The rumor was already out and it was confirmed today. American Airlines, the world’s largest carrier, said today that it is fundamentally changing the way it awards frequent flier miles, joining other major U.S. airlines by rewarding dollars spent instead of miles flown.
The change, also made by United Airlines earlier this year, benefits big-spenders, usually corporate travelers, who are more profitable for the airline, and hurts deal seekers who take many cheap long-haul flights.
American Airlines will also increase the number of miles you’ll need to redeem for many types of awards in March of 2016.
The change is also an outgrowth of how setting fares has changed. Years ago, fares correlated more closely with miles traveled, so miles were a good gauge of money spent with the airline. That’s no longer true. Flights of the same number of miles could cost $200 or $1,000, depending on the destination, when a flight is booked and many other factors.
“We have studied this long and hard,” Suzanne Rubin, president of American’s AAdvantage program, said today on a conference call. The change gives the airline’s customers “the best benefits,” she said.
The AAdvantage makeover comes eight months after merging its frequent flier program with US Airways loyalty program. It also comes 23 months after the two airlines merged in December 2013.
“We have spent a lot of time since the integration of the two frequent flier programs [in March] really studying the combined customer base and studying the combined market place,” Rubin said on the conference call. “What you see today is the first step in those changes. We are obviously are very eager to be transparent and deliberate well in advance for our customers.”
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, award redemption levels to Mexico, the Caribbean and Central America will be reduced.
Long-haul flights to Europe and especially Asia will see substantial increases however. Premium cabins will also see big increases. This comes due to high market demand for those higher-priced flights, higher award redemption demand and more competitive pricing on those tickets, Rubin said.
American is adding a shorter-flight MileSAAver awards because “a much greater percentage” of its flights are at shorter distances, Rubin said. Flights 500 miles or less in the United States and Canada can be redeemable for as low as 7,500 miles one way.
Here’s a chart of flights from the United States operated by American Airlines with new redemption starting next year, compared to current rates. (HT: TPG)
American has simplified how frequent fliers can earn elite status. Starting in January, AAdvantage members can qualify for elite status in two ways: elite qualifying miles (EQMs) or elite qualifying segments (EQSs) at the same thresholds as now. Miles will be weighted toward higher-priced fares and premium cabins. Elite-qualifying points will disappear.
American said it will offer the best elite-qualifying mile multipliers in the industry and simplify the elite qualification process for customers. American will award three elite qualifying miles for full-fare first- and business-class tickets vs. two at Delta Air Lines and 1.5 at United Airlines.
Starting Gold and Platinum AAdvantage members can earn four 500-mile upgrades for every 12,500 EQMs earned during the membership year, up from the current 10,000 EQMs. And starting Jan. 1, Executive Platinum members will receive four systemwide upgrades upon qualification for the 2017 membership year, with a chance to earn up to eight systemwide upgrades up to 200,000 EQMs.
As with past AAdvantage changes, American is largely focused on making sure its elite fliers — passengers who travel the most and spend the most money — are happy.
Earning rates will changes as well. 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 AAdvantage members will receive seven miles per dollar spent; Platinum members will receive eight miles per dollar spent; and Executive Platinum members will receive 11 miles per dollar spent.
HT: Aviation Blog
And here’s the official notice that American Airlines sent by email
Starting in 2016, we’ll make changes to the American Airlines AAdvantage® program. We’re evolving to build a rewarding program for all members while giving our best customers access to our most exclusive benefits. These updates will roll out in phases over time. We’ll keep you updated as we implement these changes.
Earning award miles
In the second half of 2016, award miles earned from flying will be calculated differently to reward you when you spend more. When traveling on flights marketed by American, you’ll earn miles based on the price paid for your ticket (base fare plus carrier-imposed fees, excluding any government-imposed taxes and fees), multiplied by five (5) for AAdvantage® members. If you reach elite status, you’ll earn award miles at higher rates. Plus, as a Citi® / AAdvantage® credit cardmember or an AAdvantage® AviatorTM MasterCard® cardmember, you will continue to earn additional bonus miles on American Airlines purchases when you use your AAdvantage® credit card.
How award miles will be calculated »
Earning award miles for travel on flights marketed by partner airlines will be based on a percentage of the flight distance and the fare class purchased. We’ll have more information about earning on partner airlines in 2016.
Until the new award mile earning structure takes effect, you’ll continue to earn miles based on the distance flown. In addition, we’re extending our 2015 AAdvantage bonus miles promotion that allows you to earn more bonus miles when you purchase and fly on a First or Business Class ticket on American and select airlines.
2015 AAdvantage bonus miles promotion »
Award redemption changes
We’re adjusting existing award levels for award tickets redeemed on March 22, 2016 and beyond due to changes to market pricing and demand. Award levels on some routes, such as flights to Europe and other international destinations, will increase. Award levels on other routes, like flights to popular destinations in Mexico, the Caribbean and Central America, will decrease. Plus, you’ll be able to redeem MileSAAver® awards for as low as 7,500 miles one-way (plus any applicable taxes and carrier-imposed fees) for flights 500 miles or less.
More about award level changes on American »
More about award level changes on partner airlines »
Earning elite status
On January 1, 2016, elite-qualifying points will be removed from our qualifying structure, and elite status will be based on Elite Qualifying Miles (EQMs) or Elite Qualifying Segments (EQSs). The membership year is also changing. Beginning with the 2017 membership year, elite status will be valid through January 31 of the following year.
How you’ll earn elite status in 2016 »
We’ll continue to keep you updated as we get closer to implementing these changes to the AAdvantage program. We appreciate your continued loyalty.