American Loyalty Points: A Brilliant Program I Hate

American Loyalty Points: A Brilliant Program I Hate

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New as of 2022, American AAdvantage introduced Loyalty Points, a radically transformed way to earn elite status. You no longer earn status based on how many miles you fly, but rather you earn status based on how many Loyalty Points you rack up, including through non-flying means. Nowadays you can earn elite status exclusively through credit cards — putting $200K of spending on a co-branded American Airlines credit card would earn you top-tier Executive Platinum status.

The program has now been around for several months, so I wanted to share my thoughts, especially as I’ve been able to observe how others engage in the program. My conclusion? American’s switch to Loyalty Points is one of the most brilliant frequent flyer program overhauls we’ve ever seen. Unfortunately for my own situation, I kind of hate it.

What an airline loyalty program should achieve

Broadly speaking, a well executed airline loyalty program isn’t there to simply reward people for what they’d do anyway. That would just make the program a huge cost center. Rather the goal of an airline loyalty program should be:

  • To have someone give more business to that airline than they otherwise would have; this can come in many forms, and doesn’t just have to be through flying
  • To make consumers act irrationally; this could be because of our desire for intangible benefits that are hard to value, or it could be because we start to feel a connection to the company

Many people argue that frequent flyer programs should reward frequent flyers, and not frequent buyers. People think that because they fly a lot, they shouldn’t have to compete with those spending money on credit cards for upgrades. I hear you, but unfortunately that doesn’t really reflect the reality of the airline business.

American’s loyalty program changed radically as of 2022

American Airlines doesn’t make money flying

In the third quarter of 2022, American Airlines reported a net income of $483 million, with record quarterly revenue. The kicker? The airline actually lost money flying passengers:

  • American’s passenger revenue per available seat mile was 18.08 cents
  • American’s cost per available seat mile was 18.28 cents

American Airlines doesn’t make money flying planes. It makes money with everything else, and in particular the loyalty program. The way it makes money with the loyalty program generally involves everything other than actually flying.

But let’s assume for a moment that American made money flying planes. For the third quarter of 2022, the airline had net income of $483 million on $13.5 billion in revenue. That’s a margin of under 4% on overall revenue.

If American’s profit margin on flying passengers were actually 4% (it’s not), what would that mean for how profitable American’s most valuable elite members are? Before the new Loyalty Points program was introduced, American required spending $15,000 with the airline to earn top-tier Executive Platinum status.

If you were to assume the margin on that flying were 4%, that would mean the average Executive Platinum is “earning” American $600 per year. That’s hardly a lot for a company’s most loyal customer.

American doesn’t really make money flying passengers

Why American’s Loyalty Points system is brilliant

When American first launched its new Loyalty Points system, I wasn’t quite sure what to think, and for that matter I wasn’t sure how consumers would respond. Now that the program has been live for several months, I’m prepared to draw a conclusion — this program is simply brilliant.

In particular, it’s clear that spending on co-branded American Airlines credit cards is way, way up. Just how much are people increasing spending on credit cards?

View from the Wing reports that in an internal meeting earlier this month, American Chief Commercial Officer Vasu Raja claimed that in the New York market, more people are qualifying for status than before, and 65% of those people are doing so with credit cards.

Now, admittedly there are some important details missing — are people earning status exclusively with credit card spending, or through a combination of spending and flying?

Along similar lines, I recently had a conversation with someone in Miami, who talked about how he earned status with American for the first time, by just spending $200K on an American Airlines credit card. He didn’t previously use the card much.

The point is that people are absolutely upping their spending on American Airlines credit cards, and are increasing their non-flying engagement with the program beyond that.

This is brilliant for American Airlines for so many reasons:

  • The margins on AAdvantage members earning status through credit cards is much better than the margins on members earning status through flying
  • Giving out status costs American almost nothing; people are competing for a finite number of upgrades (American claims 80% of first class seats are sold, so there aren’t many seats to upgrade to)
  • Those with high status who only occasionally fly American shouldn’t be of concern to American frequent flyers when it comes to upgrade competition; A single Executive Platinum member flying 100 segments per year provides the same amount of competition as 25 people who earned Executive Platinum status by spending $200K on a credit card, and then flying four times per year
  • Those who earn elite status with American Airlines are more likely to fly with American Airlines to take advantage of those perks, even if they wouldn’t have flown with the airline otherwise

The new AAdvantage program is genius, if you ask me. It’s rather simple, and on top of that it serves its purpose — to cause people to act irrationally and generate profits — much better than the previous program.

People are a lot more engaged in the AAdvantage program

Why I struggle with American’s Loyalty Points system

Here’s the funny thing — while I think the Loyalty Points program is brilliant, I kind of hate for it for myself, and that’s probably something that American should be proud of.

What’s my beef? Well, I can’t bring myself to actually spend a significant amount of money on a co-branded American Airlines credit card. This could have been my easiest year ever of status qualification, but so far this year I’ve spent zero dollars on an American credit card.

I’ve written about the value proposition of spending money on American Airlines credit cards. There’s a huge opportunity cost to doing this, compared to the best cards for everyday spending.

I pride myself in trying to be a rational consumer. I assign a value to each points currency, and I’ll only earn or redeem points if I determine something is the best option, and the math checks out. Choosing not to earn 2x points on my everyday spending with cards like the Capital One Venture X Rewards Credit Card (review) or Citi® Double Cash Card (review) is something I struggle to do.

But with AAdvantage that seems to now be the cost to play. For what it’s worth, I’m currently at 70,000 Loyalty Points for the year, so I’m only about one-third of the way to requalifying for Executive Platinum status. Admittedly it hasn’t been a very busy American travel year for me, as I only fly the airline when it’s the best option.

I’m at a crossroads with American Airlines. Either I need to go all-in on American Airlines credit card spending, or maybe it’s time to take a different strategy with my oneworld flying.

Maybe I should just permanently credit my flying to another oneworld program, so that I can consistently get better lounge access. Frankly I don’t even care that much about Executive Platinum status, I just don’t want to lose oneworld Emerald.

Frankly I don’t really value upgrades on American that much — I don’t have much luck with upgrades, and I often just pay for first class, when the pricing is fair. Unless I invest hugely in earning more Loyalty Points, I typically lose out on upgrades to Executive Platinum members with a higher rolling total.

I’m certainly open to ideas as to what strategy I should take, as I imagine I’m not alone…

I just don’t want to lose my oneworld Emerald status

Bottom line

I give American Airlines a lot of credit for its AAdvantage Loyalty Points program, as I think it’s one of the smartest frequent flyer program transformations we’ve seen in a long time. It reflects the reality of the airline industry — American doesn’t make money flying planes, but rather makes money on everything else.

American seems to be seeing a significant uptick in spending on co-branded credit cards, so there are lots of newly minted elites who may not necessarily be frequent flyers. While I get that this frustrates road warriors, it’s only fair for the airline to incentivize what’s profitable.

As for me, I’m struggling with the new program. I have a hard time getting myself to spend significant amounts on American Airlines credit cards, given the much more lucrative options out there. But that’s also what makes the program genius — lots of other people are doing that, even if it’s not rational.

Where do you stand on American’s Loyalty Points program? Is it working better or worse for you than the old program?

Conversations (69)
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  1. Pochama Guest

    I always thought you should have jumped ship to BAEC when AAdvantage first went revenue based. You would probably be close to lifetime BAEC Gold if not there already with the amount of flying you do.

  2. Andy 1235 Guest

    I think it's also important to consider how much of the old program was wasted anyways. A corporate contract that requires flying the airline shouldn't bother awarding "loyalty" benefits to the flyer, but rather the company footing the bill. The new paradigm successfully drives up profitable engagement with the airline among those who probably just had the card for the occasional waived baggage fees, and have a genuine choice of who they fly. As others...

    I think it's also important to consider how much of the old program was wasted anyways. A corporate contract that requires flying the airline shouldn't bother awarding "loyalty" benefits to the flyer, but rather the company footing the bill. The new paradigm successfully drives up profitable engagement with the airline among those who probably just had the card for the occasional waived baggage fees, and have a genuine choice of who they fly. As others have mentioned, the difficulty will be to sustain this engagement, since a "free upgrades" benefit is worth about as much as a lottery ticket. What should you do? That's hard to judge, because your job is to review travel, whereas the rest of us travel to get somewhere. For me, elite status has long since lost any value, and I just buy the best combination of price/schedule. Sometimes this is discounted business class, and sometimes it's extra leg room in coach on a direct flight (something you will appreciate more when you travel with the little one).

  3. BenjaminGuttery Diamond

    3 very big things to note:

    One: 30 Qualifying Segments must be flown to get both the PP & EP Choice Rewards (and anything above that). So no more SWU's and all the other goodies going out to the thousands of EP'S automatically anymore.

    Two: Upgrades are not only based on status now, but also a Rolling 12 Month Spend. So if someone earned all their LP's at Christmas or Tax Season or whatever, that...

    3 very big things to note:

    One: 30 Qualifying Segments must be flown to get both the PP & EP Choice Rewards (and anything above that). So no more SWU's and all the other goodies going out to the thousands of EP'S automatically anymore.

    Two: Upgrades are not only based on status now, but also a Rolling 12 Month Spend. So if someone earned all their LP's at Christmas or Tax Season or whatever, that will run it's course and others will still get upgrades that fly.

    Three: None of us really know how this new program is actually working. It will take at least 3 full years of the new program to be able to tell if anything has markedly changed for the worse or better.

  4. FlyerDon Guest

    You must have a lot of wealthy readers. To some people 200K is still a lot of money and not just a path to upgrade to business class travel.

  5. Chris Guest

    You're almost to platinum pro. Isn't that emerald status? Get it and call it a day.

  6. Randy Gold

    I have a good friend that had never been Elite. But spends big on the AA cards. Was EXP in less than months. Doesn't worrying about upgrades, as I help him always book his travels with First rewards - even a the J level.

    The beauty of J rewards - is they are like Full fare tickets - you can change anytime.

  7. TomLV Guest

    I've managed to rack up around 50k miles with very little effort. A few purchases that are pointless ($10 for Homer that got me 3k points, $6 for Crafty that got me 4k points, etc. etc.), as well as strategically holding purchases til holidays ($400 at Petsmart when they were offering 10x points around Memorial Day for example). Now I've got gold status, but it's kinda worthless. But tomorrow I'm flying round trip to Cancun...

    I've managed to rack up around 50k miles with very little effort. A few purchases that are pointless ($10 for Homer that got me 3k points, $6 for Crafty that got me 4k points, etc. etc.), as well as strategically holding purchases til holidays ($400 at Petsmart when they were offering 10x points around Memorial Day for example). Now I've got gold status, but it's kinda worthless. But tomorrow I'm flying round trip to Cancun in first thanks to a saver fare and all it took was paying attention to Simply Miles and aadvantageshopping. Zero complaints as I'm down to play the game.

  8. kels2003 Guest

    Great analysis Lucky, and my wife and I were just discussing how our strategy has completely changed. Now instead of doing mileage runs where we look for the longest flight for the cheapest price, we are now looking at the most expensive shortest flights and portal and credit card spend. Completely different.

    And we feel the same way about ExPlat - much more interested in OW Emerald. My question is: What Oneworld program would you...

    Great analysis Lucky, and my wife and I were just discussing how our strategy has completely changed. Now instead of doing mileage runs where we look for the longest flight for the cheapest price, we are now looking at the most expensive shortest flights and portal and credit card spend. Completely different.

    And we feel the same way about ExPlat - much more interested in OW Emerald. My question is: What Oneworld program would you credit to? Love Alaska miles but something outside of North America would allow for access in the first class and Flagship lounges ...

  9. jns Guest

    Looking at the numbers shows that American Airlines makes money per available seat mile on domestic flights. On every grouping of international flights they lose money. This must be due to competition. I did some calculations and found out why USA airlines are much more expensive across the Pacific Ocean, which is my normal travel route. I wonder how international airlines can fly these routes year after year and not fail while providing much lower cost seats.

  10. Darren C Diamond

    Ever since AS joined OW, I have been using my AS# on every AA flight to keep my Emerald status as an AS Gold 75K.
    I take a few flights to Hawaii and Alaska on AS, and I happy to have dumped AAdvantage, which I joined in 1987.

    1. Jeremy Guest

      Lucky,

      Actually, to your point, AA is blocking redemption using Avios and partner miles on domestic flights I'm interested in. I'm talking about 12.5k miles or less one way. This is causing me the same issues you are speaking of. I usually prefer 4x MR or 5x UR, but if I can't redeem for the flights I need, what's the point? This is really creating interest for me in Bilt as they are the only AA transfer partner. I need Citi to bring back AA transfers.

  11. BritFlyer Guest

    It’s still a shame that those of us in the UK cannot get our hands on an AA credit card to help us on our way to EXP.

    1. Charlie Diamond

      It’s annoying that this blog completely ignores the world outside of the US, which doesn’t get access to lucrative travel credit cards…

  12. Scott Guest

    Right there with you. In the past, I obtained EXP status mostly from a few paid business class tickets a year on QR, BA, and JL (mostly), and then some domestic flights on AA. But with the higher requirement for EXP now, those flights aren’t enough to get me there. So I need to start using the AA credit card, but that doesn’t make sense compared to better cards in my wallet.

    Basically, all...

    Right there with you. In the past, I obtained EXP status mostly from a few paid business class tickets a year on QR, BA, and JL (mostly), and then some domestic flights on AA. But with the higher requirement for EXP now, those flights aren’t enough to get me there. So I need to start using the AA credit card, but that doesn’t make sense compared to better cards in my wallet.

    Basically, all those people willing to make the irrational move of putting a ton of spending on the AA card are going to crowd out people like me. So now I’m thinking I’ll never get upgrades on AA anymore, so maybe it’s time to just switch over to UA/Star.

    Funny thing is all those New Yorkers now chasing EXP with credit card spend are going to be disappointed when they find out how rarely upgrades clear and see business class award tickets on AA at 400,000+ miles. So eventually a lot of those people will go away and AA will have alienated people like me who actually fly on high-margin paid business class tickets. I think their new program works for them in the near term, but maybe not so great longer term.

    This idea that an airline doesn’t make money flying people and therefore can afford to lose people who pay big money to fly just seems severely misguided.

  13. Mike_SFO Guest

    AA "loses" money flying *only because* of award accounting!

    The 18.08 cents per mile figure is a blend of the ~95% of ASM sold to people who pay a fare and the ~5% filled by AAdvantage awards at the "incremental cost" (accounting term) of about 1 cents per mile.

    Do the math, and the 95% seats who are sold to the market are sold for 18.98 cents per mile, above its costs.

    AA makes money...

    AA "loses" money flying *only because* of award accounting!

    The 18.08 cents per mile figure is a blend of the ~95% of ASM sold to people who pay a fare and the ~5% filled by AAdvantage awards at the "incremental cost" (accounting term) of about 1 cents per mile.

    Do the math, and the 95% seats who are sold to the market are sold for 18.98 cents per mile, above its costs.

    AA makes money flying, but it has incentives (probably tax-related) to reallocate that profit to the AAdvantage program instead.

  14. Omar Guest

    Didn't you get 2 years of Emerald from the Finnair miles deal?

  15. Mike_SFO Guest

    Lucky, I completely agree with you. As a frequent flier, the program is a dud especially because it removes all incentives on AA to make the flying better.

    AA's business class is already filled with lower-yielding discounted corporate fliers: people who aren't tied to a contract can fly with anyone and indeed do choose to fly with other airlines, as proven by AA's pullback on transpacific flying from LAX and on JFK-to-anywhere-but-UK

    Given...

    Lucky, I completely agree with you. As a frequent flier, the program is a dud especially because it removes all incentives on AA to make the flying better.

    AA's business class is already filled with lower-yielding discounted corporate fliers: people who aren't tied to a contract can fly with anyone and indeed do choose to fly with other airlines, as proven by AA's pullback on transpacific flying from LAX and on JFK-to-anywhere-but-UK

    Given the above, I expect the quality of the experience on AA to continue to nosedive, which is not a great prospect.

    I too only care about oneworld Emerald, and there's a strong incentive to gain this status with an airline that is *not* AA since it comes with US lounge access while Emerald on AA doesn't.

    It would be great if you could update your review of all oneworld programs out there!

  16. JR Guest

    Those who earn status flying are more likely to fly premium cabins and thus are the customers who are in profitable rather than loss making coach seats.

  17. John Guest

    I don’t think the strategy is a good one for AA long term. Years ago they figured out how to make good money selling redeemable miles to credit card companies. They opened up the printing presses and in the process radically devalued the miles with “dynamic” pricing of awards. Over time they effectively destroyed redeemable miles as a tool for building frequent flyer brand loyalty, which was the original purpose of AAdvantage. To counter that...

    I don’t think the strategy is a good one for AA long term. Years ago they figured out how to make good money selling redeemable miles to credit card companies. They opened up the printing presses and in the process radically devalued the miles with “dynamic” pricing of awards. Over time they effectively destroyed redeemable miles as a tool for building frequent flyer brand loyalty, which was the original purpose of AAdvantage. To counter that trend they made elite status their primary brand loyalty tool. Now they’re selling that to the credit card companies as well. AA needs brand loyalty if they’re going to stay in the airline business, and if they don’t stay in the airline business credit card companies won’t want to buy their miles.

  18. John Guest

    Fully agree with your analysis, Lucky.

    As for switching your OW loyalty program: BA ain't a bad option. You get MCE, some recent improvements wrt AA benefits (BA Gold upgrade vouchers can be used for AA flights since May 2022), and AA flagship lounge access on every one of your AA flights.

  19. Larry D Guest

    The biggest problem with Loyalty Points is that it devalues the program by about 40%. For years I kept up (barely) with the $12K spend (for two of us, so $24K/year).

    When they raised the spend to $15K we fell back to Platinum Pro, significantly cutting back on flying in the process (we went to Maui one year to just to be sure we met our spend - that’s fun but irrational).

    I cleared...

    The biggest problem with Loyalty Points is that it devalues the program by about 40%. For years I kept up (barely) with the $12K spend (for two of us, so $24K/year).

    When they raised the spend to $15K we fell back to Platinum Pro, significantly cutting back on flying in the process (we went to Maui one year to just to be sure we met our spend - that’s fun but irrational).

    I cleared EP again this year, but the $9K I would spend to keep Platinum Pro would only get me to Platinum, and even staying Platinum Pro would require a $15K spend.

    I’m not that irrational.

    I did a status challenge and switched mostly to Delta.

    This year I’ll clear Platinum, but my first transatlantic trip in three years is on Delta.

    I don’t care what makes the airline more money. I want to be rewarded for my loyalty, not punished for it.

    1. Larry D Guest

      I gave up mostly on MGM Rewards for the same reason. Not a gambler, but I like nice hotels and good food and live near Vegas. Clearing $8K/year was pretty easy, and I liked the perks like the discounted Celebrity Cruises.

      But this year they cut the hotel/dining points from 25 points/dollar to 4 points/dollar. As a result, I’d need to spend $50K to keep Platinum. Not happening.

      The best part? Because I have...

      I gave up mostly on MGM Rewards for the same reason. Not a gambler, but I like nice hotels and good food and live near Vegas. Clearing $8K/year was pretty easy, and I liked the perks like the discounted Celebrity Cruises.

      But this year they cut the hotel/dining points from 25 points/dollar to 4 points/dollar. As a result, I’d need to spend $50K to keep Platinum. Not happening.

      The best part? Because I have AmEx Platinum I get Hyatt Gold (equivalent) which due to reciprocity gets me MGM Gold - without spending a dime.

      Now who’s irrational?

      When you majorly devalue your loyalty program, you’re going to lose top-paying customers to your competitors. Maybe you don’t care. But when you make customers feel betrayed, they’re going to talk to others about their negative experiences as well.

  20. Super Gold

    Ben - I think your logic on the "American Airlines doesn’t make money flying" is faulty, especially with regards to the "value" of an Exec Plat to AA. I believe you've posted an article before on how Business Class essentially is the bulk of the reason why planes fly, and economy is essentially just there to fill the rest of the space in the plane (I'm massively oversimplifying, I know, but just making a point)....

    Ben - I think your logic on the "American Airlines doesn’t make money flying" is faulty, especially with regards to the "value" of an Exec Plat to AA. I believe you've posted an article before on how Business Class essentially is the bulk of the reason why planes fly, and economy is essentially just there to fill the rest of the space in the plane (I'm massively oversimplifying, I know, but just making a point). If there were no loyalty amongst business travelers and those consumers behaved only rationally, the cost of those business class seats would have to go down to compete. So to say that in your example, 4% profit margin = $600 per EP, is not quite true, as the real value would be way more as the profit margin would be negative without those EP's choosing to sometimes act irrationally by staying loyal to AA and purchasing those business class seats. In addition to my prior point, because these EPs are essentially paying for those routes, they enable AA to sell the rest of the economy seats which could be counted as ancillary profit for an EP's value.

    That was my only point of contention - your reporting and logic for the rest of the article was excellent, as usual :).

    1. Lune Gold

      Have to agree here. Your assessment that high status members have an average profit of 4% like everyone else is almost certainly false. The whole point of going after business travelers is that they pay more for their seats, either by buying business class, or buying last minute, or not meeting Saturday-night-stay requirements on roundtrips, etc. If the average frequent flyer gave you the same profit as the average non-frequent flyer, there's no point to...

      Have to agree here. Your assessment that high status members have an average profit of 4% like everyone else is almost certainly false. The whole point of going after business travelers is that they pay more for their seats, either by buying business class, or buying last minute, or not meeting Saturday-night-stay requirements on roundtrips, etc. If the average frequent flyer gave you the same profit as the average non-frequent flyer, there's no point to having an FF program: just fill your plane with occasional travelers and you'll make the same money. Who cares how often they travel?

      The likely truth is that elite status FF members have a vastly higher profit margin than the average non-elite member, because even an extra $100 on a $500 ticket would be a pure 20% profit vs the 4% profit you're assuming, and plenty of elites think nothing of paying $50-$100 extra for a ticket, especially when traveling on their company's dime.

      We'll have to see how it works out, but I wouldn't be surprised if this move, rather than being brilliant, actually backfires. How so? You provide the answer right in your post: you yourself are now feeling that it's no longer worth chasing EXP and that you might either switch to a different airline, or just start booking seats by price. IOW, American is losing you as that "irrational" customer paying an extra $50-100 per ticket in the hopes of scoring an upgrading or ensuring your EXP status for another year. Assuming they're selling their credit card points for 0.5cents each, they would need someone to spend $20,000 worth just to earn back the revenue they lost from you spending $100 extra on a single ticket. That would show up as extra "profit" in their points division (since they sold 20,000 points for $100), and a decrease in their "profits" in ticket sales (since they had to sell the ticket you didn't buy, to someone else at a $100 discount vs what you would have paid). Hmm... sounds like the exact scenario they seem to be in right now, no...?

      Similarly, people will only pay the points and status game as long as they perceive value in it. You can fool all of the people some of the time, but not all of the people all of the time. They eventually wise up, tell their friends, etc. Once upgrades become really hard to get, people will stop chasing loyalty, even the ones using credit card spend to get it. Already, lots of people have given up the points chase due to the difficulty with redeeming points, and have gone back to using cashback cards. The same is probably happening to elite status seekers right now. Lots of lower-level elites assume that higher elite levels get free upgrades raining down like manna from heaven. Once they're EXP for 1 or 2 years and find that their upgrades aren't clearing anyway, they'll get disillusioned and move on.

      I'm another example: I play the points game for airline miles because I still find valuable redemptions (although it's getting harder). But I don't bother for hotels because I find it's basically impossible to redeem for good value, even at aspirational luxury hotels. I did the math and basically, if priceline or hotels.com offers me $10/day cheaper than booking directly at the hotel's site, the cash is worth more than whatever points I might earn, even at mythical redemptions like the cheapest rates in their luxury properties in Tahiti or Hawaii (that you'll never get anyway). And I don't care about elite status in hotels as it basically gets me nothing (at least airline status gets you free bags and early boarding), so all hotel brands need to compete on price and value for my business (I stay about 90 days a year in hotels), and I don't have any of their hotel cards (despite spending 6 figures annually on cards).

      So it's not a given that American will hang on to its frequent flyers while adding profitable credit card users. At that point, They could easily find themselves losing both the people who fly a lot *and* the people that spend a lot. A lose-lose scenario that I'd hardly call brilliant. At the end of the day, predicting whether these changes will lead to long-term revenue / profit gains for American is a difficult exercise, especially for us outsides who don't have access to their detailed accounting information. But none of us will know whether it's brilliant or not for at least a few years.

  21. Andrew Diamond

    Confirmed. I just dropped 15k on my Exec card to qualify for the bonus (and then to take advantage of the 4x multiplier in effect on the card between now and year end.) Card revenue and their cut is going to be way up.

    Snag is: what status does for me... that's another story.

    1. David Guest

      You are not considering the most insane and quite frankly broken( in the flyers favor)part, aa shopping. With this browser based shopping app, some stores offer 2x up to 10x per dollar spent regardless of card you use. I ordered 10k Samsung tvs and a loyalty earning rate at 5x. Using a corporate card I made 50k loyalty points. It insane and easy to game with stores like home Depot and best buy. This is...

      You are not considering the most insane and quite frankly broken( in the flyers favor)part, aa shopping. With this browser based shopping app, some stores offer 2x up to 10x per dollar spent regardless of card you use. I ordered 10k Samsung tvs and a loyalty earning rate at 5x. Using a corporate card I made 50k loyalty points. It insane and easy to game with stores like home Depot and best buy. This is a loop hope and I think will get close, but I will earn the highest rank status with little flying maybe 30 flights and little spending on my aa card.

  22. NK3 Member

    I think everyone needs to assign an estimated value to elite status. If you couldn't earn Executive Platinum status, and could only buy it, how much would you pay? Let's say you would pay $3000. The "price" for Exec Plat is 200K loyalty points; therefore, each loyalty point is worth 1.5 cents. So if you value each AA mile at 1.4 cents, general spend on an AA card gives you 2.9% back (1 loyalty point & 1 AA mile).

    1. Alex Guest

      Agreed this is what I do to determine the opportunity cost of non category spend or shopping portals. Only issue is with status any loyalty points (not the AA miles) earned over or under the exact qualifying amount is close to worthless besides a tiny bit for upgrade priority.

  23. Dempseyzdad Gold

    Right now I am earning 4x "loyalty points" when I buy my AA tickets with my AA card. This is only fair because I'm buying a damn seat, and flying on the damn airline. Earning status by not flying is BS.

    1. Adam Brian Dada Guest

      You aren’t earning 4x LPs on credit card spend, just 4x award miles. You are only getting 1x LPs on any AA credit card spend.

    2. Shaka Guest

      Are you sure that you're earning Loyalty points? I thought that the 4x for the end of the year would be loyalty points, but looking at my statement, it seems that it's 1x Loyalty. I feel that I've been taken "aadvantage" of.

  24. Ryan Guest

    You're looking at this wrong. It's not just credit card spend. It's:

    - Booking hotels through Rocket Miles or Book AA Hotels-- often times there are great mileage earning opportunities. For me, I've stopped booking Marriott direct because I don't want Marriott Points given the devaluations and instead get AA Loyalty Points. It's also how I have been booking non-chain affiliated hotels. Plus there are sometimes very lucrative opportunities to book a hotel room cheap...

    You're looking at this wrong. It's not just credit card spend. It's:

    - Booking hotels through Rocket Miles or Book AA Hotels-- often times there are great mileage earning opportunities. For me, I've stopped booking Marriott direct because I don't want Marriott Points given the devaluations and instead get AA Loyalty Points. It's also how I have been booking non-chain affiliated hotels. Plus there are sometimes very lucrative opportunities to book a hotel room cheap and get lots of Loyalty Points (Vegas is a great example, and you don't even have to check in).

    - Advantage Eshopping Portal. Install the browser plug-in and make sure anything you buy online is getting you AA Miles. Look for LP "buying" opportunities. For example I got 7400 points by signing up for Motley Fool for $99, but then had an offer on one of my citi cards for $50 back on a subscription, so net 7400 miles for $49.

    -SimplyMiles. Again, make sure you are taking advantage of offers. There was an opportunity to get 4050 miles from Craftsly for net $1, combining with a citi credit card offer. I've earned over 4000 miles on Uber and UberEats orders through Simplymiles.

    There's tons of opportunities out there. Just have to hunt from them. And there may be a facebook group or two focused on finding these opportunities

  25. 305 Guest

    As for change in behavior, loyalty points definitely has me using the AA shopping portal over Rakuten more often than before. Ties for point earning used to go to Rakuten, now to AA.

    Between a few hotels, rental cars, and even day-to-day needs like toilet paper, I’ve earned half my loyalty points for this year from the shopping portal alone.

    It’s completely feasible for someone to obtain EP without any flying or even AA...

    As for change in behavior, loyalty points definitely has me using the AA shopping portal over Rakuten more often than before. Ties for point earning used to go to Rakuten, now to AA.

    Between a few hotels, rental cars, and even day-to-day needs like toilet paper, I’ve earned half my loyalty points for this year from the shopping portal alone.

    It’s completely feasible for someone to obtain EP without any flying or even AA credit card spend, but just by strategically using the portal. Think folks who book lots of travel for business/groups, contractors/someone doing a home renovation, IT/tech company, etc. Basically, if you have high enough CC spend, there’s probably a way to pair it with the portal to increase your loyalty point earnings by a ton without sacrificing the CC point earn/other benefits.

  26. Pk Guest

    You and Gary need to stop saying american doesn’t make money on flying - that’s entirely false and predicated upon cherry picked marginal costing. All you’re doing is comparing ticket revenue to 100% of the costs. Do you think freight revenues that run through other revenue have zero cost? No. Does advantage have zero cost? No. Advantage buys seats from american at a slight discount to market rates and sells points (hence why your redemptions...

    You and Gary need to stop saying american doesn’t make money on flying - that’s entirely false and predicated upon cherry picked marginal costing. All you’re doing is comparing ticket revenue to 100% of the costs. Do you think freight revenues that run through other revenue have zero cost? No. Does advantage have zero cost? No. Advantage buys seats from american at a slight discount to market rates and sells points (hence why your redemptions are dynamically priced). Even with creative costing to juice what the discount they buy at is, eventually when planes are so full after they printed all these “high margin” points, american will buy a plane and staff a crew for a marginal flight to make more space for points redemptions - should we allocate 100% of that cost to ticket revenue and not loyalty revenue? No.

  27. uldguy Diamond

    It’s a sad day when an airline more or less publicly states that they’d rather you not fly them.

    And that is what American is saying. “We’d rather you use our credit cards than buy a ticket to fly us.” Why? Because we make much more money selling loyalty points that we do selling passenger tickets. American has transformed itself from a transportation company to a marketing company. And to me, that is a sad day.

  28. snic Diamond

    It's not necessarily irrational to switch a significant amount of spending from some other card to an AA-branded card in order to earn status - IF you are switching that spending from another card that that provides no rewards at all, or some small reward like 1% cash back. There are many, many people - even frequent travelers - who don't like playing the points and miles game because they think it's all a scam...

    It's not necessarily irrational to switch a significant amount of spending from some other card to an AA-branded card in order to earn status - IF you are switching that spending from another card that that provides no rewards at all, or some small reward like 1% cash back. There are many, many people - even frequent travelers - who don't like playing the points and miles game because they think it's all a scam and the deck is stacked against them. So when AA offers a tangible benefit they can use on every trip (lounge access, free checked baggage, etc) without having to worry about redeeming points, searching for availability, etc, they go for it because it's getting something for nothing.

  29. Donna Diamond

    How many loyalty program changes have we seen with AA in the last decade? Currently, the airlines can afford to be stingy but like in the past, the winds will shift and they may be forced to make the rules more frequent flyer friendly or lose those passengers to free agency or other more generous loyalty programs. In the meantime, premium cabin redemptions are ridiculously expensive, upgrades elusive and lounges are poor. The card spend...

    How many loyalty program changes have we seen with AA in the last decade? Currently, the airlines can afford to be stingy but like in the past, the winds will shift and they may be forced to make the rules more frequent flyer friendly or lose those passengers to free agency or other more generous loyalty programs. In the meantime, premium cabin redemptions are ridiculously expensive, upgrades elusive and lounges are poor. The card spend loyalty points option probably works for some trying to top off but again, the benefits of status seem rather small in the current climate.

  30. Eli Guest

    I also struggle with spending money on this card, as you said, why not make 2 points per dollar. The main reason I do spend money on it. Is because I need AA points, so it totally makes sense to spend 200k and even more. The problem you have now that you are loaded with AA points. Didn't you spend a lot on AA cards before you bought there points at a crazy discount?

  31. Bob Guest

    Another article that defines the benefits/costs of elite status solely in terms of upgrades...

    So much more to it than that.

    1. Ben Schlappig OMAAT

      @ Bob -- I don't think I was suggesting upgrades are the only benefit of elite status? Though upgrades are one of the primary benefits of AAdvantage elite status over status with a partner oneworld program.

      The focus of this story wasn't even meant to be perks of AAdvantage elite status, but rather just a focus on the value of the Loyalty Points program. I figured the story was already getting too long as is, without getting into the nitty gritty of status perks.

  32. JetAway Guest

    Platinum Pro with OW Emerald status is good enough.

    1. Ben Schlappig OMAAT

      @ JetAway -- Yeah, that's a good point. Though if I'm "only" going for Platinum Pro (which makes upgrades even less likely), then I wonder if I'm best off just going for status with another oneworld program instead.

    2. Chris Guest

      I'd be interested in an article comparing the other OW elite statuses.

    3. Charlie Diamond

      The problem is that if you’re EXP and “only” requalify for PP, it will be harder next year to requalify as you earn 9LP/$ as PP and 11 as EXP. So with the same amount of spending, you will get fewer LPs next year.
      That’s a reason why this new program is crap, you could theoretically spend the same amount every year and gradually downgrade your status

  33. Sel, D. Guest

    Too bad this didn’t really pan out - I wonder if something will pop up.

    “Ithink that this is one of those things where qualifying might be easier than we expect once we put our heads together and figure out some of the more lucrative opportunities out there”

    1. Ben Schlappig OMAAT

      @ Sel, D. -- Hah, fair. I think status turned out to be *easy* to earn (by credit card spending, as expected), though for those of us maximizers, it is tricky. Too bad we haven't seen many great opportunities with SimplyMiles.

    2. Sel, D. Guest

      Yeah simply miles helped a bit, although now I have a closet full of mediocre wine.

  34. Tony Guest

    I've gotten a good chunk of the way to EXP via Marriott bookings through the AA eshopping portal - if you're spending significant amounts on Marriott stays, it really pays to book when there's a promo deal (4x Loyalty Points per dollar).

    1. Sel, D. Guest

      Thanks for this tip. Just changed a $1,500 Marriott booking.

    2. Ben Schlappig OMAAT

      @ Tony -- Yeah, hotel bookings can be a good way to earn Loyalty Points, though you are forgoing hotel points and in many cases elite perks, which for me is too big of an opportunity cost.

    3. Tony Guest

      @ Ben - The AA eshopping portal is just a link to the Marriott website - I also earned ambassador through these stays (and received all benefits, subject to the usual Marriott property-level gambits to weasel out of providing elite bennies).

    4. jon_isp New Member

      Not true! The AAdvantage eShopping portal is a referral link directly to Marriott's website. You earn full Bonvoy points and elite recognition in addition to redeemable AAdvantage miles that count as Loyalty Points. I've done this for all my Marriott stays this year. It's the best "double dip" in the industry. (Also works for Caesars Rewards hotel bookings)

  35. greg Guest

    Is it worth it for you to put American specific spending on your Exec card given the 4x redeemable miles earned through end of year?

    1. Ben Schlappig OMAAT

      @ greg -- Good question. Essentially I have the choice between 5x points and travel protection on the Amex Platinum, and 4x miles and 1x Loyalty Points with the Citi AAdvantage Executive Card.

      I think I'm still better off putting my AA airfare spending on the Amex Platinum for the better return and protection, and I'd be better off putting non-bonused spending on an American Airlines credit card.

  36. Tee Ayo Guest

    Why is one world emerald/lounge access so important?

    1. You cannot enter am Emerald lounges in HK unless you originate or transit from Mainland china. So any westerner cannot enter emerald lounges there.

    2. Emerald Lounges in Japan are a shell of what they were pre covid and I see no changes soon.

    3. Emerald lounge In the US ( LAX Qantas) is nice but only if you originate out of LAX; which is becoming...

    Why is one world emerald/lounge access so important?

    1. You cannot enter am Emerald lounges in HK unless you originate or transit from Mainland china. So any westerner cannot enter emerald lounges there.

    2. Emerald Lounges in Japan are a shell of what they were pre covid and I see no changes soon.

    3. Emerald lounge In the US ( LAX Qantas) is nice but only if you originate out of LAX; which is becoming harder with AA moving many international flights out of LA.

    I use to want to achieve Emerald for those lounges, but with them pretty much useless I'll just keep Platinum and use the business class lounges.

    1. RichM Gold

      There are some great First Class lounges that Emerald gives you access to. Sydney, Melbourne, London Heathrow, Kuala Lumpur, and Helsinki are a few examples.

    2. SEAmericanExpat New Member

      This is a great point! I'm based in SEA and OWE was truly amazing in the context of CX's The Wing and Pier First Class lounges and the JL F lounge at Narita. But as you point out, at least for now none of these are accessible and/or what they once were.

      So OW Platinum seems like a very reasonable place to be at least until the time when CX and JL bring back their first class lounges (assuming they eventually do).

  37. Mike C Diamond

    @ben, I'm in the mirror image of your OW situation but have the same assessment of it. As I've written here before, I see more value in OW lounge access as a perk than free upgrades, so OW Emerald, or even Sapphire, with a non US carrier ticks that box. That's what I have now, and QF is where I have it, and probably my best option. Here in Oz we have far fewer transferable...

    @ben, I'm in the mirror image of your OW situation but have the same assessment of it. As I've written here before, I see more value in OW lounge access as a perk than free upgrades, so OW Emerald, or even Sapphire, with a non US carrier ticks that box. That's what I have now, and QF is where I have it, and probably my best option. Here in Oz we have far fewer transferable miles options so partly for that reason I haven't joined other programs just for miles transfers, I want the programs I join to have a realistic path to status based lounge access, so potentially a different irrational reason for flying with them or their partners!

    I've viewed the AA developments with interest and agree that it's totally rational but annoying to frequent flyer purists, but with no access to AA points credit cards it has limited interest to me. I'll still consider crediting flights to it when doing so rather than to QF makes sense (e.g. no hope of reaching the next QF level).

    I'll be interested if you decide that crediting your AA travel to another OW carrier makes sense and what the cost benefit analysis is for you.

    1. SEAmericanExpat New Member

      Agreed, I also would be interested in hearing, Ben, if you decide to credit to another OW carrier and if so which one. I'm in a similar situation as Ben is; currently EXP but on track to end the year as a regular old AA Platinum.

      I would imagine AS or BA would be the candidates to credit to lieu of AA.

    2. 305 Guest

      Seconded! Would love to see an article about best ways to get OW Sapphire/Emerald that doesn’t involve crediting to AA. Being MIA based, I also find myself valuing Flagship access (thanks to Royal Air Maroc match) as a much better perk than what Plat Pro gets me

  38. Patrick Guest

    Isn't this similar to what AA did a long time ago? Use your credit card and that spend went towards élite status? Heck, that's how I earned Life Time Platinum status. Basically all of it on credit card spend.

    1. Nun Guest

      Patrick- You're confusing the old policy on the MM program with the regular elite program. CC spending used to count toward MM status but never toward regular yearly status. The exception is you could/can earn a fixed chunk of elite points on certain cards once per year.

    2. kels2003 Guest

      Same as my mom. My family flew maybe once every 2-5 years when I was a kid, but they had the AA card with everyone as an authorized user. She's lifetime Gold now.

  39. Lee Guest

    Ben, if your key objective is OneWorld Emerald, Platinum Pro achieves that at only 125K Loyalty Points. Don't make the job tougher than it needs to be.

  40. Mike Guest

    I've reupped for EXP this year with lots of spending...but I do find myself questioning continuing for next year. I'm also Life Platinum - and although the upgrades are good at EXO for me...I do also find myself purchasing F rather than risking it in many situations.

    Free agency may indeed be in my future in 2023.

    1. Airfarer Diamond

      I have also found myself buying more F this year. I've been on fewer flights so my spend has been about the same.

  41. hp12c Member

    What about AAdvantage mileage earning? Now that upgrades are very scarce, my main reason for wanting to maintain Executive Platinum is to earn gobs of AAdvantage redeemable miles - despite having less award availability these days, I still find the miles to be incredibly valuable. What would you replace that earning with? Or is that a problem for another day given what I assume to be your large balance?

    1. Ben Schlappig OMAAT

      @ hp12c -- In my case that's definitely a problem for another day at the moment. ;-) But I hear you, as AAdvantage miles are extremely valuable, and can't be earned with one of the major transferable points currencies.

Featured Comments Most helpful comments ( as chosen by the OMAAT community ).

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Lune Gold

Have to agree here. Your assessment that high status members have an average profit of 4% like everyone else is almost certainly false. The whole point of going after business travelers is that they pay more for their seats, either by buying business class, or buying last minute, or not meeting Saturday-night-stay requirements on roundtrips, etc. If the average frequent flyer gave you the same profit as the average non-frequent flyer, there's no point to having an FF program: just fill your plane with occasional travelers and you'll make the same money. Who cares how often they travel? The likely truth is that elite status FF members have a vastly higher profit margin than the average non-elite member, because even an extra $100 on a $500 ticket would be a pure 20% profit vs the 4% profit you're assuming, and plenty of elites think nothing of paying $50-$100 extra for a ticket, especially when traveling on their company's dime. We'll have to see how it works out, but I wouldn't be surprised if this move, rather than being brilliant, actually backfires. How so? You provide the answer right in your post: you yourself are now feeling that it's no longer worth chasing EXP and that you might either switch to a different airline, or just start booking seats by price. IOW, American is losing you as that "irrational" customer paying an extra $50-100 per ticket in the hopes of scoring an upgrading or ensuring your EXP status for another year. Assuming they're selling their credit card points for 0.5cents each, they would need someone to spend $20,000 worth just to earn back the revenue they lost from you spending $100 extra on a single ticket. That would show up as extra "profit" in their points division (since they sold 20,000 points for $100), and a decrease in their "profits" in ticket sales (since they had to sell the ticket you didn't buy, to someone else at a $100 discount vs what you would have paid). Hmm... sounds like the exact scenario they seem to be in right now, no...? Similarly, people will only pay the points and status game as long as they perceive value in it. You can fool all of the people some of the time, but not all of the people all of the time. They eventually wise up, tell their friends, etc. Once upgrades become really hard to get, people will stop chasing loyalty, even the ones using credit card spend to get it. Already, lots of people have given up the points chase due to the difficulty with redeeming points, and have gone back to using cashback cards. The same is probably happening to elite status seekers right now. Lots of lower-level elites assume that higher elite levels get free upgrades raining down like manna from heaven. Once they're EXP for 1 or 2 years and find that their upgrades aren't clearing anyway, they'll get disillusioned and move on. I'm another example: I play the points game for airline miles because I still find valuable redemptions (although it's getting harder). But I don't bother for hotels because I find it's basically impossible to redeem for good value, even at aspirational luxury hotels. I did the math and basically, if priceline or hotels.com offers me $10/day cheaper than booking directly at the hotel's site, the cash is worth more than whatever points I might earn, even at mythical redemptions like the cheapest rates in their luxury properties in Tahiti or Hawaii (that you'll never get anyway). And I don't care about elite status in hotels as it basically gets me nothing (at least airline status gets you free bags and early boarding), so all hotel brands need to compete on price and value for my business (I stay about 90 days a year in hotels), and I don't have any of their hotel cards (despite spending 6 figures annually on cards). So it's not a given that American will hang on to its frequent flyers while adding profitable credit card users. At that point, They could easily find themselves losing both the people who fly a lot *and* the people that spend a lot. A lose-lose scenario that I'd hardly call brilliant. At the end of the day, predicting whether these changes will lead to long-term revenue / profit gains for American is a difficult exercise, especially for us outsides who don't have access to their detailed accounting information. But none of us will know whether it's brilliant or not for at least a few years.

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RichM Gold

There are some great First Class lounges that Emerald gives you access to. Sydney, Melbourne, London Heathrow, Kuala Lumpur, and Helsinki are a few examples.

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Super Gold

Ben - I think your logic on the "American Airlines doesn’t make money flying" is faulty, especially with regards to the "value" of an Exec Plat to AA. I believe you've posted an article before on how Business Class essentially is the bulk of the reason why planes fly, and economy is essentially just there to fill the rest of the space in the plane (I'm massively oversimplifying, I know, but just making a point). If there were no loyalty amongst business travelers and those consumers behaved only rationally, the cost of those business class seats would have to go down to compete. So to say that in your example, 4% profit margin = $600 per EP, is not quite true, as the real value would be way more as the profit margin would be negative without those EP's choosing to sometimes act irrationally by staying loyal to AA and purchasing those business class seats. In addition to my prior point, because these EPs are essentially paying for those routes, they enable AA to sell the rest of the economy seats which could be counted as ancillary profit for an EP's value. That was my only point of contention - your reporting and logic for the rest of the article was excellent, as usual :).

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