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How much does AA sell miles for to their partners ?

How much does AA sell miles for to their partners ?

Old Aug 29, 22, 6:43 pm
  #1  
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How much does AA sell miles for to their partners ?

I am curious , does anyone really know ? As I am now in the process of getting EXP on AA as I cannot get top tier on AS based on my new flying patterns I really do not understand AA's new loyalty points scheme.

I have a Barclays silver aviator card, so whats to stop anyone from sending a friend or whoever a money via paypal, pay the 2.9 percent fee and just get to EXP in a few weeks / months. I am not saying I would do that as the cost to "charge" 200K miles would be around $5,800, but American is not nearly getting that much in revenue from these card swipes so how much do they really make selling the miles top Barclays.

Seems like an EXP who does this is not very valuable at all.

In my case , I switched over to silver Aviator on the 25th, I have since now charged a little over $50K for work and personal. So I will now have 65K loyalty points ( bonus for spending 50K on the aviator silver) and almost a Platinum without every spending a dime on airfare. I don't really seem like that valuable of a customer to warrant status to an airline by doing this charge scheme.

I know airlines make a lot on selling miles, but how much can a customer have really generated by just charging and never stepping foot on their planes?

Just curious really, not going to alter my plans. I also have a small business card and will be charging about 60K in the next few months on that, so I am more than halfway there and havent even really tried.
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Old Aug 29, 22, 6:56 pm
  #2  
 
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A penny a piece or less from various internet sources (none of which are official of course). The banks buy them by the billions from AA and its always a critical negotiation. AA wont get more than a few thousand dollars from a pure credit card spend EXP qualification.

its not going to be super lucrative for AA but statistically speaking there wont be many EXPs that qualify that way.
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Old Aug 29, 22, 7:15 pm
  #3  
 
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If you never set foot on an AA plane that EXP status costs them nothing to give you.
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Old Aug 29, 22, 8:21 pm
  #4  
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I will once I get EXP. I will fly Alaska 80 percent of the time anyway, but even if I clear after AS 75K , I am still clearing before AS Gold which is all I could get with Flying on Alaska. So really not costing me anything either. I am not going out of my way to charge as these are normally incurred job, side biz and personal expenses.

Bought some rims on Discount Tire just now, 4500 more loyalty points, plus the credit card charge. I am essentially at Platinum now, guess I have to wait until 9/25 for my card statement to close.
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Old Aug 29, 22, 10:27 pm
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We know that Bask Bank reports miles they give on 1099's at 0.42 cents per mile. So that's one indication.

The question of whether AA is an airline or a credit card company that happens to fly planes is an open one. AA has made their decision. Most EXP's are reporting no significant decline in upgrade success with all the "credit card EXP's" suppposedly qualifying.

Don't overthink it. Just do what makes sense for you.
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Old Aug 30, 22, 6:12 am
  #6  
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.42 cpm is the taxable "value" assigned to the miles, it's not necessarily what they pay for them. 1 cpm is the figure I've heard frequently and it makes logical sense given that most cashback cards start at 1% (1 cent per dollar) while most mileage cards provide 1 mile per dollar spent. Part of the value of mileage programs is "breakage" -- there will always be a fairly significant number of miles that are never redeemed (even if mlies never expire). Airlines use statistical models to estimate breakage and factor it into their financial reports. It is similar to gift cards where the companies that sell them know that quite a few will never be redeemed and this is part of the profit model for them.

Last edited by xliioper; Aug 30, 22 at 6:22 am
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Old Sep 9, 22, 10:07 am
  #7  
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Originally Posted by xliioper View Post
.42 cpm is the taxable "value" assigned to the miles, it's not necessarily what they pay for them. 1 cpm is the figure I've heard frequently and it makes logical sense given that most cashback cards start at 1% (1 cent per dollar) while most mileage cards provide 1 mile per dollar spent. Part of the value of mileage programs is "breakage" -- there will always be a fairly significant number of miles that are never redeemed (even if mlies never expire). Airlines use statistical models to estimate breakage and factor it into their financial reports. It is similar to gift cards where the companies that sell them know that quite a few will never be redeemed and this is part of the profit model for them.
There is going to be a flood of new EXP this coming year with this new loyalty point scheme. I see them raising the bar for EXP , 200K seems too low so the status wont be worth much. I booked a few hotel stays via AA hotels and racked up 40K loyalty points, thats just too easy
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Old Sep 9, 22, 12:18 pm
  #8  
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A few thoughts...

Paypal-ing your friends and family is sure fire way to get shutdown. The Manufactured Spend community (its own forum here on FT) will gladly educate you on all the pitfalls of using Paypal, Venmo, or other digital based money transfer services to try and rack up miles and spend. Not to mention, that transferring that much would not only get you shutdown by the bank - but the recipient would be on the hook for a 1099 from whichever bank due to new tax laws. No bueno.
You could do more traditional MS, via VGC and MO's - but those avenues are drying up these days as well. At my peak, I had $500K in annual MS spend with my cost basis for a "manufactured" AA mile about 0.65 cents per- which provided pretty good value when then redeeming for flights. That said, the liquidation markets for VGC are not as plentiful as in the past. I am down to maybe $20K per year in MS, as I was able to shift some of this "AA" focused spending to hit status via organic business expenses.

So your premise that some big and noticeable influx EXP from manufactured spend is coming is a bit of a stretch. Looking at consumer spending trends and median annual incomes, the amount of folks who regularly put $200K or more on credit cards per year, let alone on an AA branded card for said spending.... not that many folks.
I do think that mid-tier elites who were making status by flights only in the past will now find themselves able to achieve EXP via additional spending.

And if someone were to earn EXP but not fly much (or at all?) - what impact does it have on the every-week traveling road warrior EXP in terms of upgrades?
I don't really understand the outcry from folks on this topics. If this new credit card EXP isn't flying.... how does their status have any meaningful impact on your traveling?

I do agree with your thought that raising the bar for EXP is likely coming. I could see 250K or even 300K.
But flipside of that was the caveat that a PPRO/EXP needed to hit 30 segments to earn the "Loyalty awards" like SWU's. So it did force some actual flying by a member to access some of the better benefits of EXP.
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Old Sep 9, 22, 12:29 pm
  #9  
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Originally Posted by TRAVEL4SCUBA View Post
I will once I get EXP. I will fly Alaska 80 percent of the time anyway, but even if I clear after AS 75K , I am still clearing before AS Gold which is all I could get with Flying on Alaska. So really not costing me anything either. I am not going out of my way to charge as these are normally incurred job, side biz and personal expenses.

Bought some rims on Discount Tire just now, 4500 more loyalty points, plus the credit card charge. I am essentially at Platinum now, guess I have to wait until 9/25 for my card statement to close.
remember you need to fly 30 segs to get whatever worthwhile perks of EXP are left...notably the SWU's.
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Old Sep 9, 22, 12:32 pm
  #10  
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The SWU are not worth much, too much hassle to even try and use them. the upgrades are nice as an EXP will get upgraded on AS after 75K. I am vegas based so upgrade percentage on AA is pretty good out of here.
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Old Sep 9, 22, 12:36 pm
  #11  
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Originally Posted by enviroian View Post
remember you need to fly 30 segs to get whatever worthwhile perks of EXP are left...notably the SWU's.
Originally Posted by jtav559 View Post
A few thoughts...

Paypal-ing your friends and family is sure fire way to get shutdown. The Manufactured Spend community (its own forum here on FT) will gladly educate you on all the pitfalls of using Paypal, Venmo, or other digital based money transfer services to try and rack up miles and spend. Not to mention, that transferring that much would not only get you shutdown by the bank - but the recipient would be on the hook for a 1099 from whichever bank due to new tax laws. No bueno.
You could do more traditional MS, via VGC and MO's - but those avenues are drying up these days as well. At my peak, I had $500K in annual MS spend with my cost basis for a "manufactured" AA mile about 0.65 cents per- which provided pretty good value when then redeeming for flights. That said, the liquidation markets for VGC are not as plentiful as in the past. I am down to maybe $20K per year in MS, as I was able to shift some of this "AA" focused spending to hit status via organic business expenses.

So your premise that some big and noticeable influx EXP from manufactured spend is coming is a bit of a stretch. Looking at consumer spending trends and median annual incomes, the amount of folks who regularly put $200K or more on credit cards per year, let alone on an AA branded card for said spending.... not that many folks.
I do think that mid-tier elites who were making status by flights only in the past will now find themselves able to achieve EXP via additional spending.

And if someone were to earn EXP but not fly much (or at all?) - what impact does it have on the every-week traveling road warrior EXP in terms of upgrades?
I don't really understand the outcry from folks on this topics. If this new credit card EXP isn't flying.... how does their status have any meaningful impact on your traveling?

I do agree with your thought that raising the bar for EXP is likely coming. I could see 250K or even 300K.
But flipside of that was the caveat that a PPRO/EXP needed to hit 30 segments to earn the "Loyalty awards" like SWU's. So it did force some actual flying by a member to access some of the better benefits of EXP.
Not that I would do it, due to expense, but why would paypal care ? They get their 3 percent cut from the processing fee. Money in their pocket.
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Old Sep 9, 22, 12:36 pm
  #12  
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Originally Posted by TRAVEL4SCUBA View Post
The SWU are not worth much, too much hassle to even try and use them. the upgrades are nice as an EXP will get upgraded on AS after 75K. I am vegas based so upgrade percentage on AA is pretty good out of here.
well if you're in Vegas you are enjoying upgrades. I guess I'm a debbie downer unfortunately living in Dallas. EXP at DFW is like gold at RDU
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Old Sep 9, 22, 12:38 pm
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Originally Posted by enviroian View Post
well if you're in Vegas you are enjoying upgrades. I guess I'm a debbie downer unfortunately living in Dallas. EXP at DFW is like gold at RDU
This is true ! I will still fly AS 50 percent of the time.
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Old Sep 9, 22, 12:46 pm
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Originally Posted by TRAVEL4SCUBA View Post
The SWU are not worth much, too much hassle to even try and use them. the upgrades are nice as an EXP will get upgraded on AS after 75K. I am vegas based so upgrade percentage on AA is pretty good out of here.
Respectfully disagree. I have used all of mine with no waste over the past 11 years. All international upgrades.
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Old Sep 9, 22, 12:47 pm
  #15  
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Originally Posted by apeortdz View Post
Respectfully disagree. I have used all of mine with no waste over the past 11 years. All international upgrades.
I never seem to find availability on any flight I ever wanted to take , use expert flyer as well.
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