• Graham

American Airlines’ New, VERY Different ‘Frequent Flyer’ Program.

After months of speculation, American Airlines finally unveiled its new, redesigned AAdvantage elite-status program, completely overhauling how you’ll earn ‘frequent flyer’ status. In short, air travel is now just one way to earn elite benefits, along with spending on AA-branded credit cards and American’s e-commerce portal.


It’s a clear sign that American is recognizing that airline tickets are just one part of their revenue stream; like many airlines, they’re recognizing the growing importance of revenue from co-branded credit card customers and shopping-portal partnerships.


This also represents a growing trend in the airline-loyalty sector; the more you spend, the better perks you’ll get. We’ve seen this in different forms on airlines around the world, but it’s still relatively rare to be able to earn this level of elite status without ever setting foot on an airplane.

  1. The New Deal, Explained

  2. Earning Loyalty Points From Flying

  3. Earning Loyalty Points From Spending

  4. The Bright Spot For Upper-Tier Elites

  5. Let's Do The Math: What Does It Take To (Re)qualify?

  6. So, What Does This All Mean?

photo: ross sokolovski @ unsplash

The New Deal, Explained


Everything you do with American Airlines – from flying to spending - now earns ‘Loyalty Points’. American says this is a case of replacing “complicated elite-qualifying metrics” with “an easy-to-understand point system that provides multiple ways to earn status” at the following tiers:

Gold

30,000 Loyalty Points

Platinum

75,000 Loyalty Points

Platinum Pro

125,000 Loyalty Points

Executive Platinum

200,000 Loyalty Points

As well, the new status-qualifying calendar runs from March 1 to February 28/29, which American staff have referred to as a move to ensure that holiday-season credit-card spending is counted towards qualification, even if it takes one or two statements to post.


Earning Loyalty Points From Flying


First off, if you mainly fly American domestic routes, this is really simple: spend money to get status. No more miles or segments, status is simply determined by how much you spend. For flights operated by American or American Eagle, it’s the same formula as before:

Basic Membership

5 pts /$USD

Gold

7 pts /$USD

Platinum

8 pts /$USD

Platinum Pro

9 pts /$USD

Executive Platinum

11 pts /$USD

For example, flying economy from Boston to Phoenix, a Gold member will earn (5 x $180 = 900 Loyalty points), while an Exec Plat on the same ticket will earn (11 x $180 = 1,980).


For flights on partner airlines, it gets a bit more complicated; you’ll still earn by distance flown, multiplied by cabin class. For example, flying Boston-Tokyo return in business on Japan Airlines, you’d earn (2 x 6,702 miles x 125% class-of-service multiplier) for a total of 16,755 Loyalty Points; flying Chicago-London return on British Airways in a regular Economy fare, you’d earn (2 x 3,953 miles x 50% class-of-service multiplier) for a total of 3,953 Loyalty Points.



Earning Loyalty Points From Spending


This part’s definitely simple; for almost all AAdvantage-branded credit cards, $1 USD spent equals 1 Loyalty Point earned. Similarly, each base mile earned by spending with partners like dining and shopping programs, now earns 1 Loyalty Point as well.


Sign-up and category bonuses don’t count, nor do miles bought, gifted or transferred from other programs, but a few premium AA-branded credit cards will also give bulk bonuses if you hit annual spending targets of $20K and higher.


...but this is where the game really changes. You can now earn up to AAdvantage Platinum & OneWorld Sapphire status without ever setting foot on an airplane, as long as you spend $75,000 on your credit card, or Gold status for just $30,000.


To me, this change affects Gold and Platinum members the most; you’ll now face stiffer competition for Preferred and Main Cabin Extra Seats, from people who got status without flying. As well, if two passengers of equal status are waitlisted for the same upgrade, the tie will go to the person with the highest number of Loyalty Points earned in the past 12 months.


In other words, if you qualify for Gold “the old way”, there’s a pretty solid chance you’re going to start losing out on short-haul upgrades to people who rarely fly, but run all their small-business spend through their AA credit card, or credit-card churners using manufactured-spend techniques.


To be fair, Gold members were rarely-if-ever getting upgraded on anything besides short regional routes, but if you’re based somewhere like Harrisburg, Midland or Ottawa, this could really change what you get out of your status.



The Bright Spot For Upper-Tier Elites


Before we start looking at this as a straightforward Pay-To-Win system, American has kept one limit in place to protect Platinum Pro and Executive Platinum members; while you can qualify for these tiers solely through credit-card spend, in order to receive top-tier benefits like Systemwide Upgrades and Admirals Club membership, you’ll need to fly at least 30 segments a year.


As Heather Samp, AA’s managing director of member engagement recently told our colleagues over at ThePointsGuy, “We want this to be a nod to the fact that we are an airline, and the benefits within the Loyalty Choice Rewards menu really is a nod towards flyers.”


For a domestic traveller who’s been qualifying as an upper-tier elite “the old way”, this will be a snap; 15 round-trips, or fewer if you fly routes with connections, but there will be a small group who’ve previously qualified on a few long-haul, premium-cabin trips a year, for whom this can be a real headache.


One other bit of good news though; as before, award flights operated by American will still count towards those segment earnings.



Let's Do The Math: What Does It Take To (Re)qualify?


In the existing program, AA elites had minimum-spend requirements called Elite Qualifying Dollars; along with a certain amount of flying, you had to spend a base amount of money with AA to earn status.


Now, this is all being replaced with Loyalty Points, but to offset the new ability to earn based on daily credit-card spending, the earning needed for each tier has gone up considerably. Here’s the old chart:

...and here are the new tiers:

Gold

30,000 Loyalty Points

Platinum

75,000 Loyalty Points

Platinum Pro

125,000 Loyalty Points

Executive Platinum

200,000 Loyalty Points

It now takes a LOT more flying – and a lot more spending - to reach the same elite tiers by flying alone. American’s basically telling us “unless you're at the airport every week, just flying is no longer enough”.


So, let’s look at what it’ll actually take to reach status, with some real-world, round-trip examples on common high-traffic routes. In all cases below, I looked at least a month in advance, for direct, non-red-eye fares I could get any day of the week, and I left out Basic Economy.


- LA-New York non-stop is about $300 in AA economy, $1,500 in Business or $5,000 in First.

- Chicago Dallas non-stop is about $200 in AA economy, or $500 in Business.

- Dallas-Tokyo; $1,400 economy / $9,000 business. Earns 6,400 / 16,000 LP in JAL Econ/Biz.

- NYC-London; $700 economy / $2,000 business. Earns 3,451 / 8,625 LP in British Econ/Biz.


In the math below I'm using the levels needed to *re-qualify* for the given tier. If you don’t already have AA elite status, the costs would be higher still, based on the 5x multiplier for non-elite members.


If you currently hold Gold status, you’ll need to hit (30,000 LP / 7x multiplier = $4,285) in spending on American Airlines domestic flights to re-qualify for the following year, which means 15 flying LA- New York in economy, round-trip, 15 times a year, or Chicago-Dallas nearly every other week. This is roughly 50% more flying than you previously needed to reach Gold.


Or, you can get exactly the same thing by spending $577 a week on your AA credit card. Heck, in some families, gas and groceries alone would pretty much cover that.


To requalify at the Platinum level, you’ll need (75,000 / 8x = $9375), or 31 round-trips on LA-New York, nearly double last year’s requirement. However, since there’s no segment requirement at this tier, it’s worth noting that six cross-country round-trips in business class would pretty much get you there.


If you’re Platinum Pro, the requirement is nearly twice what it used to be; you’ll need (125,000 / 9x = $13,888.88), and unless you plan to do hot-laps clear across the country 46 times a year, or 10 round-trips to Japan, you’re simply never going to get there just by flying economy. And that’s *if* you’re already PlatPro with a healthy multiplier to help you along.


At Executive Platinum, the required spend is only up by 50%; to requalify by flying alone, you’re looking at (200,000 / 11x = $18,181.82), which would require 36 LAX-NYC round-trips in Economy.


You could also do 12 round-trips in Business, or four in First, but neither of those will get you over that 30-segment minimum, so some of those will need to be rerouted LA-Chicago-New York, or Dallas-LAX-Tokyo if you want to get the full benefits of your status.



So, What Does This All Mean?


Why am I doing all this math? Well, crunching numbers is sort of what we *do* around here, but as always, it’s to illustrate a point. American’s new program makes it pretty clear that they *really* want you to have one of their credit cards, and/or spend a *lot* on expensive, flexible or last-minute airfares.


The bottom line here is that American’s weeding out the less-profitable passengers from its elite lists; if you’re flying regular-economy fares, you’d better be profitable to them in another area, or they’re simply not in a rush to offer you many incentives. However, if you're a credit-card user, they know these perks have a decent chance of turning you into a loyal airline passenger as well.


I’m not blaming them for this; the airline industry has just barely survived utter COVID catastrophe, and they're facing an ocean of red on their balance sheets. However, the end result of these changes is that a lot of people who considered themselves good customers, are about to find out that “frequent flyers” and “profitable passengers” are not necessarily the same thing, and for some people that'll hurt a lot. As a tall person who spends a lot of time flying Economy, I'd be pretty bummed to suddenly have to start paying in advance for extra-legroom seats after years of getting them for free.


Looking ahead, in the highly-competitive US airline market, a major change like this from one of the big players will often be adopted in whole or in part by the others, so it’ll be interesting to see how this shakes out with Delta and United in the year or two to come. If it delivers strongly for American, we may well see similar programs crop up at airlines across the world.