AA may be in a shocking state at the moment, but what they did with the loyalty scheme was very smart. Iberia has gone some way down the track.

Basically, almost anything you do with AA earns tier points (Loyalty Points). Spend enough on your credit card and you get top tier status. Book enough hotels via the hotel portal etc etc and you get status. The biggest growth in AA elites is in New York where it has very few flights, because its easy for many New Yorkers to put $250,000 (IIRC) through a credit card to get Platinum.

What's clever is that AA charges partners more for miles if they are to count as Loyalty Points (2.5 cents vs 1 cent, I was told). Partners know they will get more traction if they pay the higher rate and many agree to it (that said, I was told by another oneworld exec that AA wanted 5 cents per point for Loyalty Points and was told to clear off by the entire partner community).

Selfishly, it would be a dream for me. Every day HfP could run articles on some great new partnership that would earn you tier points. Readers would lap it up.

Where BA goes wrong is that it doesn't understand that there is a LOT of money to be made 'selling' status (via tier points from non-flying routes) to people who want it but don't really need it. McKinsey can't model this on a spreadsheet so it doesn't get factored in. I know a corporate hospitality agent who also used to sell GGL Gold referrals for £7,000, and he gave me some VERY well known names as people whose management teams had bought from him. He might have been talking nonsense but for the names he mentioned £7k would have been a drop in the ocean. The old BAEC scheme tapped into this by giving status for modest levels of flying to people who played the game.