TravelingZoomer

TIL the only part of taking a trip is being on a plane

ajf87

I'm going to book a bunch of award space for late next year on partner metal (Qatar Qsuites and Qantas in J). It would appear that the new CEO seems to grasp the idea that the Aadvantage program is a big value-add for flying American, it's why a lot of people are even willing to put up with them. I'll never fly United unless they're the only choice, the MP program has ...... award fares and itineraries and constant devaluations on top of ancient aircraft and cabins (they still operate 2-4-2 "business" class 777s). Delta's Skymiles are a joke (everyone calls them "skypesos" even on the Delta forums). With Aadvantage, 70k one-way in Qsuites or 80k from anywhere in North America to anywhere in Australia in J (you can do east coast USA to Perth, that's three flights) on Qantas business class are both some of the best sweet spots around. And they don't pass on fuel surcharges. Their new partnership with JetBlue and Alaska joining oneworld are going to help them out a lot, they get tap into a lot more hubs where they're underrepresented without having to spend big money on their own staff and facilities. They can also tap into Amex, Chase, and Citi and make their miles transferable to those programs. Right now only Marriott is a transfer partner, and most people don't transfer miles via Bonvoy @ 2.4:1. That's a ton of potential revenue.

I think the picture will become a lot more clear in the latter half of 2021. I'm going to hold off on Citi and Barclays sign-up bonuses in the short-term though.

eponymous_coward

Nobody's flaming but frankly, "how am I going to spend my miles if (insert airline here) devalues them" is pretty low on the list of my worries during a global pandemic and massive economic retrenchment.


I use miles for 100% discretionary travel. If they disappeared tomorrow, I'd either not do travel (which I'm not doing much of anyways) or find some other way to do it.

AA's program is a roach motel; miles go in, they'll never come out; they're not transferrable. If you'd like you can burn them on domestic travel with rental cars and hotels though, not just AA flights.

If you're worried about earning patterns and having a balance of miles, I'd recommend hedging with flexible earning currencies from banks (AMEX, Chase, Citi, cashback) over hotel/airline program cobrand cards. That and the answer is to spend as you go rather than hoard, so start spending that balance down once you think it's safe to travel.

My current hedging is by accruing in AMEX, and in airlines where the relative risk of unacceptable devaluation is low (AS, WN) or the cost of accrual was low and worst case I'll just blow it on hotel rooms and cars or coach flights (CX, AV). I don't plan on having an immense amount of miles or points stacked up before I start spending them again (in fact I'm spending and accruing them now). I have nearly no exposure to AA/DL/UA. As mentioned previously, it is a given that program devaluations will happen, so it's a matter of managing risk.

ajf87

This is me. I'm focusing on building up my Amex MR balance. I got the Green last year and just got 60k and 75k welcome offers for Gold and Platinum. I also do as much online shopping as possible through Rakuten and opt for MR over cash-back. I'm prioritizing flexibility in the future. I'll have close to 300k MR after I hit my Platinum SUB and between airfare, grocery & dining, other misc. travel, and the Rakuten portal I can organically net 60-75k/year, plus retention offers. Then there are the business cards, and I'll actually have a business next year as opposed to a "business" for the purpose of attaining credit cards.

I'm sticking with American for now due to status but I'm more than willing to become a mercenary in the future if it makes sense or if there is a significant devaluation.

PointsPanda

1. Use them you can fly anywhere domestic in the USA. Mexico is open, many Carribean islands are open, Brazil is open. Colombia and Ecuador are now open without quarantine requirements too. AA offers some fantastic deals to South America, like 50k in J RT Miami to Manaus or anywhere on the northern half of Brazil. Then use 7.5k AA miles each domestic segment to fly GOL (wrote a post about that).
2. Hook some friends up, book a flight for them. Treat your extended family.
3. Donate the miles to a charity
4. Checkout options to redeem AA miles for rental cars or hotel, it will probably be a terrible redemption value at less than 1c per point but if you truly believe that the entire program is going belly up and this isn't just a troll post, then it would be logical to use it for whatever you can.
5. Accept there may be further devaluations down the road and just deal with it and get on with life.

cova

Agree that miles are getting useless. International rewards (when you are allowed to travel) are out of sight on AA. US to Australis is 375K one-way in J (750K RT). A huge difference between what used to be the standard 80K one-way J.

Partner Airlines had been the sweet part - but that may be going away as well.

AA wants to sell miles, get miles from CC purchases, etc. but are these miles all that useful since they have been so devalued. For domestic travel, the price of the ticket doesn't justify the high mileage requirement - even in domestic J.

At least with UA miles, UA will (or used to) open up J seats closer to flight time - AA did not do that.

FriscoHeavy

Silly statement. I’m able to use my AA miles almost without restriction. I put all our spend on the Citi AA Executive card and find them to be very valuable.

ajf87

Yes, they're very valuable now. The point is that AA is in poor financial shape and those valuable redemptions whether they be on AA or partner metal cost them money. The many billions of miles in circulation are essentially future liabilities from a balance sheet perspective and basically all airlines are still at risk of bankruptcy well into next year. Accruing transferable points through Amex, Chase, and Citi are all sensible ways to hedge against future devaluation, especially with all the uncertainty now. Yeah, you can book award travel into next year, but there's no guarantee those flights will operate as scheduled or that you'll be able to actually enter foreign countries without restrictions. If you book 80k one-way to Australia in QF J and they cancel the flight or Australia bars Americans from entry and then American no longer offers 80k partner awards to Australia, you're kind of hosed.

eponymous_coward

Great, then you do you. I am sure you know what’s best for you. OP was asking what to do, I said what I do.

I don’t feel any desire to accumulate on AA beyond maybe some card churning and the occasional random OW flight I don’t want to credit to AS or BA; their service in my airport is bad and earning AA miles on AS out of SEA is suboptimal for me. AA doesn’t cover my home airport well with nonstops and forcing my routings through ORD, LAX, PHX and DFW doesn’t work for me. I don’t like being in programs that require minimum spend for elite status. I don’t prefer their lack of stopovers on awards and the value in the program for accumulating large balances doesn’t work for me, and I think most cobrand airline cards have poor earn rates for my spending; I would rather earn 3x AMEX in my Amex Green card than 1x AA for travel spend, or 4x grocery on my Amex Gold. I also don’t particularly value domestic lounges as a high value add to my cards, so Admirals Club access on that card doesn’t do anything for me. While it’s great that that card works for you, I don’t really want to spend money on a card or pay a large annual fee for a card that doesn’t suit my travel or spend patterns; it it either needs to provide benefits I value or I don’t see the need for it beyond churning for a bonus (and I would rather use other AA or Barclays cards with smaller annual fees for that).

Oh, and having AS miles means I have extensive overlap with what I could redeem for on AA anyway, which will only increase as AS joins OW in 2021.

Is it silly to have preferences as to what works for me that differ from yours?

Tack

To each their own. I’ve kept my flying pace the entire year, (3-5 trips a month). Full flights don’t bother me at all. I wear my mask, and wipe my seat. Glad you enjoy DL, I appreciate the EP/Emerald benefits too much to change. Enjoy checking off your BL items. Cheers.

Also not worried about an AA BK filing. We might see a devalue, but we just got an upgrade to AAdvantage with the recent changes. Lol, I’m doing my part and flying in a mix of main cabin and FC fares as much as I can.

GaryZ

I believe there's some truth in what the OP is saying. For me, I had never used miles for domestic flying in the past but now enjoy guaranteed FC upgrades along with the safety the extra distance it provides.

CPRich

Yes, please buy all the magazine subscriptions you can buy so you no longer have to worry about this tragedy. You can come back some day and tell us how you were smarter than everyone else.

casterpix343

This is something I worry about as the generally crappy rates on savings accounts (<0.5% APY) have prompted me to move money that I would otherwise keep in a savings account into BaskBank. For those who are not familiar, BaskBank pays interest in the form of AA miles.

My personal valuation of of the AA miles is I get this way is about 1.0% to 1.5% on the money deposited though YMMV. If AA miles were to get devalued by roughly 50% I would still break even relative to leaving the money in a cash paying savings account.

The nightmare scenario would be AA liquidation. I know a couple financial type who believe that AA is the weakest link among the big 4 and some kind of financial restructuring is likely in the next 12 months mostly because management was dumb and paid out too much in dividends/share buybacks. However, the firms that these folks work for are still willing to wager on AA debt because they think ultimately Uncle Sam will come and bail out the debt holders of AA and will never let liquidation transpire since it would present systemic risk to the economy and risk to national security.

Also, I have been told, that selling bits of AA to UA or DL or even WN would be unattractive to the government as it would further increase concentration in a highly concentrated market and make ticket prices go through the roof (which I guess is the systemic risk to the economy).

footballfanatic

"for the life of the AAdvantage program" -TOC

that said, AAdvantage is what drives the CC spend that keeps AA afloat. Highly unlikely they will completely gut the program, likely more of the same.

JDiver

On a related note, “After finalizing terms for $5.8 billion of CARES Act payroll support grants two months ago, American Airlines (NASDAQ:AAL) turned its attention to lining up a secured loan under the same program. The $4.75 billion loan it is potentially eligible for represents the crux of the airline's plan to boost liquidity to more than $11 billion by the end of June.Last Friday, American Airlines told investors that it plans to pledge the AAdvantage loyalty program as collateral for the loan. The company said that third-party appraisals have pegged the program's value at anywhere between $19.5 billion and an eye-popping $31.5 billion.

Considering that American Airlines' market cap is less than $10 billion, these estimates might seem to suggest that investors are undervaluing the company as a whole. However, it's more likely that the appraisals are wildly overvaluing the AAdvantage program.” — Motley Fool, in part (link)