American’s New Upgrade Policy is a Smart Hybrid

American announced the details of the 2015 AAdvantage frequent flier program today, and I was given a sneak peek yesterday. The details of the new program are a big deal because it’s the first one that combines the old US Airways Dividend Miles and American AAdvantage programs. As expected all along, AAdvantage is the surviving program. While there are many things that will probably be addressed in future years, it’s the changes to the upgrade program that really caught my eye.

But before we get into that, let’s talk a bit about the basics. The programs will combine in the second quarter of 2015, but no exact date has been announced. Unlike in the US Airways/America West merger, you can’t pick which account number you want to keep. Your AAdvantage number will be the surviving one. (That’s good for me since I’ve had mine memorized ever since it was my eAAsy Sabre login back in the day.) If you don’t have an AAdvantage number and only use Dividend Miles, you’ll have a new AAdvantage number created. If you have both accounts, in early 2015 you’ll link them so they can be combined later. (You won’t be able to freely transfer miles between the two. They’ll just come together when the combination occurs.)

Earning and redeeming miles won’t change at this point, though I was told the usual “we’re always monitoring the market” line that means there could be future changes. The big changes here are around the elite program since US Airways and American had fairly different philosophies. Here’s a fairly useless chart I created to explain what’s happening.

New AAdvantage Program

In other words, the levels that exist at American today don’t change, and that’s something of a surprise since US Airways had four tiers. Now, both US Airways Gold and Platinum members will be combined into Platinum in the new program. I was told that anything new that requires a technological change to implement wasn’t really considered. They wanted to put all their efforts into the combination itself. That means I won’t be surprised if things that haven’t changed today (no fourth tier, no revenue requirements, etc) end up changing in future years once the integration is behind the airline. So it’s hard to really comment on non-changes. The biggest actual change involves elite upgrades, and that is worth talking about.

US Airways today has a system like United’s and Delta’s. Elites all get unlimited domestic upgrades. That means the highest tier elites generally have good luck while the entry level elites struggle. This program will continue on US Airways until the airline joins American’s reservation system in late 2015. After that, we’ll see a hybrid approach.

On American, Executive Platinum members do get unlimited domestic upgrades, but they still have to request them. That’s changing next year when upgrades will be automatically requested. That’s long overdue. (Executive Platinums will also retain their 8 annual systemwide upgrade benefit which is best used for international travel.)

Gold and Platinum members have to use 500 mile upgrade certificates (aka “stickers”) if they want to upgrade. They get 4 of these stickers for every 10,000 miles flown, and they can buy more stickers for $30 each. Each sticker is good for 500 miles, so a 2,000 mile flight would require 4 stickers to be redeemed, if a seat is available. The cost isn’t all that great to do this, but it allows those elites who really want the upgrade to get it while those who don’t care as much won’t bother. That means entry level elites have a better chance of an upgrade than they would under the unlimited system.

With United and Delta both going with unlimited upgrades, the expectation was that American would go along as well. I’m happy to say that the airline did not opt to blindly follow Delta and instead went with an interesting hybrid.

For all flights under 500 miles, upgrades will be unlimited without charge. Every elite will be added to the list automatically. Surprisingly, 34 percent of the new American’s flights are under 500 miles and on 2 cabin airplanes. I’ll bet that US Airways makes up a fairly high percentage of those flights because of its short haul network up and down the east coast and its greater percentage of regional airplanes with 2 cabins.

But American still has a sizable number of short haul flights, and were I a betting man, I’d guess the airline looked at the numbers and found that elites didn’t use stickers to upgrade on short flights all that often. By making this change, American could then give a nod to the US Airways elites while not really hurting the point of the program.

Meanwhile, on flights of more than 500 miles, the stickers will still be required. This upholds the idea that only those who really want the upgrades will get them. Low level elites should be thrilled because it means they have a chance.

Who won’t like this? US Airways Platinums. They are probably pretty pissed right now. After all, they had high enough status where they likely got upgrades fairly easily on US Airways before. Now they not only have to use stickers to get those upgrades but they are lumped in with the former US Airways Golds at the same new Platinum status level now.

The AAdvantage team knew this would be an issue, so they are working on a conversion kit for Dividend Miles elites. I couldn’t get details of exactly what will be in it, because I don’t think they know yet. But I have to assume they’ll load them up with an increasing number of stickers depending upon how much they fly in order to ease the transition. Maybe by the following year, the integration will be behind the airline and we’ll see a fourth tier added to help make them feel better about the change.

Of course, it’s impossible to make everyone happy when combining two different programs like this, but I like the way this upgrade issue has been handled. Most everything else, however, hasn’t changed, and that just has a temporary feeling to it. But the airline has now proven that it’s not just going to follow Delta’s lead. I for one hope that American puts as much thought into future changes as it appears to have put into the upgrade policy.

To learn more about the new program, go to aa.com/aadvantage2015.

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