sbm12

Every now and then a ridiculously boring government document reveals some interesting nuggets of data. Last March AA sent a letter off to the IRS requesting taxation guidance on 39 specific types of transactions. Among them were these two:

• Service P allows Members to purchase “bonus” Miles (i.e., double or triple miles) on certain flights to be credited to the Member’s Account. Currently, this service is occasionally offered to members free of charge on a limited-time basis. However, Taxpayer is preparing to offer Service P for a fee.
• Service CC allows Members to redeem Miles for the purchase of air transportation on Taxpayer’s website. At the time this letter ruling request was issued, Taxpayer was not charging a fee for Service CC. Taxpayer is, however, contemplating implementation of a fee for this service. The fee would be charged at the time of ticketing.

The first is similar to UA's Award Accelerator and not all that revolutionary. CO also does something similar with their Extra Mile promo every year.

The second would be a bit more drastic.

Thoughts?

Without knowing the prices, would you pay for the extra RDMs? What's your price point?

Would AA starting to charge for reward redemptions online turn you away from them as a carrier? Even assuming elites are exempt?

http://boardingarea.com/blogs/thewan...es-for-travel/

ByrdluvsAWACO

Unbelievable! This has Arpey's bean-counter stench all over it. Even if the fee doesn't apply to elites, its just another reason regular people should fly WN.

This will be a slap in the face of elites if general members are allowed to double/triple up on miles. Then there's the issue of extra competition for awards as kettles find they have enough for that European award that would have been out of the question otherwise.

sbm12

If it makes you feel any better, the action is taxable, so AA won't get to keep all the cash.

Yeah, doesn't offer me any solace either.

bniu

hmm, this may actually have another benefit, those extra miles are "Elite Qualifying" in a sense since they count towards the million mile "Elite levels"...

StevenH123

Doesn't AA already charge a fee for an award redemption? How is this "Service CC" option different?

britenbsas

Not if you ticket it via aa.com ($20 phone fee otherwise waived for EXP). There's a fee only for flights ticketed less than 21 days prior to departure (again, fees waived for EXP)

Pizzaman

I assume that when they state they offer this from time to time, they mean things like DBEQM or the ex-NYC, ex-BOS stuff. When I read this the first time, I thought, "Who the H-E-double hockey sticks is getting double miles when they fly, and how come I'm not on that list?"

mvoight

In that sense, all miles are "elite qualifying".

nonesuch flyer

I am probably a slow learner (I am not very good at interpreting bureaucrat speak that this seems to be written in)... but is what AA is saying that in future they would charge a fee for DBLEQM promotions or that you could choose to do DBLEQM whenever you wanted but that you would have too pay for it? Is this really a step towards allowing people to buy elite status? I assume that these are all trial baloons that they are floating? Do any of the competitors to AA have anything equivalent to these options?

sbm12

I would agree that it is the ex-NYC/BOS stuff that they are referencing in the current bit. If they were to sell them I assume they would do so similar to UA's Award Accelerator program so the price point for buying them would be too high for most folks, but who knows.

Blumie

Is "Arpey's bean-counter stench" the same as the stench of a CEO trying to make his corporation profitable (i.e., the same stench as a person doing the job for which he was hired)?

That said, I wouldn't read too much into these proposals. I imagine that AA looks to get IRS guidance on all sorts of revenue generating ideas that it's "considering" in some vague sense, just so they have all of the facts as they consider them. I would guess it doesn't mean anything is at all iminent, only that it was one idea that surfaced in a brain storming session regarding ways to generate incremental revenue. And if you don't want to do business with companies that constantly are looking for ways to generate incremental revenues, I suggest you stop doing business with all for-profit companies.

Pizzaman

Every time I've looked at UA Award Accelerator, it's been a horrible deal. That being said, if I found myself running short at the end of the year for EXP requal, I could see the value in paying for some so I could stay home with my wife and daughter.

Non-NonRev

To me, it just seems like an alternate version of the BuyMiles program. I would venture a guess that many one-RT-a-year Kettle-class AAdvantage members don't even know that they can pay to increase their mileage total. Any incremental revenue that results from such a plan is probably "found money" to AA.

JDiver

Until we hear an announcement, this is called, IMO, "due diligence". And until the announcement is made, I am not going to lose sleep over it.

dayone

Assuming the option applied up to EXP and wasn't limited to up to PLT.