American Airlines Rewards Its Customers with Lucrative Mileage Promotion for 2015

Discussion in 'American Airlines | AAdvantage' started by NYCUA1K, Dec 15, 2014.  |  Print Topic

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Would this Year-long Promo by AA Attract Significant Numbers of Disenchanted DL or UA Members?

  1. Loads

    4 vote(s)
    20.0%
  2. Some

    12 vote(s)
    60.0%
  3. Insignificant

    4 vote(s)
    20.0%
  1. NYCUA1K

    NYCUA1K Gold Member

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    The dAArk side just announced an incredible year-long promo for their 2015 AAdvantage Program, which, while it will also seek to reward those who purchase premium tickets, it does so within the rules of the legacy FF system, in a clear rejection of the revenue-based system.

    Key quote:
    "FORT WORTH, Texas – American Airlines will reward its customers with a bonus mile promotion in 2015, making the AAdvantage program the most generous in the industry. The promotion will offer AAdvantage® and Dividend Miles® members more miles based on the distance flown, the fare purchased and the member’s elite status level.

    President, AAdvantage Loyalty Program Suzanne Rubin said: “As the largest airline in the world, with a global network that spans 54 countries, our frequent flyer program must also be the best in the business. A mile flown continues to be a mile earned in AAdvantage, and now we’re going to reward customers even more when they purchase a First or Business Class ticket
    "​

    A mile flown continues to be a mile earned in AAdvantage. What they have done is to simply explicitly verify my claim that the legacy FF system was already revenue-based because it rewarded those who spent more. AA has now made that even more lucrative for big spenders, and in the process may be explicitly trying to woo those who are looking to leave DL and UA because of their adoption of the monstrosity known as r-b.s.

    Please vote then chime in. Is this a game changer...at least for you?

    Continue reading...
     
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  2. Gtitan
    Original Member

    Gtitan Gold Member

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    Nope, already fly US-AA being based out of CLT having left UA prior to the devaluation over how bad UAX is. Stay teh course.
     
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  3. Photonerd71

    Photonerd71 Silver Member

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    Boom...shot fired by AA at the others. Maybe this will start a "war" by the big 3 to get win loyalty back.


    Oh wait what was I thinking...they only care about short term financial gain,
     
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  4. NYCUA1K

    NYCUA1K Gold Member

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    We do not yet know how short term this will be but the dAArk side, as the originators of the current FF system, putting some serious muscle to shore up their legacy does raise the possibility of a "war" that may, at least, pause what most had seen as an inevitable slide toward the r-b.s. AA's proposed solution on how to reward the big spenders is what UA, which had a decent FF program despite a lousy airline operation, should have considered, rather than mindlessly copying DL when they were badly equipped to. The approach that AA has taken has the clear advantage that it does not anger the majority of their loyalists in order to reward the very small minority of high spenders who can afford Business or First class tickets. Very little will be required to implement the announced changes because they are nothing more than the current FF system on steroids. It is really the nearly "perfect" solution for how to reward big spenders because it does not view it as a zero-sum game: the havenots do not have to lose in order to reward the haves...;)
     
    Last edited: Dec 15, 2014
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  5. Wandering Aramean
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    Wandering Aramean Gold Member

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    I see this new bonus earning as, at best, helping to stem the tide of people leaving AA for the better earn rates on the premium fares at UA and DL.

    Take NYC-HKG. That's a $5800 discount biz fare or a $7800 full fare. On AA the earning is ~56k or ~72k. On UA/DL the earning is ~60k or 75k (or higher if you buy one-way tix). NYC-SYD is a $9000 discounted biz fare on AA/QF which would earn 64k points.

    When you get into the summer biz sales at $1500/trip AA will be a nice win, but on most normal tickets I'm not seeing it.
     
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  6. MSPeconomist
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    MSPeconomist Gold Member

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    Sounds like planned inflation and the resulting de facto devaluation of existing AA/US miles when too many miles are chasing too few award seats.

    It also doesn't sound like a good way for AA to capture VALUABLE DL/UA customers versus the ones who fly a lot on cheap fares and aren't very profitable. It's not necessarily smart to maximize market share.
     
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  7. NYCUA1K

    NYCUA1K Gold Member

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    If I had to devise a system for rewarding high-spending customers, the way AA just did it is the way I would do it. It is the near perfect solution that avoids the worst of the r-b.s., while essentially achieving the same objective, because: (a) it does not alienate long-time loyalists -- the overwhelming majority -- who cannot afford expensive C or F tickets and will, therefore, stay put; (c) it rewards the minority that can afford the expensive tickets while also, in many cases, giving them good reasons not to migrate to DL: competitive award miles for paying more and the sense that the company has done its best to try to retain their loyalty, which is all that many high-value loyalists need to know to stay put; (c) it does not necessarily presage a "devaluation" precisely because the bulk of the extra miles that will be infused would go to that small minority that can afford expensive tickets (and may not even care that much); (d) there is no "class envy" because the model is nothing more than the current FF system on steroids, so most are already used to it...and...; (e) it is fair since the basic metric remains the distance traveled, which everyone would earn in award miles, with those who pay more to cover that distance or travel enough exclusively with the same carrier to earn status (read: are "loyal") getting a lot more, and those who purchase dirt cheap tickets getting much less or nothing [you get what you pay for so it is revenue-based but in a fairer way]; and (f) it all pretty much remains loyalty-based.

    If AA should want to do an old-fashioned course correction, aka 'devaluation', because there are too many miles in circulation, my view is that that sort of 'devaluation' is not necessarily a bad thing because it does help to maintain the value of the miles and, hence, of the program, just like devaluing real currency can be a sound monetary policy to shore up the economy...

    We have a whole year to observe these dueling models in action and evolve, which may put the ultimate direction of frequent-flying into a state of suspended animation until the jury returns a verdict in a year or two. It will be sort of fun to watch! :cool:
     
    Last edited: Dec 15, 2014
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  8. flyforawg

    flyforawg Silver Member

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    Anyone have a rough guess at the number of "high value flyers" there are? To me, the only people they are really targeting are people who work for companies willing to spend a lot of money on their workers' travel. I find it very hard to believe that the very well off who are not so rich as to fly private but are rich enough to not mind spending thousands of dollars on more expensive tickets every year actually care much if at all about getting points. Seems to me like an excuse to devalue points and change the conversation instead of an actual strategy that will entice lots of big spenders.
     
  9. NYCUA1K

    NYCUA1K Gold Member

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    They are targeting the business travelers who must, e.g., leave NYC and be in Hong Kong on a short notice or frequent business travelers for multinational corporations. In the scheme of things, there are not that many of them, but they are needed because a flight needs to have only a few of them flying upfront and a full Y cabin to make money. On the other hand, without the full Y cabin, the folks flying upfront would need to pay a lot more of money in order for a flight to break even, much less make money. So, I do not know about "devaluation" of points being the goal (the word is thrown around so much here it has become the embodiment of everything evil) but it is misguided for airlines to reward only folks who can afford to fly upfront at the expense of those in the Y cabin, because without the latter, those C and F tickets would have to be exorbitantly priced just for the airline to afford the fuel required to get that plane off the ground.
     
  10. Canadi>n
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    Canadi>n Gold Member

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    As I see it, this is merely a logical way to equalize the benefits for premium paying elites that come about by UA and DL adopting their revenue based model. AA was at a disadvantage in terms of offering RDMs that matched what its two competitors would be offering. A $2K one-way JFK-LAX in F would only earn an ExecPlat or Plat about 2425x2 since AA doesn't offer a COS bonus for RDMs. A UA 1K would earn 2000x11, or 22K RDMs. So AA had to respond by offering these very generous RDM bonuses. (But I also suspect UA -- not familiar enough with the DL changes -- has realized how over the top its formula really is going to be for premium fare customers in calculating RDMs.
     
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  11. NYCUA1K

    NYCUA1K Gold Member

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    That is definitely part of AA's calculation. They had to do something to avoid defections of their top spenders who happen to care about getting rewarded with more miles for the money they spend. However, the way they [AA] went about it has achieved much more because it makes them seem much bigger by declaring their independence from DL. UA wanted to build a "leading airline" but wound up doing nothing but following DL's lead...blindly. As now the largest airline the new AA also wants to be "the best in the business", meaning that the last thing that they want to do is to also begin following DL's lead blindly!!!
     
    Last edited: Dec 15, 2014
  12. dhammer53
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    dhammer53 Gold Member

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    Yes, but everyone knows that Sky Pesos aren't worth as much as other legacy carriers. UA OTOH slightly beats out AA in my cents per mile redemption rate, with Delta a distant third.

    dh
     
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  13. Wandering Aramean
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    Wandering Aramean Gold Member

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    In most cases those customers would do better to stay with a revenue-based program. You have expressed disdain for them in the past (and they are not useful to me personally, either), but were I the customer buying last-minute fares all the time I'd be very, VERY happy about the prospects such a program would present to me. Here are some numbers to compare (including real airfares for discount and full biz travel):
    [​IMG]

    That shows top tier but I've got similar numbers for other elite levels as well. AA is playing catch-up for the HVFs, not leading the charge for them.

    There are a couple spots where AA wins by a small margin. And a lot of places where they lose HUGE even with the mega bonus offers.
     
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  14. NYCUA1K

    NYCUA1K Gold Member

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    No doubt, but AA made it competitive, even where you claim "huge margins" because of the intangibles. I am putting myself in the shoes of a long-time AA loyalist, a big spender, facing the prospect of getting the loads of miles that the revenue system promises or sticking with the legacy system and earning just a fraction of the r-bs. I would probably consider migrating to the revenue system. But if AA suddenly makes things to where the difference is in single digit 1K, then I would not be tempted to migrate. Years of loyalty + the devil you know would make the AA awards competitive or close enough to convince me to stay put.
     
  15. KenInEscazu

    KenInEscazu Gold Member

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    It's a pleasant surprise for this newly minted EXP. I have several A & I class tickets booked between January 1 and mid February, so this is just gravy.

    For me, however, it was not the revenue thing that ran me off from UA. If there was one thing alone that did it, it was the excessive number of RJs on which I was flying. Uncomfortable, unreliable and often inconvenient, I just couldn't take it any more. There is a long list of secondary reasons, and the combination of them could have done it, too, but we didn't get that far.

    While I do find the premium cabin food to be noticeably better on AA, the overall service is about equal. It's just nice that since making the switch, my only RJ flights have been to/from SUX. A place that UA doesn't even serve.

    Reserving judgment until I get more recent experience under my belt (particularly with decades of bad experiences from living in Dallas most of my life), but so far I am pleasantly surprised. Extra RDMs? Cool!
     

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