Gary Leff: SEC filing - AAdvantage devaluation hurt AA profits
#106
Join Date: Dec 2009
Location: New Orleans (MSY)
Programs: AA EXP, IHG PLT, Hilton Gold, Hyatt Explorist, Amtrak, WN
Posts: 2,617
Is the grass much greener on the other side? While my experience is limited, it appears DL, UA and WN continue to push up mile redemption values, limit saver award inventory. While I am in no way attempting to let Parker off of the hook, the US airline industry has become an oligarchy, all of the top 4 carriers have devalued their currencies as the economy has improved, credit cards and award currency sales have become common place.
Of course, good times won't last forever. I wonder what they'll end up doing when the going gets tough?
I think every FFP has found its own unique way to screw over customers. AAdvantage, with its non-existent sAAver award, is no angel. I'm just scared of what comes next.
#107
Join Date: Jun 2001
Location: New York, NY
Posts: 3,698
- Miles are harder to earn and awards are more expensive. Okay, so hopefully it will be easier to find SAAver inventory? Nope, award availability has gotten much worse.
- Elite status is harder to achieve due to the addition of EQDs. Okay, maybe AA will add some benefits? Nope, EXPs get fewer SWUs, PLT upgrade window gets worse.
- Fewer SWUs for EXPs. Okay, but maybe AA will have a consistent possibility to allow people that fly hundreds of thousands of EQMs to get more of them? Nope, now you have to fly twice as many EQMs to get the same number as you used to, and then you get capped anyway. Or maybe it's easier to use SWUs than in the past? Nope, AA has tightened up upgrade availability consistently.
In the one case I can think of where there's an actual improvement (upgrades on award tickets for EXPs) and many of the minor changes that have been promised that may be good for some people but bad for others (EQD-based upgrade priority, companion upgrade status on the PALL list), nothing seems to have changed and it's not clear when any of it is going to actually happen.
The net result is that AA has gone from having the best frequent flier program of the majors to the worst in just a couple of years. That's pretty remarkable, and it wouldn't surprise me at all if it was starting to have an effect on the bottom line given that this airline doesn't have a lot else going for it.
#108
Join Date: Feb 2000
Posts: 6,546
DL is far better, where you score a deal if you find a unicorn saver seat and otherwise redeem each DL mile for $0.01 reduction in paid fare. This seems like a decent-enough new normal if AA gets to the same place.
Now, only a fool would choose a credit card that offers 1 mile per dollar or even 2 miles per dollar of spend. Better to earn bonused spend on Chase at $0.015 valuation or AMEX at $0.02 valuation. For non-bonused spend, be happy with a 2% rebate card.
Can't really say this new normal of cheap domestic F and $2K flat-bed J long-haul roundtrips with a bit of flexibility is all that bad. Especially with a pile of Chase and AMEX.
Wouldn't even be the end of the world if all the airlines went to fare-based redemptions at a penny a point.
Now, only a fool would choose a credit card that offers 1 mile per dollar or even 2 miles per dollar of spend. Better to earn bonused spend on Chase at $0.015 valuation or AMEX at $0.02 valuation. For non-bonused spend, be happy with a 2% rebate card.
Can't really say this new normal of cheap domestic F and $2K flat-bed J long-haul roundtrips with a bit of flexibility is all that bad. Especially with a pile of Chase and AMEX.
Wouldn't even be the end of the world if all the airlines went to fare-based redemptions at a penny a point.
#109
Join Date: Dec 2009
Location: New Orleans (MSY)
Programs: AA EXP, IHG PLT, Hilton Gold, Hyatt Explorist, Amtrak, WN
Posts: 2,617
Yeah, this is the infuriating part of the recent trends. For every change in the program, there was some possibility of an upside, but AA has consistently done nothing but make the program worse:
In the one case I can think of where there's an actual improvement (upgrades on award tickets for EXPs) and many of the minor changes that have been promised that may be good for some people but bad for others (EQD-based upgrade priority, companion upgrade status on the PALL list), nothing seems to have changed and it's not clear when any of it is going to actually happen.
The net result is that AA has gone from having the best frequent flier program of the majors to the worst in just a couple of years. That's pretty remarkable, and it wouldn't surprise me at all if it was starting to have an effect on the bottom line given that this airline doesn't have a lot else going for it.
- Miles are harder to earn and awards are more expensive. Okay, so hopefully it will be easier to find SAAver inventory? Nope, award availability has gotten much worse.
- Elite status is harder to achieve due to the addition of EQDs. Okay, maybe AA will add some benefits? Nope, EXPs get fewer SWUs, PLT upgrade window gets worse.
- Fewer SWUs for EXPs. Okay, but maybe AA will have a consistent possibility to allow people that fly hundreds of thousands of EQMs to get more of them? Nope, now you have to fly twice as many EQMs to get the same number as you used to, and then you get capped anyway. Or maybe it's easier to use SWUs than in the past? Nope, AA has tightened up upgrade availability consistently.
In the one case I can think of where there's an actual improvement (upgrades on award tickets for EXPs) and many of the minor changes that have been promised that may be good for some people but bad for others (EQD-based upgrade priority, companion upgrade status on the PALL list), nothing seems to have changed and it's not clear when any of it is going to actually happen.
The net result is that AA has gone from having the best frequent flier program of the majors to the worst in just a couple of years. That's pretty remarkable, and it wouldn't surprise me at all if it was starting to have an effect on the bottom line given that this airline doesn't have a lot else going for it.
#110
Join Date: Oct 2010
Location: San Diego, Ca
Programs: AA 2MM LT PLT; AS MVP Gold75k; HHonors Diamond; IHG PLT
Posts: 3,502
I find it highly unlikely that airlines will ever consider fare-based redemption, as award programs receive cash for their currency. The best case scenario for award programs is for the currency to expire, stockpiles of unused currency depreciate as redemption rates increase.
#111
Join Date: Apr 2013
Location: OGG
Programs: AA Plat, A List Pref, Marriott Ambassador
Posts: 356
Is the grass much greener on the other side? While my experience is limited, it appears DL, UA and WN continue to push up mile redemption values, limit saver award inventory. While I am in no way attempting to let Parker off of the hook, the US airline industry has become an oligarchy, all of the top 4 carriers have devalued their currencies as the economy has improved, credit cards and award currency sales have become common place.
I'm in Phx so for work United isn't really an option (I hate connecting). US used to be great (Honestly)...with normal planning I've flown our family (4) to Hawaii and Orlando in F multiple times on the same flight. Now I can't even find 1 seat.
I've been splitting with WN for years and the % continues to swing in their favor. You would think I would be one of AA's target (non-intl) customers...I usually buy last minute full fare tickets every other week or so. At least with WN I know what I'm getting (points wise) and there very usable.
If AA would just guarantee 2 J and 6 Y saver seats on every flight...think how much better the program would be. We might have to book early but at least it would be possible.
#112
FlyerTalk Evangelist
Join Date: Apr 2001
Location: NYC
Posts: 27,234
I'm silver at United via Marriott and I have a truckload of ultimate rewards points... All I can say is that for intl travel I have rarely been stumped for 2 J seats anywhere I want to go within a reasonable time period. Maybe it's just that their search engine pulls SA flights better than AA with One world but...
Can't say I disagree. I haven't redeemed a J award to Europe in probably 10+ years but have bought plenty of ~$2k J tickets. (I did several LH/LX F awards to Europe/India ~5 yrs ago while I still had CO/UA miles and before they clamped down). AA Vacations has helped here too, although I think the deals there are not as good/available as they were 12-18 months ago. I don't think redemption to Oz was ever easy; glad I got there on a RTW fare a while back! I've been using most of my AA miles on CX F to Asia.
#113
Join Date: Apr 2009
Location: YYF/YLW
Programs: AA, DL, AS, VA, WS Silver
Posts: 5,951
In the one case I can think of where there's an actual improvement (upgrades on award tickets for EXPs) and many of the minor changes that have been promised that may be good for some people but bad for others (EQD-based upgrade priority, companion upgrade status on the PALL list), nothing seems to have changed and it's not clear when any of it is going to actually happen.
In contrast, the only improvement AA has made in recent years that I can think of that could actually be a net benefit for customers (not just a reallocation of existing benefits) is the new 7500 mile short-haul awards. But I found those short-haul flights to have good award availability when I could use 4500 (now 7500) BA points (often for a value of north of 3c/point); now, there's essentially no availability at all, and when there is availability, the flight is always available for <$100 cash, making the redemption value terrible.
#114
FlyerTalk Evangelist
Join Date: Dec 2004
Location: East Coast
Programs: AA CONCIERGE KEY & 1MM, HILTON DIAMOND
Posts: 11,970
Is the grass much greener on the other side? While my experience is limited, it appears DL, UA and WN continue to push up mile redemption values, limit saver award inventory. While I am in no way attempting to let Parker off of the hook, the US airline industry has become an oligarchy, all of the top 4 carriers have devalued their currencies as the economy has improved, credit cards and award currency sales have become common place.
DL is just hopeless having the worst frequent flyer out there among major US airlines.
#115
Suspended
Join Date: Mar 2001
Location: FIND ME ON TWITTER FOR THE LATEST
Posts: 27,730
No, let's be fair. As much as I hate UA, the truth is that they have a lot of saver inventory even if F and J though they cost a bit more if operated by their partners, still not really much more than AA would charge considering AA's non-existent awards.
DL is just hopeless having the worst frequent flyer out there among major US airlines.
DL is just hopeless having the worst frequent flyer out there among major US airlines.
#116
Join Date: Oct 2010
Location: San Diego, Ca
Programs: AA 2MM LT PLT; AS MVP Gold75k; HHonors Diamond; IHG PLT
Posts: 3,502
#118
Join Date: Oct 2010
Location: San Diego, Ca
Programs: AA 2MM LT PLT; AS MVP Gold75k; HHonors Diamond; IHG PLT
Posts: 3,502
I've been splitting with WN for years and the % continues to swing in their favor. You would think I would be one of AA's target (non-intl) customers...I usually buy last minute full fare tickets every other week or so. At least with WN I know what I'm getting (points wise) and there very usable.
WN has been playing games with variable WGA redemption for 2 years http://onemileatatime.boardingarea.c...nt-devaluation, yet they somehow do a better job maintaining the perception that their points are "very usable". While I do not have the data, I would bet that earning and burning miles on AA (particularly for elites) provides MUCH more value than WN - not to mention the gymnastics required for international travel on WN.
Your "very usable" WN does not guarantee 6 Y saver seats on every flight, jacks up its WGA rate for higher demand travel periods, including most Sundays, does not offer J service - so why expect anything different from AA?
#119
Join Date: Apr 2013
Location: OGG
Programs: AA Plat, A List Pref, Marriott Ambassador
Posts: 356
What a contradiction:
WN has been playing games with variable WGA redemption for 2 years http://onemileatatime.boardingarea.c...nt-devaluation, yet they somehow do a better job maintaining the perception that their points are "very usable". While I do not have the data, I would bet that earning and burning miles on AA (particularly for elites) provides MUCH more value than WN - not to mention the gymnastics required for international travel on WN.
Your "very usable" WN does not guarantee 6 Y saver seats on every flight, jacks up its WGA rate for higher demand travel periods, including most Sundays, does not offer J service - so why expect anything different from AA?
WN has been playing games with variable WGA redemption for 2 years http://onemileatatime.boardingarea.c...nt-devaluation, yet they somehow do a better job maintaining the perception that their points are "very usable". While I do not have the data, I would bet that earning and burning miles on AA (particularly for elites) provides MUCH more value than WN - not to mention the gymnastics required for international travel on WN.
Your "very usable" WN does not guarantee 6 Y saver seats on every flight, jacks up its WGA rate for higher demand travel periods, including most Sundays, does not offer J service - so why expect anything different from AA?
Maybe they do/will "play games" on routes I don't use...or times I don't fly, but if you plan ahead the options are there. That's my complaint with AA. Even if I plan ahead, the options aren't there...or are rarely there (again, for 4 seats). I have no problem with AA/WN jacking up the price during holiday periods...makes sense. I would do the same thing if I were them.
I used to fly AA/US more...now I fly them less and it's based on my experience trying to use the miles. If I was EXP maybe it would be different as I'd live with the added costs for the other perks... AA's move to RDM based on spend helped me but if I can't spend the miles at a rate I think is reasonable what good are they.
As an example, the cost for our summer vaca airfare, for four round trip tickets phx to ewr was 88k total points with WN (nonstop, flying out on a Friday and returning 9 days later on a Sunday). On AA, it was 320k in Y (30k on Friday and 50k on Sunday). Of course, I would likely have flown home on Saturday or Monday to avoid the extortionary Sunday price increase but that would still have been 240k miles total. Sure, a saaver seat or two may have opened up...but not likely and definitely not something you can predict and plan for.
I like AA and would prefer to fly them about 90% of the time...but I use my work miles to pay for my personal fun and right now AA miles don't work for me. I'm glad they work for you. I hope someday soon they work for me again.
Last edited by davidsc111; Apr 19, 2017 at 3:01 pm
#120
FlyerTalk Evangelist
Join Date: Aug 2008
Location: Usually in SAN or Central Europe.
Programs: AA:EXP/1MM. Accor/Radisson:Silver; HH:Gold; ICH:Plt Amb.
Posts: 22,307
What you're saying doesn't exactly absolve the airlines of any responsibility here. They entirely control the currency here as well as the inventory it's being redeemed for. If selling miles to banks for credit cards isn't a winning game for them, they could stop doing it. Heck, they could stop selling miles for cash on their own website. And yet, AA still does that- it's almost if they think they can make money on the bargain. Kind of hard for me to have much sympathy for an airline that is enjoying record profits but "oh, dear, we can't give you any seats, blame those nasty card churners" when other airlines (DL, UA, AS) do a better job at having availability.