American shifts loyalty program to dollars spent

Sheryl Jean
Dallas Morning News

Dallas — The airline industry’s oldest customer loyalty program is getting an overhaul.

American Airlines on Tuesday said it will change how frequent fliers earn miles based on how much money they spend, instead of the distance flown. The shift will happen in the second half of 2016.

The Fort Worth-based carrier follows other recent airline shifts to a dollar-based frequent-flier program. American is the last of the four major U.S. carriers with a traditional miles-based program.

The changes reflect a basic shift in focus from rewarding fare-conscious leisure travelers to higher-paying business customers. Under the new rules, for example, a person who spends $500 for a flight from Boston to Chicago will earn more miles than someone who spent $300 for a ticket on the same route.

“We have studied this long and hard,” Suzanne Rubin, president of American’s AAdvantage program, said Tuesday in a conference call with media. The change gives its 100 million frequent-flier members the “best benefits,” she said.

Frequent fliers will not lose any miles in their award bank. What will change is how customers earn award miles, how many miles are needed to redeem travel and how they qualify for “elite” status and award upgrades.

“Customers buying full-fare economy or premium cabin tickets will end up ahead, but customers buying discounted coach tickets may end up a little bit behind in redeemable miles,” said Zach Honig, editor in chief of The Points Guy website, which tracks frequent-flier programs. “Redemptions have gone up quite a bit. It’s going to cost a lot more. Nobody is happy about that.”

Here are highlights of the new program:

■Mileage awards: AAdvantage members will receive five miles for every U.S. dollar spent on the base airfare and carrier-imposed fees, excluding government-imposed taxes and fees. Gold members will receive seven miles per dollar spent. Platinum members will receive eight miles per dollar spent. Executive Platinum members will receive 11 miles per dollar spent.

■Redemption: Some mileage award redemption rates will increase, others will decrease by as much as 40 percent and some will stay the same, Rubin said. For tickets booked on or after March 22, redemption levels to Mexico, the Caribbean and Central America will be reduced.

American is adding a short-haul flight award: Flights 500 miles or less in the United States and Canada can be redeemed for as low as 7,500 miles one way.

Redemption rates will increase for long-haul flights, such as to Europe and Asia, and premium cabins because of high demand and more competitive pricing on those tickets, Rubin said.

■Elite status: Starting in January, AAdvantage members can qualify for elite status in two ways: elite qualifying miles or segments. Elite-qualifying points will disappear.

American said it will offer the best elite-qualifying mile multipliers in the industry: Three elite qualifying miles for first- and business-class tickets vs. two at Delta Air Lines and 1.5 at United Airlines.

■Upgrades: Gold and Platinum members can earn four 500-mile upgrades for every 12,500 elite-qualifying miles earned during the membership year, up from 10,000. Starting Jan. 1, Executive Platinum members will receive four systemwide upgrades for the 2017 membership year.

American did not have an exact date in 2016 when the new program will begin. However, the airline is “eager to be transparent” and give customers advance notice about the changes.

The AAdvantage makeover comes eight months after American and US Airways combined their frequent flier programs and 23 months after the two airlines merged. In March, American integrated all of US Airways’ Dividend Miles accounts into American’s AAdvantage loyalty plan.

Earlier this year, Delta Air Lines and United Airlines converted their frequent-flier programs to dollar-based systems. Dallas-based Southwest Airlines switched to a dollar-based system in 2011.