Randy Petersen's Opening Remarks – March, 14 2013

Randy Petersen's Opening Remarks – March, 14 2013


‘Dewey Wins’ wasn’t the exact newspaper headline in 1948 when most of the major newspapers at the time mispredicted the winner of the U.S. presidential election (we all now know that Mr. Truman won). But it points out that proclaiming a winner has a unique history.

And what does Dewey have to do with me, you and the rest of the world of miles and points? Well, it’s still too close to call regarding the potential merger between American AAdvantage and US Airways Dividend Miles–news that seems destined to be announced before the next issue of this magazine–and news that I haven’t been able to worm out of even my best sources at these two airlines.

It’s those bondholders who are mucking up my ability to predict the certain outcome (and like newspapers in 1948, I’ve got a deadline). Now having proclaimed that Dewey wins, I know it is safe to say that all your miles can be put back together again, and while I may issue a mea culpa next month for calling this election wrong, I’ll stick my head out and say–welcome to your new frequent flyer program … members of US Airways Dividend Miles.

Now really isn’t the best time to do a full analysis of this merger, but rest assured that all your miles, even those earned by those popular Grand Slam promotions through the years, are good to go. I have no doubt the combined program will be called AAdvantage. I have no doubt that some members will be enriched with the merger of the two airlines and some members will switch rather than fight the changes that will come with the merger. What might the changes be like? It’s anyone’s guess at this point but these two programs do have some similarities so the merger will not be all that unknown.

Both interestingly enough offer discounted awards to their credit cardholders. But I do know that two different banks are at play here (Citi and Barclays), and history tells us that when program mergers included differing banks, one was soon gone. I’m not so sure that’s the picture here. Citi has been very slow underfoot to offer new ideas in credit cards for AAdvantage, while Chase has been doing wonders for United’s MileagePlus program, so maybe it would be positive for this program to shake things up a little and figure out a way to work with both banks for new offers.

The two FFPs differ on how their elite members are upgraded, with Dividend Miles members enjoying the industry standard of unlimited upgrades on an hours advance system, while American clings to a somewhat dated upgrade miles chit system.

The one item I’m a little concerned about is some of the excellent award deals that Dividend Miles has. They have excellent deals on premium intra-Asia awards, off-peak awards to Europe and the Caribbean, business class to select areas of Asia and other gems. But AAdvantage redeems maybe four times the number of awards to their members than Dividend Miles without much complaint. So my guess is that some, or likely all, of these redemption gems for Dividend Miles members will be merged upward with some major differences in upgrades and promotional offers going from current AAdvantage style to Dividend style. As many of our readers know, AAdvantage used to run the US Airways frequent flyer program years ago so US Airways has history with both American Airlines and British Airways. Yes, another of the back-to-the-future sort of event this industry treats us all to if we’re around long enough. While I like competition and would prefer to see these two continue to challenge one another, I can resign myself to change if it means seeing my miles live another day.

And yes, I see these two hooking up their current interests and moving to a revenue-based frequent flyer program in the not so distant future. The merger of Continental and United took United’s interest off the birdy on this topic, but I’m fairly certain that American and US Airways could possibly pull off the whole thing at once to make this a very interesting time for this industry. And yes, I don’t expect by the time you read this that the headlines will only be Dewey Wins.

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