That thunderous sigh of relief you heard earlier this morning? That was in response to American’s disclosure of the long-awaited details of the consolidation of American’s AAdvantage and US Airways’ Dividend Miles programs.
Members of the two programs have been on tenterhooks ever since the airlines merged, fretting that integration of their loyalty programs would result in a new scheme significantly devalued from its successors. Would American use the transition as an opportunity to introduce a spend-based program, as Delta and United will do in 2015? Would award prices increase?
The answer to both questions is no, at least for the time being. When the two programs are combined, sometime in the second quarter of 2015, the new AAdvantage will be mostly a continuation of the current AAdvantage, with a few tweaks, mostly positive.
The class-of-service bonus for business-class flights will increase from 25 percent to 50 percent.
The new AAdvantage will carry over AAdvantage’s three-tier elite structure, rather than Dividend Miles’ four tiers.
Elite qualification will be based on the following:
- Gold – 25,000 elite miles or points, or 30 segments
- Platinum – 50,000 elite miles or points, or 60 segments
- Executive Platinum – 100,000 elite miles or points, or 120 segments
That’s the same as the current AAdvantage requirements, with one exception: For Executive Platinum status, the requirement will increase from 100 to 120 segments.
Lower-level Dividend Miles elites currently receive unlimited space-available upgrades. Under the new rules, they’ll only be upgraded on flights of fewer than 500 miles; for longer flights, they’ll have to use upgrade certificates.
Accounts will be combined in the second quarter of 2015. (The process will be automatic, but program members should monitor their accounts to confirm miles have transferred correctly.)
Overall, the changes are decidedly modest and are probably a slight net positive for most affected program members.
The longer-term question remains whether American will eventually transition from a traditional mileage-based scheme to a spend-based model. Given the profit potential of the spend-based programs—which more directly align benefits with travelers’ contributions to the airlines’ bottom lines—it’s hard to imagine American resisting the trend forever. Among other pressures, Wall Street will be urging American to maximize shareholder value.
On the other hand, American’s strategy may be to stick with a program model that works best for the 98 percent, at the risk of compromising the interests of the 2 percent.
In these profit-focused times, that would be a radical approach, indeed.
Reader Reality Check
American’s retention of the mileage-based program will give travelers a clear alternative to Delta and United’s spend-based schemes in 2015. Which will you choose?
This article originally appeared on FrequentFlier.com.
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