Will American Airlines’ loyalty overhaul make elite flyers rethink their own loyalties? | Travel

By Editor On Nov 1, 2021

DALLAS – American Airlines rethinks what it means to be a “loyal customer” in the age of COVID-19 air travel.

Now, first class seat may not be as important as a tax bill paid with an American Airlines branded credit card.

American Airlines is making the biggest change to its AAdvantage loyalty program since merging with US Airways and merging the two companies’ plans in 2015.

Collecting travel miles is out. Issuing credit cards through the shopping portal and a dining program is in. New destinations are based solely on spending and buying flights.

In addition, old guidelines that reward customers for the number of miles a flight can travel have been removed.

It’s part of a wave of change that is taking place as airlines, hotels, and credit card companies emerge from the COVID-19 pandemic and look at an entirely different travel landscape.

Business trips are still cautious – this also applies to trips by long-distance warriors who collect frequent flyer awards at the expense of their employers. But those first and business class travelers have been replaced by leisure travelers looking for weekend getaways to the Florida coast or Mexico’s Yucatan Peninsula.

“We definitely had to make adjustments during the pandemic,” said Heather Samp, American Airlines managing director for AAdvantage Member Engagement. “Loyalty manifests itself differently when people move through different phases of their lives.”

Southwest Airlines, based in Dallas, is also running its own loyalty program and introducing a Rapid Rewards Business Program that gives businesses and travel managers the same benefits as individuals. It is part of a broader strategy for Southwest over the past few months to attract more business customers by bringing its flights to technology portals used by travel agents for business travel.

At American, Samp said the changes mean more customers could achieve high levels of loyalty, including the coveted platinum levels for executives. That includes more platinum executive members even if they don’t fly often, Samp said.

Over the past 19 months, airlines have lowered the threshold for loyalty programs to allow frequent flyers to maintain their pre-pandemic status even if they fly significantly less. The passengers come back, but not necessarily the same passengers or the same journeys.

Loyalty programs are incredibly important.

American attributed approximately $ 5.9 billion in business to its program, which includes not only status programs but partnerships with financial institutions for branded credit cards. American valued its loyalty and credit card programs at $ 10 billion last year, an asset it used as collateral to obtain federal loans under the state’s pandemic stimulus packages.

Some airlines have started to “devalue” miles, which essentially means that it costs more miles or points to get the same fare, upgrades or other benefits. Air passengers accumulated many air miles during the pandemic and did not use them.

The result is airlines are sitting on billions of dollars worth of airline miles, a ticking time bomb for the industry. AAdvantage members had approximately $ 9.2 billion worth of airline miles to redeem at the end of 2020, 6.7% more than the previous year.

American has stated that it will not devalue the number of points or miles required to purchase airfare, first class upgrades, and other perks.

Samp said more changes are coming. The airline is giving its customers until March to start the program, although they can start earning points in January, an indication that flying is still affected by the COVID-19 pandemic. Moving the calendar to early March could also help customers focus on meeting AAdvantage goals during a time of the year that is less busy than the holidays, she said.

Big changes are still expected for other airlines, including Delta Air Lines and United Airlines, which have also switched their programs to emphasize credit card spending in recent years, said Zach Griff, executive editor of travel and credit card website The Points guy. Its changes are unlikely to keep up with American overhaul, he said.

“What’s unique about American is that they think about loyalty in ways we’ve never seen before,” said Griff.

For example, a small business owner who deposits $ 200,000 on an AAdvantage credit card would achieve Executive Platinum status and unlock perks like free checked baggage and priority boarding. However, customers will still need to make 30 flights per year to receive upgrades and lounge access.

American loyalty program members are torn in their reactions to the change. Loyalty programs are not only nice perks for frequent travelers, many customers also love to reach the next level of status or collect new rewards. In fact, at the end of the year customers have been known to perform “mile runs” planning low-cost long-haul flights around the globe to ensure they achieve their destinations.

“Driving miles is something that is very important to the people we hear about,” said Griff.

The number of miles will be reduced under the new program, although customers can still collect loyalty points through long-haul flights with partner airlines.

Travel blogger Gary Leff of ViewfromtheWing.com said the changes could benefit American, which competes for consumer spending with banks and credit card issuers.

“There was no compelling reason for customers to put their spending on an American Airlines credit card because they had more incentive to spend on Chase or American Express,” he said.

But there are also concerns. Since this is a major overhaul, customers are still working on how to maintain their key status levels based on their historical spending.

Some customers who have achieved elite status just because of flying might look inside from the outside.

Leff said some long-time loyalty program customers may feel disadvantaged as more customers qualify for elite status.

“If this creates a lot more elite customers, will American create a new level for its most loyal flyers?” said Leff.

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