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American Airlines

Revenue Changes Coming to AAdvantage

Revenue Changes Coming to AAdvantage
Joe Cortez

Airline announces plans to attract more “high-yield customers” in coming years.

American Airlines wants to add more value for their most loyal flyers in order to attract more “high-yield customers” in 2018 and 2019. Seeking Alpha reports the carrier announced the coming changes during their third quarter earnings call.

When responding to a question about managing passenger yields across the network from Sanford C. Bernstein & Co., airline senior vice president of revenue management Don Casey responded with the change. Looking across cabin spaces, the executive said more revenue-focused changes would be coming specifically to the AAdvantage loyalty program.

“We have a host of initiatives coming in the AAdvantage program later in 2018 and 2019, which are going to attract more high-yield customers which is going to increase yields,” Casey said in the call. “So I think we got a big portfolio of initiatives that are all designed around increasing yields.”

Elaborating further, chief executive Doug Parker went on to include the “work that we’re doing with the ancillary products” in the group. The comment may have been alluding to the credit card relationships American holds with both Barclaycard and Citi.

Although the announcement was not very specific, the carrier could be looking at offering more to their higher spending customers. Much like their legacy competitors, American offers four elite levels based on the number of miles flown and amount spent on airfare. At the highest level, AAdvantage Executive Platinum earn 120 percent bonus miles on top of their base award miles, as well as unlimited auto-requested upgrades and upgrade rights for companions.

New benefits could include additional upgrade offers, more award miles or other benefits. Additionally, American could choose to follow the path of Delta Air Lines, which allows top-level elites to choose their benefits.

More separation could be coming between the front and back of the aircraft as well. Casey announced that 1.5 percent of the airline’s revenue came from basic economy fares and half of those flyers were not apt to spend more money on their flying experience.

[Photo: Shutterstock]

View Comments (6)

6 Comments

  1. mike2003242

    October 31, 2017 at 5:16 am

    Makes sense to take care of the customers you actually make money on. I would love if UA followed their lead. However, if they do implement these changes and don’t execute them well it could be an overall negative. I’ll keep my fingers crossed and hope for the best though!!

  2. dlflyer2

    November 2, 2017 at 6:15 am

    Parker is dreaming in a vacuum. Missing from his equation is that quality products attract quality yield. Consistency leads to performance.

  3. Berniecfc

    November 2, 2017 at 6:19 am

    If AA get only get 1.5% of revenue from the great unwashed who sit in the back, why bother letting them on the plane at all? The cost saving of processing, check-in, in flight service etc would probably equal the 1.5%. I’m sure Flight Attendant moral would improve having to deal with an only business class flight. I’m sure Southwest would be more than happy to except the extra revenue.

  4. JG_Aus

    November 2, 2017 at 8:01 am

    Unfortunately almost all of these changes usually result in devaluation for everyone else, since the airlines usually want to make any changes ultimately “program neutral”. As someone who is currently stuck in coach for business travel, UA’s changes back in 2015 meant that my travel (despite my 2.8M miles in mileage plus), my family’s travel, and the travel of my team at work has gone back to carriers that offer a better in flight experience and often a lower price. SQ out of Singapore and QF out of Australia offer superior in flight experience and although their points earning capacity is lower, the difference is now not terribly significant. I have always shied away from OneWorld due to the extortionate fees that carriers like BA charge. AA has always been more reasonable with the fees, but earnings potential has been okay.

  5. Jacobruiz

    November 2, 2017 at 1:10 pm

    Those “worth more” vs. “those worth less”…reminds me of George Wallace, “segregation now, segregation tomorrow and segregation forever,”. Yeah, yeah, just take this glass of water and go find a seat in the back of the plane….

  6. Zebraitis

    November 2, 2017 at 4:05 pm

    So: “Higher value customers”… the system is rigged.

    Fly 4 or 5 international flights, have the right two credit cards, and you are an EP.

    Be a domestic road warrior without the right CCards, and be lucky to be platinum. (not Plat Pro or EP)

    Selling the most expensive product to the International flier while abusing the “rank and file” weekly travelers on AA will result in a loss of revenue that will astound Doug and Wall Street.

    Once a market leader, arrogance and ignorance of the market killed Sears. History can repeat itself.

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