4aks

FF programs give customers rebates (services of value on a delay after receiving payments) ... rebates allow upfront revenues to be above and beyond typical market would bear, and allow for win-win tradeoffs between service provider and customer (e.g. I'll take a 'regular' amount of points for you to take a seat on a flight that might otherwise have sold for cash, or I'll only take a few rebate points for this 'empty' seat on a lightly used route) , this also clouds the cost/benefit math for customers

If FF programs are devalued, the % rebate is reduced, the industry competes on a more transparent cost/benefit indicator - $ price of a flight that a customer wants now

Stripe

I assume AA will switch to this model for earning RDMs, probably next year. And I could not care less. One way or another all airlines balance mileage earning and redemption in a way that works for them. Hotel, car rental, and credit card points have always been based on revenue. It just makes economic sense. They simply become a straightforward form of price rebate.

The more important question is whether and how AA will tinker with the formula for earning elite status. There has always been an indirect revenue component -- it is easier for those who consistently buy expensive tickets to reach elite status via EQPs -- but I suspect AA will eventually adopt some sort of minimum spend requirement. As long that can also be fulfilled with a minimum credit card spend ala DL I would consider even this to be a trivial change.

Reducing elite benefits, inflating elite ranks, adjusting the upgrade priority formula, or even cutting first class meals would, to me, be far worse than making mileage earning more revenue based.

ElmhurstNick

I'm assuming that AA will implement these changes for some date in 2016. I'm in an odd situation when that happens, as I'm a mix of four kinds of flying:

1) short haul work travel booked 7-10 days out
2) mid-con work travel booked 14-28 days out
3) leisure travel in the cheapest fare classes, and
4) leisure travel booked in cheaper AA UP/A fares and BA WT+ fares

Put it all together, and without revenue-based earning I'm probably a candidate for the 75k tier which US currently has, if I never redeem.

Fortunately, I had gone through the mental exercise when I switched back to American last summer. If they go to revenue-based earning and put an onerous EQD option in, I'll move all of categories 2 and 4 to BA and make OW Sapphire, and keep category 1 on AA as lifetime Gold and pay up to get MCE when I need to do so. Category 3? That'll be all award travel, between Avios and a boatload of Southwest points.

sdsearch

Not quite true. For example, Avis has no car rental points itself, but it lets you earn airline miles (and other partner currencies) with a large variety of partners. With AA, you earn 50 miles per day (before any bonuses), totally regardless of the cost of the rental. However, with US, you earn 1 or 2 miles per dollar spent (before any bonuses), depending on whether it's a "business" or "leisure" rental (presumably determined by AWD? I dunno, I use airline AWDs and those all earn 2 miles per dollar spent).

Similarly, while most hotel programs earn their own points (before any bonuses) on dollar spent, a certain subset of hotel programs give flat airline miles per stay (typically 250 or 500 miles, before any bonuses), regardless of the amount of money spent on the stay.

And I have to keep throwing in "before any bonuses", because with many of these programs:

1. The earnings before any bonuses are very small compared to what the bonuses earn you.

2. The bonuses are often (though not always) not proportional to spend, even when the "base" point earnings are. (Marriott has typical bonuses of 45k or 50k for 25 nights. Choice has typical bonuses of 8000 points for 2 separate stays. IHG's current promotion is of the form stay X nights earn Y bonus points. Etc. And with the exception of US at Avis (and maybe a couple other partners), all Avis partner bonuses are per day or per rental, not per price spent.)

For those of us who can "follow the bonuses" (only stay at hotels when there's a good bonus, not maxed out yet, only rent a car with a good partner bonus, etc), it's easy to forget that the "base earnings" are spend-based, because that's the minority of the poitns/miles we're earning once those (ever-present for us) bonuses are factoreed in.

Obivously, it works a bit differently for those who cannot jump between hotel programs/etc to follow bonuses (or who don't take the time to figure out how to maximize bonuses).

MiamiAirport Formerly NY George

When FF programs started fares were more in sync with the number of miles flown. Over the years that has changed. AA like UA will probably connect RDMs to dollar spend and eventually tie dollar spend to earning elite status. Both AA and UA certainly have an understanding that elites that are forced to buy cheaper domestic tickets won't like these changes and therefore a phase in/adjustment period might be appropriate.

pinniped

Indeed...the hotel programs have certainly used the seasonal bonuses more extensively than airlines, although I notice that they too are backing away from the practice (or just delivering watered-down bonuses that don't yield much).

In used to be that the impact of the promotions would dwarf the "regular" earnings. Hyatt's FFN, Starwood's Free Resort Nights, Starwood's percent-off award redemptions, IHG's Crack the Case, Marriott's 5k DL per stay, and Hilton's various free night promos. All of those were fantastic...but I don't see as many of these anymore. Now I get a lot of Marriott Category 4 free night offers (yawn) and HH/SPG offers for double base points (yawn again).

Hotels, like airlines, are beginning to realize they don't need us. They just aren't as far along in the process as the airlines are.

At least National Rent-a-car still likes me. Kind of...

oldsmoboi

I like that idea if I'm starting from scratch, but what about the segment minimums for existing gold members?

oldsmoboi

US just "added" AA.

pinniped

On one hand, AA could differentiate by offering a program that gave fliers the better of revenue or distance, either on any given flight or as a choice the flier makes one time per year.

On the other hand, there's really no reason for them to differentiate. What limited competition remains isn't enough to require differentiation. It's just enough to require the airlines to gradually diminish the importance of their FFP's in a reasonably similar manner, which they are doing.