Signs from United and Delta, combined with performance issues with American point to a possibility that elites are starting to leave American Airlines after the summer of discontent.
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United Elite Increases Indicate Full Elite Participation
Before the announcements to United’s elite qualification this week, I had noticed that the carrier’s status challenges had closed up shop on status matches for the rest of 2019. As much as they may be interested in welcoming new elite business from other carriers as soon as January of 2020, they won’t be extending a status match before then.
I monitor the status match page as I sometimes guide colleagues and readers to challenges and status matches. In three years, I have never seen United stop taking applicants for elite status matches. I switched from American to United after 15 years of loyalty as a result of an unpublished challenge for 1K a couple of years ago and haven’t looked back since.
It’s clear that challenges have stopped due to the transition to the new, higher, elite requirements. However, the program’s changes also indicate that they aren’t afraid of pushing elites away. In fact, they likely have more elites in the program than they can satisfy and thusly have increased the levels to drop some out and drive more incremental revenue.
It’s without a doubt that other American loyalists (as I would) have moved to United and they don’t have to be as competitive with American as a result.
Delta Reports Unexpected Elevated Traffic
Delta had a number of suggestions for their Q3 unexpected uplift. The airline reported higher than anticipated demand, calling it “surprising” and escalating demand. There are some other reasons some analysts have highlighted, among them, lack of exposure to 737-MAX issues (they don’t own any) and limited impact from the rolling Dorian storm that impaired south Florida airport hubs.
CEO Bastian, in perhaps the biggest wink in the history of CEOs countering the exact message they choose to send, in a post about
Bastian said Delta’s success is due more to its own brand and operations, “not the weakness of any of our competitors.” – Boston Globe
He’s not wrong but the strength of their operations and quality of their product showcases the weakness of at least one competitor so on pretty much any front it’s a kind gesture to not poke Parker’s eyes out, but it’s not entirely honest.
American Shuffles Management Ahead of Q3 Reporting
I’ll have more analysis of this later today, but suffice it to say that American has shuffled their management team around and a change at the very top is still possible. American has had a difficult summer, mechanics labor negotiations have not gone well, causing performance issues and changes ahead of Q3 reporting indicates that things have worsened.
Conclusion
United has raised its qualification costs for 1Ks by 50% in the last two years alone to a staggering $18,000 from an already difficult $12,000 (excluding taxes and fees.) United can afford to risk losing some customers because they have inherited so many from American. Delta has cheekily indicated they have been inundated with new business as well. It seems rather obvious to me that American flyers are fleeing the carrier while they “go for greAAt” somewhere else.
What do you think? Do these statements (Delta) and actions (United and American) indicate that frequent flyers are leaving American Airlines? Do you think there is another explanation?
100% agreed on this. I switched in July and I’m sure I’m not alone.
I switched as well.
I already left American. Platinum for years, 6000 mies YTD. Adios!
I live in Miami.. UA and DL are really not an option here.
MIA used to be a hub for UA in their LatAm operations in early 2000s. Then they pulled out and left me stranded. Had to start from scratch with AA
There are options, just not direct ones. You might consider a status match until real change occurs.
$20K+ per year domestic flyer here and it all goes to Southwest. The goat rodeo at the other majors reinforces this decision every day. 🙂
Yup… Is what I did. Why fly 300k/miled on American to eat bagged chips, have benefits that are unusable, and be treated poorly?
What you say could well be true although I think there is another trend going on…people are just giving up on top elite status across the board. I have been a Delta Diamond since the beginning and I am giving it up…just not worth it anymore.
Elite status will migrate almost exclusively to those people who work for a company that requires frequent travel and expensive tickets. Probably where it should be.
I agree with your analysis and with @ Clint. Good times for UA and DL based on both the economy and AA’s troubles. It’s a shame AA’s share holders were unable to take advantage of the good economy.
Based on my own busy flight schedule on UA the past several months, they do indeed have many more elites than they can handle. That is dramatically represented during any UA boarding when GS and 1K flyers boarding ahead of group 1 can be anywhere between 5-50. It’s really dramatic at SFO where it seems everyone is a UA GS flyer. The danger now is the ranks of this group (GS and 1K) become so large they can no longer provide a exclusive experience. Hence their need to thin the ranks and drive away those who are gaining status through mechanisms other than spending cash.
IMO the changes to the UA program are great as they reward for what you spend, which to me is what they should be doing for their shareholders. Yes, it will primarily advantage business flyers with corporate contracts – like me. But as has been demonstrated, these flyers (along with credit card companies and to some degree freight) are the profit drivers of airlines.
The risk with the new rules is all of the unintended consequences of wholesale changes. My guess is they likely ran a ‘static’ analysis of current elite data to cull 1K members to mostly corporate fliers and Platinum members to mostly existing aspirational 1K fliers (especially given there are no PQP waivers from credit cards and high spend levels to earn limited PQP) but this likely won’t capture changes in FF behavior (i.e. incentivize flying on Star Alliance partners, push million milers to just settle for their Gold or Platinum and not bother to meet 1K requirements, opt to fly other airlines when convenient -price / schedule- vs. sticking to UA to qualify).
I understand the vice president of passenger experience recently “retired”. What a disgrace American has become since Parker came onboard. Parker should be the one to retiree so American can again be a great airline!
More than 10 years as a delta platinum and southwest companion pass holder… I few American last week for the first time in ages. The experience was nothing nothing to write home about, 2 out of 4 of the planes where physically dirty inside. My travel companion and I weren’t seated next to each other at any point, even though we were booked on the same reservation. The check in process allowed for constant additional spend..” $19.04″ to board early, all extras are certainly extra, just increase the price and streamline it. I had to chuckle the disorganization and lack of service. As I was headed home I think they’re leaving a great revenue opportunity on the table. Priority baggage handing only! If you can’t fly first class your bag can for say $65.00 instead of $30. Great way to enhance the experience!
American has had troubles for a long time now, long before Parker. The real problem is Doug is enamored with “the American Way” and is happy staying with the same old same old that got American in chapter 11 to begin with. He refuses to do what needs to be done to take it to the next level, which I might add in the end made US Airways great.
Time to give American a unique and consistent look. Upgrade the amenities while giving people what they pay for. Not to mention get rid of these old relic planes….and what is with the new/old blue back in tine uniforms!
Parker and his Tempe USAir entourage have run American Airlines (the #1 airline before they took over) to the ground. American Airlines is like the Titanic the only difference is the Titanic had a Band.
American Airlines employee for 36 years.
With the new standards, United wants to give a bunch back. Ah, for the good old days of 5 years ago, when airlines actually wanted elite customers and treated them well.
I think it’s only a matter of time before you see the airlines, start app bidding cash/miles/combo for upgrades to Coach+ or Domestic J seats (including an Algorithm that Elites can confirm an upgrade for X$/Miles -related to fliers economic value and perhaps opening confirmation 24hrs ahead or they can also just bid in upgrades with rest of the fliers. Then if an unsold seat is available they work down the elite list.
Airlines already try to upsell – after you book – I think it’s only a matter of time that it becomes more aggressive and focused on site ( checked in at the terminal). Auctions also drive up the uncaptured revenue I might not pull the trigger on a fixed $100 but I probably would if I bid up to $65-70 on a hypothetical upgrade ( i.e. 3+ hr Domestic flight).
I was chatting with a CK member in DFW and he said American was making it harder to early / keep CK. And they obviously just bumped up the xp spend requirement.
Sounds like airlines trying to think the ranks overall, not an Exodus from American…
AA sent me an offer with 20 500 mile upgrades and Platinum. I declined it. I won’t fly them. I am GS with UA and did a status match to Platinum with DL. I’m splitting flying between the two now.
I live in Hawaii have left plat and platpro last two years. Iravel to AZ about 8 times a year and east coast a couple more. 1 or 2 international. I have now become agnostic towards. Hawaiian is often the most convenient so I fly them. So few AA upgrades better to buy businessbon most convenient carrier.
It’s great for people like me who remain with AA to get rid of the disgruntled folks. Good riddance I say. Spend enough time with UA and DL and you will see that it all evens out in the long run. But in the meanwhile you will make it easier to get upgrades, award tickets and make for less crowded lounges. Thanks!!
Yes, please enjoy my former upgrades. I am glad to cede them to you as I continue to clear on United with on-time flights and perhaps the best long haul business class option in the country.
Hard to change when AA has the most non stops from LAX to MIA and back, which is the route I always fly.
I will be defecting from American at the end of this year to Delta. Just waiting for my million miler qualification before I jump ship.
I’ve had it with American, they just don’t seem customer centric anymore. I’m ok with increases elite stats requirements as long as the product is good, but the product has been getting worse.
Just status-matched to Delta *this week* – the remaining flights I have booked on AA for the year will let me keep my status for another year in case it doesn’t work out, but yeah… I’m thinking Buh-Bye AA…
We get it you don’t like flying AA. Give us all a break, and spend your time writing on the carriers you fly. Good riddance!
Feel free to read the work of others, I also wrote about United and a Hyatt hotel review this weekend.