AAdvantage Revenue-Based, Wailing and Gnashing of Teeth Ensues
Sorry folks, the party, is over. Gone are the days where an ounce of travel savvy and a pound of loyalty were all you needed to earn the respect of your preferred airline carrier. As of today, all three legacy carriers, Delta, United, and American Airlines are briefing from the same playbook; much to the chagrin of their customers.
What does that mean? It says that American Airlines has made it considerably harder to earn miles under their AAdvantage frequent flyer program. Before today, you earned miles based on your distance traveled. It was fair and did not require a degree in complex analysis to determine what you earned. Now your miles are set by the price of your ticket, evaluated against what elite tier you are on; ergo the new AAdvantage revenue-based program.
It’s not you, it’s your wallet.
For some, this will be the breaking point. American Airlines isn’t a bad carrier, but they do have a lot of work moving forward, post-merger. The airline is known for inconsistent service and policies, old and sometimes dirty planes, three years into the merger and we still see US Airways livery; the merger left American Airlines in a hodge-podge state and passengers a bit discombobulated. At some point, you have to make the decision as to what speaks louder, price, loyalty, hard/soft product, or routes/hubs. I will not go into details here, but loyalty is now an afterthought for domestic carriers. It’s not you, it’s your wallet.
Where Did American Go Wrong?
Back in November (2015) we learned that two of the worst possible changes to the already ever-changing AAdvantage program were being implemented:
An award chart devaluation
The program was going revenue-based
These short-notice announcements were not received well. With only a few weeks to months before implementation, many customers felt this was more of a band-aid to catch up to Delta and United than an actual way forward. This “me-too” philosophy started when United began copying Delta’s frequent flyer program. Unfortunately, this blatant follow-the-leader approach is not a one-size-fits-all solution. It may take a few years, but eventually, airlines will see that they have control of their market, and if they choose to strip loyalty and fight only for dollars, they will miss out on that long-term customer who will pay more over the life of their loyalty than for the here-and-now.
But what do I know, I am a blogger and not an airline financial analyst with years of experience. Seriously, I’m not; so take what I say with a grain of salt.
Here is what your milage earnings looked like before today, in short, bank!
BNA – LAX (r/t)
BNA – LAX (r/t)
BNA – LAX (r/t)
BNA – LAX (r/t)
You get a pretty good return on your trip. Not only that, even a non-member could a free round-trip flight after about seven of these flights. How long that might take is a different conversation.
Here is what you can look forward to, in short, disappointment.
I have taken a screen shot of a sample fare, using the same route as above, more or less.
Here is the breakdown by Elite status.
Base Fare (USD)
Carrier-imposed fees (USD)
Award miles earned
I used the BNA – LAX route, but this easily could be BNA – JNB. The distance is on longer a factor. It’s all about the dough! Look at all the value you are getting for your money. Oh wait, sorry, I must be smoking too much jet exhaust because you are getting robbed. Welcome to the New World.
Airlines To Nightclubs; My Ill-Informed Comparison
What I can compare this to is my experience in nightclubs. I know, one is on the ground and one isn’t. One exclusively tries to get you to drink while one would like to have you sober at 35,000 feet. That aside, one thing I learned about customer loyalty and the money they spend is that patrons who not only enjoyed some degree of service and benefits felt betrayed when you try to turn everything on its head for the sake of a short-term return.
When the VIP becomes everyone-including-me, you lose face with your clientele, and you also water down the value. Do prices go up, heck yeah! It is an unavoidable fact of running a business, but that’s when you scale back, not down. You don’t stop serving hors d’oeuvre; you stop ordering as much. You can even create a simplified menu and publish it to your clients in advance; airlines do this with onboard meals. You don’t quit your promotions with a particular brand, you ask them for more, extending exclusivity. You don’t raise your prices for existing VIPs, only for new ones. You don’t change dollar draft Wednesdays on Wednesday. Lastly, you don’t swap out your resident DJ who might charge $800 a night for DJ Joe No Name who will spin for a $200 bar tab.
But I digress. The result is that we are going to move forward earning fewer miles and getting less of that great, if not inconsistent, American Airlines service.
Change is inevitable and in this case, not enjoyable. The AAdvantage revenue-based program is moving forward like a runaway train. What are your thoughts? Is the airline industry moving forward in the right direction? Not just short-term, but long-term. How do you think this affects passenger loyalty?