ATXflyer

I agree. I hope AA keeps things the way they are. They are doing things well at the moment.

NiceLanding

Certainly the conservative approach would be for AA to follow the others to a more revenue-based FFP system, preserving the old status quo and probably reducing the overall cost of award miles. There's much more upside potential, though, to taking the riskier path of sticking with some variant of their current system, thereby attracting many price-sensitive flyers who could still be incrementally profitable. Also, they'd have a great story to tell to corporations who should be leery of airlines that specifically incentivize employees to spend more of their money than necessary. The merger gives AA a good excuse to test this theory for a year or two before making a final decision, which I personally hope will be sufficient to demonstrate its merits.

RNE

The risks and rewards are myriad; I'm not weighing in on either. I'm simply reporting what I scry. To wit, AA will move to a spend-based award mile earning model. It may not be identical to either DL or UA, and it may not be until US is fully digested, but it will happen.

LaserSailor

But will the AA twit to wit move AA to a spend model forthwith?

PS - I think a myriad bit me this weekend...

austin_res

The legacies operate in a copycat environment. One makes a change, the others usually follow. Like UA and DL, USdbaAA devalued the value of AAdvantage miles: increasing the redemption requirements for some awards, shrinking availability at the sAAver level on its own metal and instead pushing sAAver awards to Europe on BA metal with its insane fuel surcharges. I expect USdbaAA will move to a spend-based FFP, similar to UA and DL, in 2015 when the US and AA programs are combined.

RNE

More likely the lazy old salt will swab the poop deck instead of the flight deck.

edgewood49

Right on Point. Prices are rising, and the cost of FF programs is as well. We have been made accustomed to points upgrades etc. that we live in a "entitlement " world in flying. The credit card issuers have gone down the same route.

Not sure if anyone remembers but years ago supermarkets had either green stamps or yellow stamps well they realized that people would rather have lower prices than stamps ! Stamps lost.

I would ( my opinion only) go back to the "old days" you pay for a ticket and fly in the class you paid for, get some real service etc.

Superguy

No it's not. AA is bigger than both of them. It doesn't have to do anything it doesn't want to do. Plus, it's already profitable with the current AAdvantage program.

While some foreign carriers do points, many don't. This is a global market with global competition. Let's not get too myopic and think that it only matters what happens here.

spin88

I think you are wrong about the geography. Flights from the North America are substantially longer to the ME hubs (Dubai) that to the European hubs. For example SFO-FRA is 5680 miles, SFO-DBX is 8,089. NYC to DBX is 6,837, NYC to FRA is 3853.

Given that the world is a globe (check out the 1980s style graphics on the tail of UAL birds) the more southern (and eastern) location of the ME hubs makes flights considerably longer, and the fuel penalty (probably any extra $150 each way per passenger at the SFO-DBX range) is massive.

The only place that the ME carriers have a geographical advantage is in flights from Africa (and Kenya Air and SA take much of that market) and parts of south America to India/Pakistan.

There is also a major resistance by many (Christian and certainly Jewish) passengers to fly a ME carrier, and that, combined with the lesser overall traffic, is probably why e.g. EK only flies to Rio and BA (which is mostly Arab tourist traffic) and Sao Paulo.

The ME carriers have several strengths, but they are (1) lower labor and soft product (food, etc) costs, (2) lower cost of capital, and (3) better service. People are taking the ME carriers because they provide better service than many of the American and European carriers and are price competitive. While many FFers may complaint about the tight seats on the ME carriers in Y (what most people see) unless you are tall, its not noticeable, and the ME carriers all provide a very good soft product.

I think this is exactly Jeff's view, and I think was DL's view as well. American on the other hand viewed it as a driver of business, and I think that view will tamper their actions. Delta though notably has been making their FF program stronger, adding usable SWUs (good on any fare) and dramatically improving saver award space to try to make the miles less like SkyPesos. They have also not gone to TOD upgrades like UAL has, making upgrades an ongoing strong sell. And of course, they have also added a nice E+ (Economy Comfort) section. Elites on DAL (and in particular DMs) are getting a lot more than they used to get.

Jeff is really on his own at that point in dramatically scaling back the benefits of the loyalty program.

This is my view. They will tinker with things, but not upset what has been a business driver. Jeff showed them what not to do.

Superguy

They already are. It's called awarding miles and EQPs based on the fare class. You spend more on Y/C/F fares, you get more reward. You buy cheapos, it can take you longer to qualify for elite status.

None of the airlines had a flat 100% earning across the board for cheapo and premium fares. To say that airlines didn't reward spend is disingenuous.

CMK10

People keep saying AA will follow because the legacies all copy each other, but let's not forget than when every legacy airline which at the time included: CO, DL, NW, US and UA went to unlimited upgrades for elites, American was the lone holdout and did not change. It's possible they may keep their FFP different. And it's also possible that if they do change it, they'll be more like DL and offer a premium product.

Superguy

Usually, but not always.

Devaluations happen with miles. That's nothing new. It happens every few years, with seats getting tighter. So what?

Of course there was going to be an alignment. US had some downright steals in its program.

Devalue too much and you have a problem with CC miles being useless, people seeing that, and not using the CC. Considering the cash they make from CC miles, I don't see that happening.

I remember those, but that's an apples and oranges comparison. Stamps often provided something that was nice to have but no one actually wanted. Things like kitchen appliances, silverware etc that most people already had. Sure something that might be nice to have if you managed to get enough points but there were few things that people said "ooo, I gotta have that."

FF miles are a different beast in that they're something that are actually used. Most people may use them for that family vacation or trip to grandma's, but there's also the ability to use them for an aspirational award for that trip to Europe or Asia, maybe in C or F.

Let's not kid ourselves - the airlines aren't going to give lower prices if they do away with or cheapen miles. Fares will cost the same. Only thing is that loyalty will go out the window. If the airlines were to actually compete on service, most US carriers would lose big time - especially where there's foreign competition.

In the good old days, economy had a lot of room, gave free baggage, and served a meal that was would often exceed what's served in F these days. The airlines aren't going back to that. UA's idea of "enhancing" quality is to cut back until no one will pay for it.

If you want to get people to pay a premium price, you need to offer a premium product. F is barely passable domestically these days, and when you look at what UA offers, no one in their right mind would actually PAY for that without a good reason (i.e. Fly America, contractual obligations, etc).

No, airlines want to have their cake and eat it too, but take actions that discourage that. As Gordon Bethune said, you make a pizza so cheap that no one will want to eat it.

xliioper

A number of those foreign carriers only have fractional mileage earning for their lower fare classes. It's not altogether clear their "mileage" programs are really any better than fare-based programs for the low spender.

Superguy

And Dougie already said he was taking notes on UA's CF of a merger for what not to do.

RNE

I don't think I'm the one being myopic.