Citi now offers a way to transfer points 1 to 1 to American Airlines, which has many predicting an AA devaluation is on the horizon. In this podcast episode, we’ll discuss this concern.
Will AA devalue now that Citi transfers to AA?
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(00:33) – Why are we so excited about transfers to American Airlines?
(03:55) – A devaluation assumes a flood of AA miles, but… Citi points are not that easy to get in bulk, but even if there are many more AA miles out there, is that reason for devaluation?
(04:45) – Here’s what we think…
(15:24) – But wait…did AA devalue already?
Read One Mile at a Time’s post here: American AAdvantage Business Class Award Devaluation? Sort Of…:Â
(16:13) – More than two years ago, AA published “starting at” prices for its own flights. Mostly, though, the starting at prices stayed as they were with previous saver award pricing.
(17:04) – Now, though, “starting at” seems to be closer to American Airlines’ published intentions from a few years ago…
(18:18) – BUT… mix in another carrier to get the partner award chart
Read more about the “devaluation” here.
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Music Credit – Beach Walk by Unicorn Heads
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I gotta take issue with the statement that Cathay is a valuable use/transfer partner of AA miles. I am always on the lookout for flights to BKK, and Cathay used to be a primary way to use my miles. That said, I do not recall seeing a single Cathay award flight in Biz or First using AA miles essentially since COVID. And, yes, I check 334 days out (that’s how I got my last 2 JAL First bookings), AND I check multiple gateways (LAX, SFO, SEA). I should add that I see Cathay availability using their own program quite often on AwardTool, so it appears that are greatly restricting partner availability.
Glad to hear the use of AA miles on their own domestic flights mentioned as another good option. The international partners get the flashy high cpp redemptions, but AA using one “starting at” price for all domestic awards leads to some good values on flights 4+ hours. Just this year our family has redeemed TPA – PHX in economy for 7,000 miles each and PHX – EWR in domestic first for 17,500 each. Those work out to a solid 2 – 3 cpp compared to cash prices and beat out any partner bookings with Alaska or Avios by a good margin (12,500/35,000 miles for the same flights).
Sometimes the dynamic algorithm gods make AA awards terrible, but surprisingly often you can get great value on their own metal with some route or time flexibility. I hope they continue to keep that rather than moving to a more fixed redemption rate like their competitors.
Isn’t the podcast underestimating the number of people doing every day spending to earn AA miles?
Even if there were no hoard of TYP today, non churners who want AA miles can now earn them faster without extra effort, which is probably millions of cardholders. Just switching to the Strata Premier lets you get 3x AA miles on the regular spending of many households – grocery, gas, dining. If someone is a little motivated and has double cash for everything else, now you have 2x – 3x on everything without much complication. The saving grace here is maybe a lot won’t switch from the AA Platinum MC, because they want free bags.
Nick mentioned partner prices could increase due to brokers taking more awards. Another reason they can go up is simply that AA can take more miles off the books by raising prices for whatever sells extremely fast. It doesn’t matter if the partner still charges them the same.
I think that we in the hobby significantly over-estimate the level of thinking the average person put into points choices.
That was kind of my point. With the premier you don’t have to play games and can keep everything on cruise control to earn way more points. My P2 is someone who can’t be bothered so I keep him on the Premier only to get a high average return.
We always need to be wary, but also remember we’re a small fraction of the whole customer base. What percentage of the gazillions of AAdvantage miles out there will ever come from Citi transfers? Would it ever reach 2%?
Boys, y’all forgot to mention that a giant source of AA miles is going away soon with Barclay’s aviator SUB’s disappearing down the trail……….
Seems like one very important “point” is being overlooked. Doesn’t this fundamentally depend on what Citi is paying per AA point? It’s clear that AA envies the Skymiles behemoth and wants Aadvantage to become similar in stature. I doubt they want negative press too soon in this process. This is a critical component to their business plan, I think they want this relationship to blossom. Can be win-win for all.
It’s not as if Citi is new to this game. It has been buying AA points for years and has the economics figured out. And, the deal is probably not inconsistent with the deals that each of the banks have with other airlines.
AA comments on conference calls and analyst days have indicated this is not a deal priced in the same way. There are puts and takes given transferability now but it still reinforces my point that AA likely isn’t incentivized to devalue for at least a reasonable amount of time.
If they didn’t devlaue after the Conservation International promotion generated billions of AA miles, I think we are OK for now.
Good point. Many of the advanced players in this game banked a million plus points from that promotion and have been spending down those balances for years. Sudden Citi transfers isn’t going to make them use their points massively faster, and the overlap between those that would transfer tons of TYP and that took advantage of Conservation International are pretty close to a circle.