Alex_I

- It would be rather irrational to spend $5K just to hop the lounges and dine on AA planes. One can do a much better wine and dine on that budget. I am not even bringing up that most what AA serves on planes is of mediocre cafeteria quality. The "grand scheme" of AA was to decrease amount of miles given away for flying so they would sell more directly to public and CC companies. EQD is an an "idea" to squeeze the most frequent customers (presumably with spending accounts) to pony even more money for AA tickets.

At the business end, the only thing that matters is the revenue per seat. Only time would tell.

AAExPlat

This. The whole revenue based approach is meant to do two things. One, to reduce the amount of outstanding RDMs (creates a liability without an equivalent cash offset) on the balance sheet and two, to incent corporate fliers to spend more than they need to in order to secure elite privileges (presumably to bolster yield).

The first goal is clearly being achieved. They are issuing WAY fewer RDMs than they used to for flying activity. I fly a mix of F and Y fares and it doesn't matter what fare I am on domestically, I almost always earn less than I used to. The only exception was a recent AUS-EWR-AUS in F.

The second goal may or may not be met, but I am certain that outside of a very small group of fliers, these revenue programs are causing the airline more harm than good. Loyalty has been eroded to a point where non-elites now simply shop and pay what's most convenient, and elites do the bare minimum necessary and THEN go shop. Many don't take trips they used to take, which means capacity swings will be slightly more severe than in the past. The whole raison d'etre for these programs ha been killed off.

It may not yet be apparent but in the next major recession, these airlines will regret the changes they made unless they have incentives ready to go on the shelf that at least temporarily restore old benefit earning levels.

If they are not ready, capacity cuts of epic proportions will be necessary.

Smiley90

I think it's been said before, but while these changes may "create true loyalty based on spend" and put them equal to UA and DL, that also means they're directly competing with their hard and soft product instead of their FF. And who can genuinely say that THAT drives them to AA? The only ones for whom AA has a clear edge is those that don't care about FF miles and where AA has the best routing or the best price.

And if that's enough to keep profits rolling in is something we'll see, because the new AA doesn't so much reward "loyalty", it just rewards kayaking.

Biggie Fries

Something the airlines know that I don't is what proportion of miles flown are (were) coming from elites -- and, of these, how many were from potentially price-non-sensitive corporate types and how many were from grifters like me.

As I get acclimated to the idea of flying less -- a lot less -- I reflect on how necessary (to my mind) the elite benefits were (are) to making flying palatable. Point being: Without them (i.e., given the ambient horribleness of garden-variety AA air travel), even low fares don't tempt me that much. Maybe that's just me.

AAExPlat

Fully agreed. Quite the opposite. I have never really mileage run, but I will only fly now if I have to (work) or if I want to go on vacation with the family. If that's what I am planning to do, I am shopping the daylights out of those flights....

Alex_I

- Exactly! I flew about 50K all business miles during last two months just to get over 150K EQM to receive 2 more SWUs. Right now I have no upcoming reservations with AA. I did not change my job and I will still travel extensively but I am shopping around and trying different airlines just for fun - and I am treated very well by other airlines when paying for J and F. Finally, I just cancelled my AAdvantage Citibank card - no needs for more of the devalued AA "currency". I guess this is not what AA had in mind when changing AAdvantage after 35 years running.

LINDEGR

Your not alone. In addition to curtailing my 'why not' weekend getaways, I am even declining my optional business trips. AA took away the 'compensation' I received for being out of town and traveling on my time.

mrow

Likewise, my next two trips to the USA are with Swiss First and Virgin Atlantic Upper Class.

Being based in the UK (but visiting the USA frequently due to family) I have only ever flown with American (or BA on an AA codeshare) when visiting the USA. By the end of next month I'll have flown all three US Legacy carriers.

Not sure if this is the behaviour AA (and the others) were aiming to promote, but I'm certainly not complaining. I am not actively avoiding American, but flying them is not the foregone conclusion that it once was.

rens

Could you please explain the reasoning behind this statement in more detail? Exactly how does an airline profit from credit card spending? Sure they may sell the bank more miles (at a greatly reduced rate), but also have the liability of the outstanding miles and redemptions. Is there some other revenue stream for the airline from credit card spend that is less apparent (like a commission or part of the annual fee)?

I have been sincerely struggling to figure out what is in it for the airline in offering credit toward status based on credit card spend, but honestly have not been able to understand the economics from the company's viewpoint. Explanation of your statement would really help to clear this up for me.

Thanks

rens

In the hypothetical, it seems the no status passenger has not yet started his $12,500 journey. Obviously no eqd has as of yet been credited (like miles it credits as/when flown, not when purchased), so he would also rank at the bottom within his (no)status tier

rens

It continues as it is currently. Generally by status level and then by timestamp within status tier.

econometrics

Same. I have spent an unhealthy amount of time on Google Flights booking my first 4 trips of 2017 the past month. Whereas before, I would have just went to AA.com and bough the ticket, applied 2 of my 8 SWUs and moved on. Not any more. Now I'm actively monitoring BA/QR prices in discount J to see how I can navigate around flying on AA and using my precious 4 SWU's.

So far, I have booked 4 longhaul R/Ts for early 2017 without using my SWUs. Because I've been creatively avoiding AA by booking on partners for confirmed J seats... all giving me EXP status much faster than if I had flow those flights on AA via more EQD and basically the same EQM.

rens

You are, depending on partner airline, taking at least a 25% hit on EQM..so not quite the same. Nonetheless a great trade-off for more EQD, which is in some cases more difficult/expensive to acquire.

econometrics

Not necessarily. I'm actually spending more to book discount J or PY fares so far. This vs just a RT discount Y ticket with SWU upgrades on the AA legs across the Pond.

Eg I used to always fly DFW-LHR-JNB on an AA ticket in discounts Y and use SWUs on the AA metal, then cash upgrade to WT+ on BA. Now I'm booking on BA in J or WT+ and using Avios to upgrade.

But yes, EQM is not the qualification amount I'm concerned with. Now I want to boost my EQD as much as I can to give me top spots on the UG list. Partner flying long haul on discount premium fares is the way to go. 👍🏼

ckx2

Our schedule for 2017 has just been released, and based on the bookings I'll secure EXP by end of February 2017. I've just had a scheduled client visit and got awarded with 20% more RDM than usual, which basically nullifies the increases miles necessary for award bookings.

With AA now serving LAX-HKG, we've seen a price decline for CX as well. It's win/win for us right now.