sukn

With the changes in how Aadvanage now awards miles for flying, one of the impacts moving forward will be that "miles concentration" will be among fewer people.

The few people that spend a lot will now earn significantly more miles, while the folks who spend less on flying will earn far fewer miles than before.

With fewer people competing for award seats, how that reshapes the landscape, if at all, will be interesting to watch -- since in theory AA will have to find a way to keep these 'super profitable' customers happy.

writetorich

This is more along the lines of my contention in my original post which perhaps could have been better articulated by me



yes programs are always devalued.
but AA has already gutted the program, it cant get any worse imho. We are at the "rachet" point. Either stays this way or gets better. no downward risk.

if they allowed 1 cent towards a rev tix for cc holders like delta that would be an enhancement in my view . think rev fares of long haul business class in I fare bucket of heavily discounted $$


also its Barclay only which you can no longer apply for. More members are former aa flyers not former us air flyers.

remember we are outlier consumers. Flyertalkers are not representative of the Macro consumer market.

the majority of AA flyers would not have thought to get an Aviator card pre- merger.


"since in theory AA will have to find a way to keep these 'super profitable' customers happy." said sukn

"In the past accruing 300k RDMs for about $4k was easy. Today to get 300k RDMs would cost $27,200. " said imapilotaz"
The BA approval so long lobbied for and so long opposed by Govt was good for accrual opportunities for high yield rev business flyer.
Good for accrual.
For redemption, it effectively pulled AAdvantage rewards from the USA - Europe market as awards are now on BA metal with "fuel surcharges "that can approximate outright purchases.
Its a loyalty/affinity program. What is the guy who spent $27,200-- going to say when his miles are worthless for European redemptions and his AA miles are of such nominal value elsewhere?
AA will need to restore value as its now angering a customer who spent $27,200 and not the former bottom feeder ( Me :0 ) who spent $4K.

The BA approval so long lobbied for and so long opposed by Govt was good for accrual opportunities for high yield rev business flyer.
Good for accrual.
For redemption, it effectively pulled AAdvantage rewards from the USA - Europe market as awards are now on BA metal with "fuel surcharges that can approximate outright purchases.
Its a loyalty/affinity program. What is they guy who spent 27,200 going to say when his miles are worthless for European resumptions and his AA miles are of such nominal value elsewhere?
AA will need to restore value as its now angering a customer who spent $27,200 and not the former "bottom feeder" -- Me -- who spent $4K

rufflesinc

I don't know how you would separate that effect from many people draining their large AA balances because of the devaluation, and now have to spend a lot of time building up the balances before making more redemptions.

I am optimistic that, similar to the UA deval, if you are willing to spend the higher miles, you'll have a much easier time getting awards (econ 101).

JonNYC

Seems very sensible to me.

CPRich

I didn't read the entire thread, but wanted to thank you for the hearty laugh to start my day. Miles value going up over time - that's a good one.

Almost as good as 3 cents per mile....

jliehr

I think it's actually the inverse, each mile costs more to acquire therefore the value of each mile is shrunk. If a mile costs 1 cent to acquire, but you get 2 cents of redemption it's a good value. If that mile now costs 3 cents to acquire and you can only get the same 2 cents value out of it, it has become less valuable.

Basically AA realized that giving out miles to mileage runners was a loss on the balance sheet. Allowing someone to eat a non-profitable seat, and then turn that into further non-profit award seats harms the bottom line. AA ultimately will do what companies in capitalist economies do, attempt to maximize revenue and profits to reward shareholders and increase value. In the age of internet fares and lowered competition the days of courting customer and loyalty has little value. It's all about increasing profitability above all.

As businesses shift travel priorities to reducing or eliminating travel spend the airlines will only continue to push the envelope to make customers that were not profitable either profitable through fees and add-ons, or they will be happy to let them walk to a competitor.

rjw242

No doubt you have ironclad data to back up those numbers?

javabytes

Depends how you squint at the 90% number. I think it is all but certain that award redemptions will ultimately become tied to fare, a la WN Rapid Rewards. This removes the ability of savvy individuals to obtain significant value from awards that is possible today where fares are high and the award chart is low. Premium cabins will be hardest hit; when a TPAC flight in Business class is no longer 120,000 miles, but pegged to a $6,000 fare at a rate of $0.01/mile becomes 600,000 miles. That sort of thing is not all too hard to envision. Same goes for close-in domestic short haul bookings, where a 7,500 mile one-way might be running $400-500.

These are probably not characteristic of typical redemptions across the FFP member base, but there are certainly such members who will find their award redemption experience becoming significantly devalued compared to what they are accustomed to.

If you already use your miles for 25k round trips to avoid a $300 fare, you don't have a reason to hoard, but also not whole lot to worry about. If you seek very high value from your miles, you should be burning away.

jmw

I can't find seats at 25k round trip frequently on AA without paying double. I ended up burning miles for a funeral at United MP. I'm glad I burned most of the miles prior to aadevaluation and not hoard for emergencies even if one aadvantage mile is much costlier to acquire nowadays.

Air Houston

1. No
2. No

rendezvous

I feel that Delta miles have gradually become more valuable since moving to a program where number of miles earned is based on fare price. Previously, their award availability was nil and although they have restructured their award pricing in a somewhat adverse way, I feel their award availability is significantly better.

nrr

To remain EXP (I normally cross 100K in Dec.) I don't get to use RDMs much. Since AA has now thrown EQD + EQM into the requalifying equation it is NOT likely that I'll make EXP for 2018 = I'll fly cheapest fare (on OTHER carriers) and/or start using my hoard of RDMs--I would "guess" other pax are in the same boat (as me).
RDM* miles are a closed end system, AA dictates how you can earn and spend them. SAAver fares are nice on paper, but if they are not offered much (or at all), you would have to use twice as many to go anywhere.
I'm speculating that the elite ranks will diminish in a big way by the end of 2017, but since AA is in total control, they will tweak the RDM system to their aadvantage.
*There are few systems that are so controlled; even the Federal Reserve bank which controls the "value" of the $ does NOT work in an isolated system, other world currencies have to be factored in.

rufflesinc

Do miles become more valuable when you have to spend more to get those miles?
Is that because DL is releasing more award seats or because there's less people competing for them?

rendezvous

Well, in the early 2010s, it was an extremely arduous task to secure award tickets at the saver level, especially when traveling with multiple people. I see you point about the cost of award tickets increasing, but with the significant increase in availability, you can actuallly redeem miles at the lowest level. To follow up on your second question, I think the increase in award availability is due to both Delta releasing more award seats and the reduction of miles earned on paid tickets. Additionally, AMEX now caps the amount of miles you can transfer to Delta on a yearly basis, so that helps too.

s0ssos

I don't see how you can look at the past and say it can't get any worse. Of course it can! What you mean is that AA won't be the leader in making it worse (probably Delta, as usual), and AA will just follow their lead in "enhancing value" (for shareholders, obviously).

Miles actually don't have any value. You are defining their value by taking the average price of a ticket (say from US to Asia) and dividing it by how many miles it takes. The the ticket prices change as well (they've been a lot cheaper recently, even for premium classes).
And the ticket prices change depending on how far out you book. If you want 10 cents per mile just book a one-way for a last minute on regional jet route that nobody else serves. Or a transatlantic flight to London in BA first.

If you purely want to maximize cpm, you can re-route yourself to all sorts of destinations and get it (Alaska had it at 7500 miles intra-state. If you want to fly to Adak Island that ticket alone is almost $1,000. Would you fly to Alaska just to get more value for your miles, even if you didn't want to go to the Aleutians?). But when most say "value" they mean on flights they want to take at times they want. So if there is no availability, the practical value of miles is 0. And if there is, it has gone up. So sure, the value goes up, but only because they were worthless to start (but I don't think you think they are worthless right now. Most FTers know how to use their miles, but most consumers don't).