handy as a secondary programme, but there’s too much uncertainty to entice one to build up a healthy balance.
All I want to is whether my AA Lifetime Platinum status will continue even as I’m retired and flying less?
What do you think the word Lifetime means? Any guess?
Ask Steve Rothstein what lifetime means
I wish the loyalty/reward points would go to a sliding scale. Hilton does this with their program. Can use more points or less with the amount of money you want to pay. Also could work with upgrades to pay for main cabin and select the amount of point for business/first class.
Apologies to George Benson, AA turned their love around!
Redeemability is already a fraudulent joke.
What would normally be a 3 hr flight, when redeemed for miles becomes a 3 day journey of red-eyes and 5 connections.
Bearing in mind how much money the airlines are making by selling miles, dynamic pricing is making to get a good deal for award flight very hard
Be flexible. Overfly the AA destination to a partner one. Dynamic award pricing applies to mainly only (not exclusively) AA destinations. For instance, fly to Malaga instead of Madrid. It’s now cheaper and different availability. Fly off season. Fly midweek. Recheck your award ticket daily. I e reticle o e itinerary three times as there is no redeposit fee. It’s a game. Make it fun.