American Airlines and US Airways, which merged to become the world’s largest carrier last year, decided to add a new layer of complexity to frequent flyer point redemption. While the company reduced the number of points needed for certain flights, it has increased them for the majority of its flights.
AAdvantage members will now be able to purchase a one-way fare for 20,000 miles for the majority of the year, something that used to cost 25,000 miles. However, on the busiest travel days, customers will be forced to shell-out 50,000 miles for the same flight. Customers flying domestic, full-fare, economy flights will no longer receive a free checked bag but will be forced to pay for it out of pocket. The change, according to the company, will affect around 110 million people per year.
American Airlines, others put rewards programs under the microscope
The change represents an industry shift. Last year, United Airlines and Delta Air Lines, Inc. (NYSE:DAL) both announced big increases in the amount of frequent flier miles needed to fly either first- or business-class seats on international flight. Last month, Delta Air Lines, Inc. (NYSE:DAL) announced that it would completely rework its SkyMiles program next year in which the price of the ticket rather than the miles flown would be determinate in the amount of “miles” received.
The airlines aren’t the only ones reviewing how they view loyalty. Hilton, Marriott, Starwood and InterContinental Hotels Group PLC (NYSE:IHG) also restructured their rewards programs last year, and suffice is to say, not in the customers favor with each requiring more points to spend a free night in their nicer hotels.
Why now?
Quite simply the airlines and hotels are doing this because they can. With an improved and improving economy, more and more people are traveling and flights are getting fuller. Consequently, airlines just don’t need to fight over you as they have for the last five years with 84% of all flights booked with paying customers.
“Members have accumulated large quantities of miles that can be redeemed only at prices and on terms set by the airline, and increasing the [points] reduces the costs associated with redeeming miles. It improves [the airline’s] bottom line”, says Gary Leff, founder of flyertalk.com, an online community for frequent fliers. “More miles are chasing fewer seats, and adjusting the award charts is one way for airlines to balance that. If you find yourself holding a number of miles on these airlines, make sure to visit the company’s website to further understand the changes before it’s too late.”
