American Airlines is the latest major airline to make changes to its frequent flyer program in recent months. announcement On Tuesday, many benefits that were previously available to everyone will become exclusive to frequent flyer members.
Delta Air Lines and United Airlines also changed their programs last year with stricter requirements as the industry looked to credit card programs as a source of funding.
airline award squeeze
An American Airlines CRJ-900 lands at Reagan National Airport in Arlington, Virginia, Thursday, February 23, 2023.
Changes to the American AAdvantage program announced Tuesday are aimed at increasing the ways customers can earn miles, the company said. The company hasn't changed the requirements for higher tiers of mileage awards, but it has made lower tiers more difficult to obtain.
Some options that were previously available to the public will now be available only to AAdvantage members. This includes standby flights without fees, pre-booking flight reservations, purchasing one-day lounge passes, and more.
Aero Consulting Experts CEO Ross Aimer said these moves are aimed at encouraging customers to sign up for AAdvantage and are part of a business trend to increase profitability.
“Aviation is one of those industries that is constantly evolving, and everything they do, unfortunately, is for the benefit of their shareholders,” said Emmer, himself a former airline captain. said.
“In the old days, before labor regulations were relaxed, airlines passed everything on to their customers,” he continued. “It's really not possible these days, but instead of raising ticket prices…what we're doing is cutting somewhere and coming up with something creative.”
Delta made a similar change last year, opening free in-flight Wi-Fi to all SkyMiles members to encourage enrollment.
Credit program benefits
By directing customers to frequent flyer programs and airline-backed credit cards, airlines create loyal customers and an ongoing revenue stream, regardless of whether they actually fly frequently, Aimer said. That's what it means.
“This is a huge profit center,” Emmer said of credit cards. “And if you're using an airline credit card, you have loyalty to that airline. You're not just going back and forth from one airline to another.”
The coronavirus pandemic is a perfect example, he continued. Even though no one was actually flying due to the coronavirus pandemic, airlines were making money from people shopping with their affiliated credit cards.Although the industry was one of the most affected by the coronavirus, credit card programs Reduced the severity of the blow.
Co-branded credit cards have been a major source of revenue for airlines since their introduction in the mid-1980s.delta earned $3 billion The company ended the American Express Partner Program in 2018, and the number of SkyMiles members will exceed 100 million by 2022.
Consumer backlash
People wait in line at a Delta Airlines check-in counter at JFK International Airport, New York City, June 30, 2023. (Photo by David Dee Delgado/Getty Images)
Not all changes to frequent flyer programs are welcome. When Delta Air Lines announced in September that it would limit lounge access to senior SkyMiles members, customers rebelled. In the face of widespread criticism, Delta rolled back the changes a month later.
The industry as a whole is also moving away from awarding points for the amount of money spent, rather than the distance traveled, as programs have traditionally done. Delta Air Lines was the last major airline to make this change last fall, among the changes that were not rolled back.
united airlines Announcing similar changes In November, we'll focus on rewards for those who spend more.
The change is effectively eliminated This is a deal-hunting practice that has allowed clever frequent fliers to earn points on long-haul, low-cost flights on a budget.
Only Alaska Airlines still offers rewards in miles rather than dollars.
federal investigation
Senate Judiciary Committee Chairman Richard Durbin (D-Ill.) speaks with Sen. John Cornyn (R-Texas) before a hearing on Tuesday, November 28, 2023.
Changes in the industry have not gone unnoticed by federal regulators and Congress. The Department of Transportation told The Hill last month that it would investigate a spate of complaints about deceptive practices in loyalty programs.
Senate Democratic Sen. Dick Durbin (Illinois) and Sen. Roger Marshall (R-Kansas) I asked the Ministry of Transport The investigation into the airline's program came in October, shortly after Delta Air Lines rescinded some changes following customer complaints.
The senators said that while these programs were initially incentives and rewards, they are now “solely focused” on the amount spent, and that airlines can change programs without notifying customers. “fair, unfair and deceptive practices'' are taking place.
“As a result, these programs incentivize consumers to purchase goods and services, obtain credit cards, and spend on those credit cards in exchange for promised rewards; “and retains the power to strip consumers of those rewards at any time,” they said.
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