The genius of AA’s Loyalty Point scheme (On Greg’s Mind)

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On January 1st, 2022, American Airlines moved to a new way for members to earn elite status. The old EQMs and EQDs are gone. Now, we can earn elite status simply by earning lots of Loyalty Points. Loyalty Points are now earned not just from flying AA, but also almost anytime we earn AA miles.  In other words, we can earn Loyalty Points from credit card spend, shopping portal rewards, hotel bookings, flower purchases, and more.  In fact, it’s not necessary to fly at all to earn top level status.  At Frequent Miler, we named this the Loyalty Point game.  And, the more I think about it, the more I believe that this change was a brilliant move by AA.

Every time someone earns AA miles and Loyalty Points without flying, American Airlines earns money.  While the behind-the-scenes financial details presumably vary from one partnership to another, the end result is the same: AA’s partners (shopping portals, hotel booking sites, rental car companies, etc.) buy AA miles (which include Loyalty Points) to reward their customers.

Here’s why I think this is genius: There are plenty of people, like me, who rarely fly AA and yet are now actively acquiring AA Loyalty Points in the hopes of earning elite status (click here for details).  And guess what?  It costs AA nothing, literally nothing, to give elite status to a person who never flies their airline.  So, worst case, AA grows it’s elite ranks without watering down perks for active fliers.  The upgrade list won’t grow larger, for example, if these new elites don’t fly.  Actually, maybe that’s the best case for AA since they’ll earn money from these customers without having to provide them any flight services.  Another likely outcome is that people with elite status will choose AA more often than before.  That’s another win for AA, especially if they provide good enough service to keep those customers coming back.

Some long time elites will no doubt be annoyed by the swelling ranks of elite members.  Competition for upgrades is never good.  The thing to remember, though, is that many of these new elites will be people who don’t fly very often.  They will have acquired elite status through credit card spend and other non-flying techniques.  Therefore, even though there will be many more elite members, the chance of there being many more elite members on your specific flights will be small.

The AA customers who lose with this new approach, I believe, are those who earn status only by flying.  Doing it that way can be harder than before.  The new system encourages those flyers to supplement their flying with other ways of earning AA miles and Loyalty Points.  Those who refuse to adapt may find themselves being left behind with less status than before.

The other losers if AA is very successful in this new game will be AA’s competitors such as Delta and United.  They may find that AA will be more successful in selling its miles because AA miles that come with Loyalty Points will be more valuable to customers than competing miles.  Additionally, they may find some flyers with AA status opting to fly with AA rather than whichever carrier they would have chosen before.  The question then is whether competitors will copy AA’s approach.  Will Delta or United adopt a loyalty point scheme like AA’s?  I don’t know the answer to that, but I bet that both companies are watching closely and they will pounce if they see AA getting ahead.  I don’t have any guesses as to how United would approach it, but with Delta I predict that they won’t go as far in simplifying elite qualification as AA did.  Instead, I predict that Delta will treat points earned through non flying activities as qualifying towards Delta’s elite spend requirements (e.g. in order to earn each level of elite status with Delta, you need to both fly a certain distance and spend a certain amount — I expect that SkyMiles earned from non-flying activities will add to the latter: MQDs).

What do you think?  Are AA’s changes as brilliant of a business move as I think, or am I missing an important piece of the puzzle?  Do you think this will negatively affect existing AA elites?  Do you think AA’s competitors will follow?  Comment below.

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JohnB

This new way won’t affect the EPs and CKs. But for the lower levels of AA elites, I cannot see this being an advantage. It will be far easier for low level flyers to game the system, and have middle level status without really doing much flying. AA has made its money historically, in the last 20 years, from AAdvantage, not from butts in seat flying. That is the problem I see, is this making AA the choice of flyers, or the choice of miles/points hounds? Because AA in off years makes it money on miles not flying! I am just not sure that AA by giving away services to newly minted elites and then loses that revenue stream, that it helps AA financially.

DjG

First, I love those who reach status from paying for flights, yet 99.99% of the time it’s their client or employer who really paid for the ticket – thus, those of us who are hitting status by spending on cc, portal, offers, etc., are actually spending our own funds and perhaps more legitimately earned status.

We love the LP approach. Been into the miles/points hobby for 40 years now, have not “paid” for travel/lodging for about 35 years. I shifted majority of our portal spending to AA portal, took a few Simply Miles offers, and used the CC more often, giving me Platinum, and should hit Platinum Pro by the program cycle on 2/28. I’ve already tested how this status has opened up extra prime seating at no cost for me and P2, so now in 2023 I’ll probably pay $ for a few economy flights for the first time in decades, while trying to hit the highest status levels where we can get class upgrades not just main cabin seating. Long way to say, this works well for us.

D M

So, you think those who spend countless days away from their families, those who spend 3 nights every week in a sterile hotel room (and away from their partner), those who have to waste at least an hour on each side of the flight to get to and from the airport, and countless others who travel for business and sacrifice their personal time for that, haven’t earned the status in a legitimate way?

Every so often, people like you forget that corporate travel isn’t a perk (for most) – it’s nuisance for which their clients/employer compensate them. In my books, status earned via flying, irrespective of who’s paying for it, is the only truly earned status!

And for your “legitimately” earned status through CC spend, go figure how much of that is reimbursed corporate expenses and business expenses (which isn’t personal money spent to earn status).

DjG

Sir, at best you misread/misunderstand. First, I never framed it as not legitimate, just less legitimate given my post is focused on the spending, not the travel effort. There are many who post that they earned their status by paying for the airfare, and claim more legitimate for that reason; my post is clearly about who pays the cost. Next, for the first 15 years of my career, I traveled 4 to 7 days a week, every week, no holidays, for an employer responding to emergencies in areas with a single “motel”, in the days when a payphone was your lifeline, there was no internet, no cable/streaming, no laptop (pen/pad), few restaurants, etc. and calling home from pay phones to keep tabs on upcoming birth of children. Later years, traveled monthly in the current “modern” way. No complaints ever for any of it, and I did not see my work effort, what I signed up for, to be anything but work – at a desk, on the road, whatever, and I truly enjoyed the travel far more than the office.

Respect your view, boots on the ground is the only true status, but while you paid for it with your time you were paid a salary you agreed to for your time and effort, the work you call a nuisance put food on your table; your employer paid the travel costs, you might have even profited from per diem or perks – yet you complain and call it the only way to earn? No.

As to my spending to reach status, it’s 100% my own funds, no employer, self-employed gigs while now retired, and assuming your employer lets you use any cc, you’re the one spending their funds to earn cc points/miles/LPs.

Sam

Biggest losers are AS Elite flyers losing upgrades to savy AA elites working easy status. I earned Plat Pro & correctly guessed that I would get many upgrades on AS as a SEA based flyer with AA status. I’m probably 40% success with upgrades on AS & perfectly happy with the “better” seats in advance when not. Definitely a better deal for low level AS frequent flyers. Get an AA card, push spend through portals, hotels through AA/Booking.com/Rocketmiles. Oh yeah… Lots of cheap wine & pre-packaged meals, ready to cook;-)

andrew

thank you for the article..i dont fly AA that much and jumped at the Loyalty Points earlier this year to gain status thru 3rd party sites.
some of the earnings i receive are
AA miles only, no loyalty points
Loyalty points only, no AA miles
AA Miles & Loyalty points
i assumed all loyalty points were also AA miles and this is incorrect?
Input?

Harry

The part I don’t understand is you can’t fly loyalty points. So status (loyalty points) means what?

andrew

after 6 months i achieved Gold thru 3rd party spending.. then one site offerred “5000 Loyalty Bonus Points” while i didnt need the loyalty points at the time, i assume would also get 5000 AA miles, which was not the case.
i am also fining out some bonus miles on AA shopping portal do not give Loyalty Points and others on AA shopping portal do give Loyalty points. confusing?

NK3

Interesting article. I disagree on Delta adapting and allowing points earned counting towards elite spend requirement. Why? Because they already have a version of this. When you use SkyMiles on Delta award tickets, you now earn both MQMs and MQDs. Delta is not going to give you MQDs for earning SkyMiles and then more MQDs for using them. AA only gives you loyalty points for earning miles, not for using them.

I feel like Delta’s move to have award tickets earn MQDs & MQMs is often overlooked. Delta has given people a lot of reasons to hate SkyMiles, but for someone like me (who chases Delta status), they became much more valuable with that move. I used to avoid most SkyMiles redemptions for the first 9 months of the year, until I knew I had a path towards elite requalification. Now I can treat a good or even decent redemptions like cash, year round. The move made more engaged than ever in earning & burning SkyMiles.

MickiSue

Used AA points (70K/each) for J seats back from MLE to IAD. BA flights. They don’t allow seat choice till 3 days before the flight for One World Gold, but three weeks for Plat. My loyalty points got me to Plat 3 days before we left, so I could have the worry of the worst J seats off my mind for the LHR-IAD segment. It was an old configuration, with 2/3/2 in J, and forward/backwards seating.

It was by far the worst intercontinental J I’ve ever flown. But at least we were in A and B seats.

As someone who mostly uses AA points to fly their partners, I applaud their new scheme. I like the added status and the minor benefits are better than no benefits.

Sco

I’m a UA flyer, but just this weekend I was thinking about how different my behavior would have been this year if UA had qualification similar to AA.

I’m UA Plat, but I had some health issues this year that basically meant I was grounded for almost 8 months. So now the question is whether to spend ~$2,000 on unnecessary “mileage” runs just to qualify for Gold – and the answer is almost certainly no. Meanwhile, if UA had the AA program, I would have moved a ton of my spending over to my UA card in order to re-qualify.

ffI

With a presidential plus card you can just move spend over

Darin

I think what a lot of people are missing with complaining about too many elites is that it doesn’t mean as much as it used to. With all the airlines doing better at premium class monetization, comp upgrades are no longer the defining feature of elite status. The lists are much longer, and even high status travelers, especially in hub cities, now understand that they can’t expect upgrades and need to pay or maybe use confirmable instruments if business/first is important on that flight (and AA has made those instruments accessible only to those who actually fly).

If you take that out of the equation, most of the other benefits don’t affect high volume flyers as much. Yes, it could get to the point that there aren’t enough extra legroom seats in economy, but I haven’t seen much evidence of that until very close to departure.

Lukas

Funny. Exact same article on OMAAT the exact same day with the exact same conclusion – brilliant.

Sam

Love the synical attitude. There’s a difference between collusion & coincidence. Might want to meditate on that one.

Lukas

Lol, I know these articles are prepared weeks in advance, I know there is no conspiracy, I just found it funny.

Sam

“prepared I advance” = synical

Lukas

Time to take off the tinfoil hat and learn to spell.

Sam

Sorry.. too focused on the BOA biz AS 70k on 11/5. Check your spelling:-)

Cookie Monster

We don’t need more people like the ones working here flying on AA metal reducing upgrades, taking up free eco plus seats, reduced award availability, etc. we need people who really fly

Cavedweller

LOL

Harry

Recent blogs on this site and others indicate AA and DL for that matter sell $$$ 80% of their first class seats. So that said the chance of you getting a status upgrade is slim to none. Money talks and always will. AA with their new scheme finally figured that out.

LarryInNYC

Got plat pro last year through a challenge, moved all my paid domestic flights to AA since last November, and running about 70% success with upgrades. Including twice upgrading myself AND my wife (no status) on basic economy tickets. So “slim to none” is definitely not my experience.

Harry

YMMV as you are obviously “slim” but I still contend by far most are “none.” 20% remaining seats would only be good odds in Vegas not for upgrades.

Mike

I don’t get the big hype with elites, I’ve seen it written where they’re mad people can spend to elite tier but they’re spending to elite tier as well by flying. The article is great and well written. I rarely fly american only because I have flight privileges on delta but having gold on American is great for me reaching globalist with hyatt. And those elites that are mad I still don’t get because a true elite with all perks has to fly 30 segments, a fake elite like me only gets minor benefits like free bags or I get to board the plane first, it’s a smart move by AA in addition to the status paid challenge.

Harry

I disagree. AA yes once the leader, but IMO fell so far behind in the cc game. Amex & Delta are light years ahead. Now if AA would make Citi/Barclays transfer partners, then maybe AA might make progress towards Amex/Delta. Problem is Amex sets the bar and maintains the bar. Simple, how often does Amex have some promotion/offer to make some serious points? Really AA/Citi/Barclays you’re not close. FYI I have Citi/Barclays cards and after the SUB, what’s the use? Another FYI I’m very close to DFW too. Delta please come back!

JakePB

Great article and I mostly agree. As a PP business flier, on morning flts I’m usually #15 or so on the upgrade list which in my experience represents a significant change in the negative. When I’m EP in 3 weeks maybe that will improve, but for now it’s much more competitive for upgrade space.

Lee

Virgin has taken the step of adding credit card spend as a means of earning tier points. An intermediate step worth noting.

Lee

With one key exception:

Imagine that you fly round-trip JFK to LHR every month in first class. You are spending about $60k. As an EP (or CK), you are earning 660k Loyalty Points per year. And, they are absolutely worthless. That’s because you only have 24 segments and you can’t unlock ANY of the Choice Awards. 30 segments are required. AA is stiffing its highest revenue, highest margin customers. Who thunk that up?

Jeff

Greg, I think you are spot on, as usual. I joined AA in 1986 but rarely used the airline . However , a combo of Delta’s massive devaluation/route cuts and American’s brilliant marketing move to target Hyatt Globalists with Exec Plat has lead me to travel almost exclusively on American -including international vacations . I have also basically ditched my Amex Delta Skymiles Reserve for the Citibank AA branded cards given the new Loyalty Rewards program . In doing so , I found that American’s in-flight service is as good if not better than Delta’s and my success in obtaining upgrades is much higher.

So I have completely switched my loyalty to American .

Julius

I totally agree with this article. Personally, I have been a United loyalist, but started playing this “game” earlier in the year and am not in reach of Executive Platinum. It gives me a real choice in choosing which airline. For my needs, I am findng American and One World now a more compelling team than my old United and SA carriers.

Tim Grable

This is spot on. For over 15 years I have flown Delta exclusively. I believe the only time I took an American flight was to the Caribbean when Delta did not have service. However since happening executive platinum I routinely check their schedule and and prices. Ironically I have now flown American more this year than Delta. I will earn executive platinum again this year because it is a benefit to have a secondary airline.

Paul

As you’re near a captive hub airport like DTW, I don’t get why you are that interested (other than just having lots of time to spend on this since it’s your job). As a captive DL flyer in ATL (Southwest doesn’t have enough nonstop flights – RIP Airtran), I’m not bothering to care about LP but I will do the occasional AA portal purchase to earn the miles which are valuable for partner bookings. I’m not going out of my way to fly via CLT or PHL or DFW when I can fly nonstop to just about anywhere and always get at least Comfort+ as a DL Platinum.

Peter

Certainly see AA elites more likely to purchase AA tickets. MCE seat selection (could get competitive for all elites). Free luggage, little to no check-in line. Some benefits apply to Alaska Airlines (western US options wide open). “Reasonable” possibility of an upgrade if not based in an AA hub (any more or less likely if UA, DL elite?).

For every LP is an AA mile. Only EP can upgrade on those award tickets. But free MCE, etc. so the mindset could be to use those miles while got the benefits.

JakePB

@Peter – if EPs can upgrade award tickets, that would be awesome. Are you certain that’s the case? I’m a former EP (PP the last 3 yrs) about to regain EP in November…maybe my memory is faulty, but I don’t recall being able to upgrade award tix even as an EP. Hoping you’re right. (Crosses fingers)

Peter

I’m not EP myself but read this much on the AA website on Elite benefits and have seen it on blogs. My understanding is EP can be upgraded on awards purchased with AA miles (i.e. no BA Avios). May also be the case that in the hierarchy of who gets updgraded first, these award tickets may be behind revenue tickets (within the EP rungs).

Peter

From AA website…
“Upgrades on award tickets
AAdvantage Executive Platinum® members automatically receive complimentary upgrades on AAdvantage® award tickets for travel within North America on American.”

Upgrade priority is SWUs then Purchased tickets and then Award tickets

Alex_I

The genius was in creating the original AAdvantage. If you look at AA financial performance I do no see LP making a dent. What AA and other airlines did was to remove any renaming trust that the programs will stay the way they were before and that long-term loyalty will be rewarded.
Personally, I do not like Barclay and Citi CCs and will not use those.

Nathan

To be clear in the past I would choose a longer route with more miles and legs because I knew that was important. So even if I don’t get the best upgrade now I still feel like I am winning because I’m choosing the best flight for me.

Nathan

I think it works fine. There’s always going to be issues with too many elites. In my case Delta has too many elites out of Memphis (used to be Northwest hub) so that is why I chose American. I like earning status without the stress of flying extra just to get Qualiffying miles/legs.

EricF

The EQM/EQD system was unnecessarily complex, and seemed somewhat unapproachable to occasional American flyers who weren’t interested in learning program rules and bookmarking (or memorizing) dual cutoff amount charts.

Dropping from two to one points currencies removes that barrier to entry.

docntx

Excellent analysis.
Currently approaching Executive Platinum, 95% through spend.
Most recent flight, DFW-LAS on Tuesday, I was 13th of 56 automatic upgrades,
One seat available.
I’ll give it one year. I am an AA captive. in the DFW area.
AA will have to move the goalpost again.
Not sure the squeeze is worth the juice.

Rob

Yes, it is absolutely true that there are many people, even probably the majority of new elites, that will now pursue status without flying much. But minting this many new elites, will undoubtedly lead to a reduced elite experience, because there will still be many new elites who do use the perks. They are gambling that they can chip away at the value provided in these harder to quantify ways, like longer lines at elite check in, lower probability of upgrade etc. before enough people notice and abandon the program. The risk is that they alienate the whales who spend a ton and the whales are smart enough to understand that they are being undercut.

JohnB

Not sure that Concierge Key folks would be under cut. If that is the type of whale you have in mind?

Brant

Is this new AA status scheme genius? Well, I don’t know about that, but it’s certainly a clever marketing tool to shift spending through AA related channels. I think the genius part all the free advertising AA is getting about the scheme. Not only is this advertising free, it’s about as highly targeted as it can get. Getting your message across in a positive post on very well received and popular travel blogs with thousands of points and status enthusiasts is the equivalent of having your “Vegan Pot Roast”
featured on “Oprah’s Favorite Things”.

JoeSchmo

It’s changed my behavior – both for earning thru non flight activities and actively seeking out aa flights. United and dl shop copy the program.

Gene

@ JoeSchmo — Mine, too. I no longer pay cash for any AA tickets or credit any flights to AA or use their credit cards EVER. Not genius in my case.

Markj

If everybody is elite…no one is. That was said about Delta but it fits American better.