American Airlines overhauls AAdvantage loyalty program to focus on credit card spending - The Dallas Morning News

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American Airlines is rethinking what it means to be a “loyal customer” in the age of COVID-19 air travel.

Now a seat in first class may not be as important as a tax bill paid with an American Airlines-branded credit card.

American Airlines is embarking on the biggest change to its AAdvantage loyalty program since it merged with US Airways and combined the two companies’ plans in 2015.

Accumulating trip miles is out. Spending on credit cards, using its shopping portal and a dining program, is in. New goals are based entirely on spending and purchasing flights.

It also scrapped old guidelines that rewarded customers for the number of miles for a flight.

It’s part of a wave of changes happening as airlines, hotels and credit card companies emerge from the COVID-19 pandemic and look at a completely different landscape for travel.

Business travel is still subdued — meaning so is travel by long-haul warriors who racked up frequent flyer rewards at their employers’ expense. But those travelers in first and business class have been replaced by leisure travelers looking for weekend getaways to the Florida coast or Mexico’s Yucatan Peninsula.

“We definitely had to make adjustments during the pandemic,” said Heather Samp, American Airlines’ managing director of AAdvantage member engagement. “Loyalty manifests itself differently as people move through different stages of their lives.”

Dallas-based Southwest Airlines is also making its own loyalty program change, rolling out a “Rapid Rewards Business Program” that gives the same perks to corporations and travel managers that it does to individuals. It’s a part of a broader strategy in recent months for Southwest to capture more business customers by getting its flights into technology portals used by corporate travel booking agents.

At American, Samp said the changes mean more of its customers could achieve high loyalty status levels, including coveted executive platinum levels. That includes more executive platinum status members, even if they don’t fly often, Samp said.

For the last 19 months, airlines have lowered the threshold for loyalty program levels so frequent flyers could hold onto their pre-pandemic status even while they were flying significantly less. Passengers are coming back, but not necessarily the same types of passengers or taking the same kinds of trips.

Loyalty programs are incredibly important.

American attributed about $5.9 billion in business to its program, which doesn’t just include status programs but also partnerships with financial institutions for branded credit cards. American valued its loyalty and credit card programs at $10 billion last year, an asset it used as collateral to get federal loans as part of the government pandemic stimulus programs.

Some airlines have begun “devaluing” airline miles, essentially making it cost more miles or points to get the same airfare, upgrades or other perks. Airline passengers accumulated a lot of airline miles during the pandemic and didn’t use them.

The result is that airlines are sitting on billions of dollars’ worth of airline miles, a ticking time bomb for the industry. AAdvantage members had about $9.2 billion worth of airline miles left to redeem at the end of 2020, up 6.7% from a year earlier.

American has indicated it isn’t devaluing the number of points or miles needed to buy airfares, first-class upgrades and other perks.

Samp said more changes will come. The airline is giving customers until March for the program to begin, even though they can start earning points in January, a nod to how flying is still depressed from the COVID-19 pandemic. Shifting the calendar to end at the beginning of March could also help customers focus on achieving AAdvantage goals during a time of year that’s less busy than the holidays, she said.

Big changes are still expected from other carriers, including Delta Air Lines and United Airlines, which also shifted their programs in recent years to emphasize credit card spending, said Zach Griff, senior editor at travel and credit card website The Points Guy. It’s unlikely their changes will rival American’s overhaul, he said.

“What’s unique about American is that they are thinking about loyalty in a way we have never seen it before,” Griff said.

For instance, a small business owner who puts $200,000 on an AAdvantage credit card would hit executive platinum status, unlocking perks such as free checked bags and priority boarding. But customers will still have to take 30 flights a year to receive upgrades and lounge access.

American’s loyalty program members are torn in their reactions to the changes. Not only are loyalty programs nice perks for frequent travelers, but many customers love the chase of getting to the next status level or collecting new rewards. Customers are even known to engage in “mileage runs” at the end of the year by planning low-cost, long-distance flights across the globe to make sure they hit their goals.

“Mileage runs are something that is near and dear to the hearts of the people we hear from,” Griff said.

Mileage runs will be scaled back under the new program, even though customers can still earn loyalty points through long-distant flights on partner airlines.

Travel blogger Gary Leff of ViewfromtheWing.com said the changes could benefit American, which has been competing against banks and credit card issuers for customer spending.

“There hasn’t been a strong reason for customers to put their spending on an American Airlines credit card because they had more incentive to spend on Chase or American Express,” he said.

But there are concerns, too. Since this is a large overhaul, customers are still processing how they will retain their important status levels based on their historical spending.

Some customers who hit elite status based on flying alone could be on the outside looking in.

Leff said some longtime loyalty program customers may feel slighted because more customers qualify for elite status.

“If this creates a lot more elite status customers, will American create a new level for its most loyal flyers?” Leff said.

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