American Airlines is making some structural changes in hopes of improving profitability. While I’ll discuss that in more detail in a separate post, in this post I want to cover the development that probably has the most implications for American’s loyalty program…
American’s new Senior Vice President of AAdvantage
American Airlines has just named Scott Long as Senior Vice President of AAdvantage. Here’s how the airline described this decision in an internal memo:
With our new exclusive partnership with Citi on the horizon, our cobrand partnership will be more important than ever in helping increase engagement with the AAdvantage program, drawing more customers to the world’s largest and most valuable travel rewards ecosystem, and driving profitability. Going forward, both the AAdvantage program and our cobrand card portfolio will be the responsibility of Scott Long, who I’m delighted to announce will join Commercial as our new Senior Vice President, AAdvantage. Scott has distinguished himself in several roles across the company – most recently his very successful leadership of Investor Relations. Scott is the perfect person to lead the continued development of the world’s best travel rewards ecosystem and ensure the successful launch of our innovative card partnership with Citi.
Indeed, in the coming years we’ll see some changes to American’s co-brand credit card portfolio, as American and Citi are launching an exclusive partnership (while American currently also partners with Barclays). American sees significant upside from this deal, though only time will tell how this plays out.
So, who is Scott Long? He’s currently American’s Vice President of Investor Relations & Corporate Development. He has been at the airline for over 15 years, previously working in various positions in Revenue Management, Planning, and Finance.
What’s interesting is that in 2022, AAdvantage became part of American’s Revenue Management department, while that will no longer be the case following this latest change. That could be a good or bad thing.
Being integrated into Revenue Management makes it easier to come up with a cohesive strategy for how award availability is released, and how the airline internally accounts for the cost of that. When the loyalty program is outside of Revenue Management, it can be a more adversarial relationship, in terms of making award seats available at a reasonable cost.
My take on these AAdvantage leadership changes
We can of course try to draw all kinds of conclusions based on corporate structures and someone’s work background, in terms of what it means for the future of a loyalty program. Quite honestly, I know virtually nothing about Long — of course on the surface, promoting from Investor Relations to running a loyalty program might seem a bit odd, but there’s nothing necessarily wrong with that.
American is obviously struggling financially in comparison to Delta and United, and has a lot of ground to make up. The airline has made a lot of mistakes. Ironically, though, I’d argue that AAdvantage is actually the one aspect of the airline that’s currently the most compelling:
- American was innovative with introducing its Loyalty Points system, and I think that’s probably a smart strategy that benefits American’s bottom line, given the extent to which it encourages profitable behavior
- There continue to be good uses of American AAdvantage miles, much more so than with Delta SkyMiles and United MileagePlus
Obviously loyalty programs at large just aren’t as lucrative for consumers as they used to be, given that there are fewer upgrades to go around, due to airlines selling more premium seats.
With AAdvantage having new leadership, I guess my one hope is that not too much actually changes with AAdvantage:
- I think any revenue disadvantage at AAdvantage isn’t due to the program being broken or bad, but due to the airline being broken or bad, and lucrative customers not wanting to fly with American
- I hope that American continues to view AAdvantage as an opportunity to differentiate itself, while working on other areas to lure high yield and profitable customers
So I hope this isn’t one of those situations where someone takes a fresh look and says “well Delta and United are making money and they’re doing XYZ, so we should do that as well.” Only time will tell.
It seems like American management currently has a heavy focus on making changes to improve performance, and in those situations, there’s the tendency to overcorrect, in order to see fast results. That might not be great for members.
Bottom line
Scott Long has been appointed Senior Vice President of American Airlines’ AAdvantage program. He’ll oversee the loyalty program and the new (more lucrative) Citi co-brand credit card portfolio. While there are a lot of things that I hope American changes to be more like Delta and United, the loyalty program isn’t one of those. We’ll see how this goes, but I’d certainly expect this to lead to some change in direction, for better or worse.
What do you make of American appointing a new leader for AAdvantage?
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