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What You Need to Know About American Airlines' Loyalty Program Changes

The price you pay, not the distance you fly, will determine how many AAdvantage miles you earn.

U.S. News & World Report

What You Need to Know About American Airlines' Loyalty Program Changes

Airport.

American is rolling out a revenue requirement that will impose a certain cash amount for members to qualify for elite status in 2017.(Getty Images)

American Airlines launched the first frequent flier program in 1981 and watched as every other major carrier moved quickly to follow suit. This was in the aftermath of airline deregulation, which introduced competition to the industry, and was well received by travelers who embraced loyalty programs. Over the years, airlines have continued to tweak their programs by charging fees for reward travel, adding expiration dates to miles, adding higher thresholds to earn elite status and raising requirements to redeem miles for award flights.

Here's what you need to know about the latest changes to American's AAdvantage loyalty program, and other frequent flier program changes on the horizon.

American's Latest Loyalty Program Shift

Starting in August, American Airlines will be following Delta Air Lines' move to tie miles (and elite status) earned to dollars spent. The miles you earn will be calculated against the base fare paid per flight ticket times a multiple based on your AAdvantage loyalty program status. Those with a high elite tier status who pay a high fare will see their mileage rewards, while those without elite status will see their accumulated miles drop well below their actual miles flown, the previous benchmark.

Do Airlines Need Loyalists?

With continual consolidation within the industry, major carriers don't need the loyalty of infrequent, leisure travelers flying once or twice a year. The top legacy carriers – United Airlines, Delta Air Lines and American Airlines – aim to bolster loyalty from frequent business travelers to maximize revenue. For this reason, major airlines are adapting their programs to keep their business traveler clientele.

Despite the increased competition, and new flight routes, most U.S. markets are dominated by one or two major carriers. These airlines want to protect their most profitable customer base and use pricing, not rewards points or free upgrades, to drive leisure travelers. Meanwhile, smaller carriers don't have the frequency or the network to get these travelers where they need to be in many cases. A strong loyalty program, and large network with high a frequency of flights, on the other hand, has an advantageous position to retain loyal business travelers. Therefore, the latest moves from American and Delta have zeroed in on their business travel clients who pay the highest prices and travel the most, rather than focusing on occasional, leisure travelers.

Say Sayonara to Former Elite Status Perks

In previous years, savvy fliers could game the rewards system and book long-haul, low-priced tickets just to hit a threshold for higher status with American and other carriers. This would provide a number of benefits that are typically reserved for each loyalty program's most profitable customers. The time and effort to purchase a cheap ticket and rack up the necessary miles to reach the next elite status tier once was outweighed by the free upgrades to first class and other benefits members could receive over the next year. Aside from elite status perks, members could take advantage of mileage multipliers to rack up more rewards, leading to more free travel options.

The Price of Leisure Loyalty

Each year, airlines rake in billions of dollars with last-minute fares that are typically booked by business travelers, along with a variety of extra ancillaries, such as $200 change fees and priority boarding charges. By rewarding these big-spenders, the airlines are putting their loyalty programs in the hands of their most lucrative market. Leisure travelers, on the other hand, are motivated by price, not loyalty, and many will go out of their way to save a few dollars, even for inconvenient routes. In essence, leisure travelers are the commodity of the airline industry, so price, not loyalty, is the main driver.

For most leisure travelers without elite status, shopping around for the best airfare may be the best option to maximize savings. One way to get the best deal is to work with a professional travel agent. You'll pay the same price as you would by booking directly with the airline, but you'll get an unbiased perspective to make sure you're getting the best price and value for your next trip. Regardless of whether you want to stay loyal or drop your status, one thing is clear: With major carriers shifting to a model where points are accumulated based on price paid rather than distance flown, it's becoming increasingly difficult for leisure travelers to reap the generous perks of the past.

About En Route

Practical advice on the art of traveling smarter with tips, tricks and intel from En Route's panel of experts.

Contributors have experience in areas ranging from family travel, adventure travel, experiential travel and budget travel to hotels, cruises and travel rewards and include Amy Whitley, Claire Volkman, Holly Johnson, Marsha Dubrow, Lyn Mettler, Sery Kim, Kyle McCarthy, Erica Lamberg, Jess Moss, Sheryl Nance-Nash, Sherry Laskin, Katie Jackson, Erin Gifford, Roger Sands, Steve Larese, Gwen Pratesi, Erin Block, Dave Parfitt, Kacey Mya, Kimberly Wilson, Susan Portnoy, Donna Tabbert Long and Kitty Bean Yancey.

Edited by Liz Weiss.

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