Do you have Elite status with AA?
If you are logged on to aa.com, it'll know your status and show elite-only seating as available. However, when you try to select a seat, this request is passed on to another computer system.
That computer will check whether the PNR is tagged as an elite reservation - if it is not, the request will be denied and you'll get the error back. If you enter your AAdvantage number for the passenger information, this will also take care of tagging the reservation with your status -- however, if your status changes after the reservation has been made, the booking record will not be updated automatically. However, just call up AA and they'll fix it for you in the blink of an eye

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