And then there were three.
American Airlines announced Tuesday that it will start doling out frequent-flier miles based on the fare customers pay and not on the distance they fly. American’s move closely mimics changes already made by Delta and United, the USA’s two other big traditional carriers.
“American Airlines has spent the last two years being singularly focused on integration. Now we’re at a point where we can begin to look ahead and lay the foundation for the future of the AAdvantage program to ensure we’re rewarding our most loyal customers with the benefits they value the most,” Suzanne Rubin, president of American’s AAdvantage frequent-flier program, says in a statement.
Starting sometime in “the second half of 2016,” non-elite American customers will earn 5 miles per every dollar spent on the base fare and “carrier-imposed fees.” Elite customers will earn more, with Gold members earning 7 miles per dollar, Platinum 8 miles per dollar and Executive Platinum 11 miles per dollar. The earning levels closely mirror how Delta and United award miles.
American detailed several other changes, including changes to the miles needed for many frequent-flier awards. Unlike “redeemable” miles that can be cashed in for free flights, miles that count toward earning elite status on American will still be tied to distance flown. But the carrier is tweaking that too, making it easier for customers buying expensive fares to rack up those miles even faster. American customers earn elite status by accumulating at least 25,000 miles in a calendar year.
But it’s the change in how American awards “redeemable” frequent-flier miles that appears to cement a fundamental shift in the nature of loyalty programs at U.S. airlines. Launched in the 1980s – first by American and quickly matched by most others – airline frequent-flier programs have since become commonplace among American consumers.
For decades, the programs run by the big traditional “legacy” carriers handed out miles based on the distance their customers flew. But that began to change last winter.
Delta became the first of the big carriers to tie mileage-earning to fares rather than distance. United followed Delta’s lead about three months later, making nearly identical changes to its loyalty program.
Low-cost carriers — including Southwest, JetBlue and Virgin America — already employ a “revenue-based” system of earning frequent-flier points. Still, it’s been the change at Delta, United and now American that’s being viewed as a fundamental shift among the three big network carriers that control much of the U.S. market.
American stood pat with its traditional set-up for more than a year after its rivals changed. Still, it was widely expected that the airline would eventually follow suit once it had finished the heavy lifting in its merger with US Airways. US Airways made its last-ever flight last month, among the last moves in a merger that has left American as the world’s largest airline.
“I definitely think it’s because of the merger. And they’ve basically said as much,” says Brian Kelly, who tracks airline frequent-flier programs via his The Points Guy website. “To their credit, they’ve handled the merger beautifully.”
American’s switch to fare-based earning will begin sometime in the second half of 2016, though Rubin said in a call with reporters that the exact date has not been determined.
Despite that uncertainty, Rubin said American wanted to detail some of its planned frequent-flier program changes now because the carrier is “eager to be transparent” and to give customers advance notice.
Once the changes to earning miles begin in 2016, Alaska Airlines, Spirit and Frontier will be the last big U.S. carriers left to still tie redeemable frequent-flier miles to distance flown.
But while American has followed Delta and United in tying frequent-flier miles to fares, it did not match one other big change made by its rivals since 2014.
Delta and United now require customers to hit minimum spending thresholds to attain elite status. Previously, fliers on those carriers could earn elite status simply by flying a minimum of 25,000 “elite” miles in a calendar year. Now, both those carriers require customers also to spend a minimum of $3,000 in airfare — or spend $25,000 in an airline-branded credit card — to attain the lowest level of elite status.
American did not add such a requirement in its latest program change.
When asked if the carrier might add such a requirement down the road, Rubin said only that American would “continue to study that element of the program.”
Kelly said he thinks American may not be quick to add it.
“Now would’ve been the time to do it,” he says. “This will be a differentiator for them.”
Overall, however, “most of the changes are not good,’ Kelly adds about the changes announced by American on Tuesday. He says appears to have shifted more awards into higher-mileage categories. With the proliferation of airline credit cards, “billions and billions of miles have been pumped into the system. There’s going to be inflation” in the cost of frequent-flier award tickets, Kelly says.
But he’s quick to add that “there are a couple of bright spots” to the changes.
“I really like the changes for EQMs (elite-qualifying miles), Kelly says, saying American now offers “richer” elite qualifying options than both Delta and United. Beyond that, the changes are likely to help corporate travelers but work against bargain-seeking leisure customers.
“For passengers buying expensive tickets, they’ll likely get more miles under the new system,” he says. “Most leisure fliers will earn less.”
Other highlights from Tuesday’s announcement:
New low-mileage award for short flights: American create a new award category for flights under 500 miles. It’s “MileSAAver” award for those flights will now by just 7,500 miles each way, down from the current 12,500. The new awards will become available in March. Examples of sub-500-mile flights include Washington Reagan-Boston; New York JFK-Cleveland; Philadelphia-Montreal; Charlotte-Orlando; Chicago O’Hare-Memphis; Dallas/Fort Worth-Kansas City; Miami-Savannah, Ga.; Phoenix-San Diego; and Los Angeles-San Francisco.
Changes in earning elite status: In changes beginning Jan. 1, American is phasing out its system of “points” that count toward elite status but will enhance how members earn “elite qualifying” miles. Customers who buy “full fare” first and business class tickets will earn 3 “qualifying miles” per mile flown while discount first and business-class tickets earn 2. Full-fare coach tickets earn 1.5 miles while discounted tickets earn 1 mile.
So, for example, a customer buying a full-fare first class ticket on a 1,500-mile one-way route will earn 4,500 miles that count toward elite status. The same flight in discounted economy would earn 1,500 qualifying miles.
The points system is being discontinued, but customers will still be able to qualify by “segments” — which are equivalent to a single flight. A round-trip flight with a connection in each direction woudl be the equivalent of 4 segments. Fliers earn status be flying 30 (Gold), 60 (Platinum) or 120 (Executive Platinum) in a calendar year.
Mileage award levels changing: American will roll out a new award chart, increasing the miles needed for routes between some regions while reducing them on a handful of others. The changes will take effect in March.
Premium tickets on trans-Atlantic routes and cross-country routes are among those seeing increases. First-class tickets on American’s three-cabin cross country flights will now go for a minimum of 50,000 miles each way, up from the current minimum of 32,500.
Rubin says the routes are being “adjusted to match increased customer demand, including routes that feature our world-class A321T and 777-300ER aircraft.” American has rolled out cabin upgrades to those aircraft, including first and business class cabins that feature lie-flat seats.
At the other end of the spectrum, tickets to Mexico and the Caribbean will now be available for as little as 30,000 miles round trip in coach – a decrease of 5,000 miles round trip (or 2,500 miles each way).
Upgrades: Beginning Jan. 1, members who qualify for Executive Platinum status for 2017 and beyond will receive four “systemwide upgrades,” down from the previous eight. However, they’ll be able to two more (up to a total of four additional) for every 50,000 elite miles they earn beyond the 100,000 it takes to earn Executive Platinum status.
Upgrades (2): American’s Gold and Platinum elite members will now earn four 500-mile upgrade certificates for every 12,500 elite miles earned, up from the current 10,000. American says it increased the earning requirement to coincide with its increased elite-mile multipliers for high-fare tickets.