q AAdvantage Business Makes Life Miserable for Companies and Travel Agents – Cranky Flier

AAdvantage Business Makes Life Miserable for Companies and Travel Agents

American

American is at it once again. The company has decided to end its Business Extra small business rewards program and replace it with something less lucrative for the business itself called AAdvantage Business. This does streamline the program and adds benefits for the traveler directly, but it makes life more difficult for companies, and as always, furthers American’s never-ending quest to remove travel agents from the equation.

Business Extra Is Gone

The old Business Extra program evolved over the years — and not just by dropping the extra “A” from what was Business ExtrAA. In its most recent form, any company that did not have a corporate sales agreement with American, had three employees, and spent $5,000 on the airline over the previous year would be eligible to join.

Once the company joined, it would then earn 1 point for every $5 spent by its employees on American and its joint venture partners. Companies could then spend the points for a variety of things.

  • Free tickets started at 2,000 points in coach or 3,200 in first for domestic travel and went up from there
  • Upgrades were available on American flights
  • Employees could be given status with Gold at 3,200 points and Platinum at 6,600 points\
  • Points could be used for an Admirals Club day pass (300 points) or annual membership (3,300 points)
  • Points could be converted to AAdvantage miles at 1 point becoming 6 miles

You can understand why American would want to do away with a shadow program that had its own redemption system when it could just fold that into AAdvantage. That is what it has done here, with the old program ending on December 15, 2023, and I support the general idea of simplifying and using a single currency. That part makes sense.

AAdvantage Business Rises

The new program, AAdvantage Business, fits within the existing AAdvantage program almost entirely. Any business with 5 employees (up from 3 before) who spend an enterprise total of $5,000 a year can join as long as they don’t already have a corporate sales agreement with American. American’s SVP of Partnership Strategy Scott Laurence tells me that this is really targeted at small businesses, but he told The Company Dime it was targeting both small and medium-sized businesses. It seems pretty clear the goal is bigger than the company lets on.

The Company Dime also reported that some businesses which had a corporate sales agreement had them canceled “given this new program is available to you and your travelers.” This is on top of American’s move earlier this year to purge its mid-size business contracts. If these companies are unable to move their business to another airline, I have no doubt they would be interested in recouping some of what they’ve lost through this program, no matter how minor.

Companies will now earn 1 AAdvantage mile per $1 spent, but they can’t actually spend those miles anywhere. Instead, they would have to transfer miles to an employee’s AAdvantage account where they can be redeemed like any other AAdvantage mile.

As an added sweetener here, employees will get 1 Loyalty Point (for elite qualifying) directly for every dollar spent on their travel as long as the company is a member of the program. So it helps employees to earn status faster which is actually a double-edged sword, as I’ll discuss later.

Of course, there is a credit card component here. If the company has the CitiBusiness AAdvantage Platinum Select Mastercard, then earnings are doubled. You knew there had to be a tie-in with the all-mighty banks.

A Terrible Construction

But wait, there’s one really big caveat here… the only spending that earns is spending done on aa.com, in the AA app, or via American phone reservations. Travel agency bookings are strictly excluded. So when American says “Business travel with benefits everyone will love,” it’s obviously excluding the one piece of the puzzle for which it has not hidden its disdain.

And really, that statement is a lie anyway, because whoever is in charge of travel at a company is not going to be happy about this one bit either. Sure, they can earn AAdvantage miles as an entity, but the rewards are in most cases heavily diluted from what they were in Business Extra. But that’s not even the worst part.

Possibly the most obnoxious challenge for those in charge of travel (admins, procurement, whoever) will be the pressure employees will put on them to not use the company’s preferred booking solution and instead go direct so they can earn their extra loyalty points. This will be a royal pain to manage for those companies that actually do want to manage their travel and rightfully believe that American’s meager travel management tools are not a valid solution for doing so.

Scott continues to pay lip service to agencies, telling me that “agency bookings are out there, it’s something we welcome if agencies are driving value for customers….” That rings hollow. If that were the case, AAdvantage Business would have allowed companies to continue to book through whatever channel they want. Instead, American is trying to force the paying customers to work the way American wants them to work. This is a bad shift in an already bad strategy.

Earlier this year, American said companies could book however they wanted, but if they chose to use a third party, then that intermediary would need to start using the NDC standard or it would lose access to the lowest fares. Even though the systems are not ready, good agencies responded and started using the system despite countless problems in order to make sure their clients could get the same fares they’d find directly with American. Now, American is saying that’s not good enough.

Travel agencies provide a purpose and real value for those companies that choose to engage with them. American is now telling those companies that it doesn’t care what companies want. They shouldn’t use agencies, and if they do, then American will turn the company’s employees against them. It’s a reckless strategy that fits perfectly into everything American has done in the sales arena as of late.

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31 comments on “AAdvantage Business Makes Life Miserable for Companies and Travel Agents

  1. Without looking at the agency “push-aside”, isn’t the obligation to transfer the points to an employee personal account to redeem those points into flights a painful way to do so ?

    1. This was my thought, too. It’s creating an impossible situation for the employer, where something that the employer regards as its asset gets dumped into the employee’s personal FF account. I imagine that AA thinks this ugliness is a feature, rather than a bug.

    2. Christophe – Yeah it’s certainly clunky. But I assume the person who manages the travel at the company can just use their own account and book travel for others using miles that way. It would be useful if the business account could just book travel for people on its own, but that probably requires too much work on American’s side to bother.

  2. AA continues in their quest to kick agencies in the teeth, with policies and pricing that have nothing to do with cost differentials between distribution systems. Of course whenever there are weather/computer/crew issues, passengers are supposed to contact their agency – it’s not like that’s a time AA wants to step in and take over.

    Only if there’s a downturn in demand, and other airlines continue successfully with pro-agency policies would current management be curtailed. Or if there was some ruling/regulation about the sham their frequent flier program is churning credit card points.

  3. A big point being missed here is that not only is AA trying to eliminate TMC’s, but rather their ultimate goal is to eliminate corporate travel managers and managed travel as a whole. This is nothing more than AA trying to minimalize corporate business and try to work directly with the travelers. This is just another step to reduce corporate agreements. If corporate travel managers don’t wake up and realize that AA is trying to eliminate them and begin moving as much travel away from AA as possible then there are going to be a lot of travel managers out looking for a job that no longer exists. AA has repeatedly said that travel managers cannot move business so there is no need to work with them, if travel managers continue to sit on the sideline and let their travelers do what they want then I guess they are going to prove AA right. AA is in desperation mode. They cannot compete with their biggest rivals, they just signed very expensive labor deals and they have a lot of debt to pay off with increasing interest rates. When you cannot compete you must try to blow up the way things are going and risk everything on a strategy that makes no sense.

  4. I have a Business Extra account. I certainly qualify (easily) for the financial threshold it had, but I am a one man band. So how that account was approved I do not know (I also did not know about those qualifiers when I signed up a good few years ago). The program has proven a very minor benefit: I transferred the miles already into my AAdvantage account so I am OK with that requirement.

    But like me, there are thousands and thousands independent consultants and other specialists in a variety of fields who are just a one man business. We travel. I would say we travel probably more than your average small business. Because we work for clients on contract or on an outsourced basis we often have to go to where our clients are, or where their business directs us.

    So on the day that Delta bumped me from 1MM Medallion Silver to Gold to make up for their uber-aggressive moves on their program, American kicked me and many of my high value one-man businesses in the teeth.

    Oh well… in the eyes of airline loyalty programs, said loyalty is a one-way love affair. Only it isn’t anymore.

    1. CLT Flyer – That threshold wasn’t always there, so you probably just got in before it existed. They tried to tighten it up to prevent individuals from being able to get extra benefits, but I don’t remember exactly when it happened.

  5. Opinion from a non industry expert: I think it’s important to differentiate between independent travel management agencies like Cranky that actually provide value to their clients, vs the ones a lot of big corporations employ to simply ensure the travel is being booked “per policy”. The latter is something I experienced at my last employer and it was the biggest pain in the ass because their booking engine sucked, their prices were always higher than if I could book direct with the airline or hotel (which really sucks when you have a very limited cme budget for travel), and when irrops happened they were typically nowhere to be found. So I guess I’m saying I wish AA would use some nuance here because as an employee I’d love to book direct and get rid of the useless large corporate management companies hoisted upon us as employees that don’t do a thing to serve us as passengers.

    1. Hov – I’d actually argue that we shouldn’t differentiate from an airline perspective. It should be up to the company to decide how it wants to work. If it wants to go with bad customer service and focus on contracts and compliance, then that should be the company’s choice. The airline should meet the company where it wants to book. Now, the airline should be able to tell the company that if it wants to use a third party, that third party has to use NDC or whatever rules it wants to set. It’s a mistake right now since NDC connections are not ready for primetime, but that’s also American’s decision to make. The problem in my mind is when American tries to force companies not to use a third party at all as it’s doing here.

  6. AA is trying to do to travel agencies what Uber did to taxi drivers. Market disruption is hard. Change is the way of the future.

    A company that cares about its employees doesn’t make them fly AA, anyway.

  7. It seems to me that AA is really targeting the mid-sized and regional TMCs, along with mid-sized corporate accounts. AA was already ignoring the small guys; those agencies hadn’t gotten support for years. But there’s no way that AA will risk their relationships with the Amex GBT’s of the world; those TMCs are too powerful. And this is what I don’t get: AA still writes huge override checks to the megas. Why weaken the Regional TMCs that provide a check on the largest agencies? By providing less support to the Regionals, they give more power to the megas which will help the megas then steal corporate business from the regionals, especially the mid-sized accounts that GBT has been targeting with their Egencia purchase. AA is helping make the mega TMCs even bigger. It’s madness.

    I’ll be very interested to see how United responds to this. If the small corporates and regional TMCs rally to UA and, to a lesser extent, DL, this will hurt AA and give the UA sales leader a reason to continue their current programs. If they do not, I anticipate that UA will follow AA’s lead in order to maintain cost competitiveness. Whatever happens, this is going to make one hell of a HBS business case study!

    1. Wildcat – I agree to some extent, but really this move isn’t about TMCs at all. This is about companies. If there’s a mid market company that’s working with a mid-size or large TMC, it still won’t have access to a discount program anymore. It doesn’t matter which agency the company works with, it’s out of luck.

  8. I love this blog, and I really like Brett and his insights. My favorite travel blog forever, and it’s not close. That said, this is a subject that you have to admit your bias. You have a business that is threatened by American’s steps.

    I mean most of us know this, but an irregular reader may not. And this could color your entire coverage of American.

    I am exactly their target market. I own a small engineering firm with 8 employees. Our engineers travel a lot. I’m an EP on AA and I’ve had a Business Extra account a long time.

    I don’t personally don’t have a problem with tie move. And in fact, for me? It wouldn’t bother me if the airlines announced they will never again pay an agent. Why? Because I don’t use them.

    If AA pays an agent for a ticket for one passenger but not for mine, I’m subsidizing Brett’s business if you think about it. I would rather just let the consumer pay the agent fee if they want help.

    I risk pissing you off Brett but I’m going to call it as I see it here. You are basically people who don’t use your services to subsidize you. If that is wrong can you lease explain why?

    1. John G – Oh I gladly admit that running an agency certainly gives me a different perspective. That’s why I write about it, because it’s the things that others may not see, and it has broader implications. I can’t reiterate my background in every post, so hopefully if people want to know more, they are going to the about page. That being said, I need to make one thing very clear.

      This has nothing to do with paying agents. Think about it this way. You have a small engineering firm and you like to book direct. That’s great.
      But what if you wanted to use a travel agent because you found value in it? American is telling you that if you do it, you can’t be in AAdvantage Business. And it’s also telling your employees that if you do it, they’ll get fewer Loyalty Points. They’re taking away your choice as a company to decide how to book travel, even if you’re willing to pay the travel agent to do it, and that’s the real problem in this particular move.

      (By the way, a rational, thoughtful post calling it as you see it will never piss me off.)

      1. Companies still have a choice:

        – Book through an agent, which costs the airline some % of the revenue in GDS fees and overrides paid to agencies
        – Book direct, which doesn’t

        AA is just providing a “rebate” (in points) to the companies that book direct, to reward them for the fact that they saved AA money on GDS fees and overrides.

        Seems pretty reasonable to incentivize customers to use less expensive channels when possible. If companies value the service they get from the agency, they’ll still use them – the lost points are just part of the cost.

        1. Alex – It is far from that simple. The real problem here is that American is now pitting a company’s employees against the person making the decisions. The employees want their extra points and don’t care about the same thing the company as a whole cares about. So American is just creating internal strife in these companies. Further, American has reduced its distribution costs significantly by forcing NDC and it gets great benefit from agent bookings by not having to service them. So, this isn’t just a complete and total drain on American, though it certainly seems uninterested in recognizing any actual benefits.

          1. Why are you so concerned about 3rd parties’ internal affairs?

            Let the companies and their employees figure out how to handle the awards; why is it any of your concern?
            In some cases, the company may try to accommodate their employee’s desires for access to the points; or maybe they just give them some cash or other benefit in lieu of points. In other cases, the employees may have to get used to not being able to accrue personal benefits from company-paid travel.

            Yes, I get that this is how it’s been ever since the invention of airline reward programs; but it’s purely an artifact of that wacky system, and I fail to see why you should blame AA for changing things up to better reflect their costs of doing business. If it doesn’t work, they will find out quick enough.

      2. Well reasoned response Brett. Sometimes hard to find actual discussion and debate these days.

        If I wanted to use an agent, couldn’t I always just give them access to my AA logins, and negotiate paying them myself?

        Basically the agent researches the flights, figures out which ones, and then uses my logins to get them?

        The bottom line here is that American, Delta, et al are competing with the ULCCs. Those guys won’t pay agents, correct? So the legacies have to decide what extra costs add value and keep customers off the ULCCs. For an increasing number of people, travel agents don’t add value, as they can look it up themselves.

        Where value is added is specialty lines like what Brett offers. Can’t that just be a transaction separate from the airline?

          1. Brett, but we go farther, and if the agent is only getting paid by the passenger or other users (company travel) then why would AA care?

            I mean if I want to pay someone to handle our bookings and find us the best and most efficient travel, and I’m not asking American to pay for it, why would that be a problem?

            Bottom line here is I think that in time the airline-paid agent fees are all going away, and the cost of that is going to be carried by the consumer.

            If you think about it, it isn’t really any different from bag fees or other unbundled items. If someone wants to check a bag they can but they have to pay for it. If someone wants a better seat they pay for it.

            And if someone wants to use an agent they can pay for it instead of asking those who do not to subsidize them through regular fares.

            1. John – Well then we’re talking about a completely different business model. The beauty of the GDS is the ability to centralize everything and make it easily reportable. It also makes it easier to service bookings and help people when things go wrong. No agency is going to just stop being an agency and move to managing everything independently directly with an airline because it is a far worse experience. It could be a niche business for someone who wants to try it, but it would be a nightmare to actually manage a program like that and the value is not there for either side.

    2. John – I understand your perspective, and as an ex-travel distribution guy (supplier side) I support it *to some extent*. But you have to remember, airlines cut commissions to guys like Cranky a LONG time ago (I was with a major airline when DL first capped commissions in the mid-90’s; remember that action, Tim? ?). Therefore, there’s not a lot of money in base commissions anymore. (Overrides are a whole other story!). The primary cost of agencies is now in GDS fees (which are indeed a ripoff to the suppliers.)
      Let’s think back to what commissions were originally all about: these companies were acting as “agents” of the airline. When paper tickets were considered currency, having agencies out there issuing tickets was a valuable service for airlines, and they were happy to pay for it. (They couldn’t afford to have City Ticket Offices in every city in the country, after all.) With electronic ticketing (first), and then the web, the value of that service dropped. But agencies like Cranky still provide value to the carriers, and some of the stories mentioned in the comments explain it – they solve problems when issues crop up.
      As an EP, you may indeed have a number to call (that gets answered!) when the system breaks down, but most travelers do not. Travel agents resolve problems that otherwise have to go to central reservations, which – as we all know – can get overwhelmed in a hurry. If AA really wants every one of its traveler’s to call reservations, or wait in line at the airport, every time there’s a problem (and with AA, that’s pretty common), they can do that, but there will be some pissed off customers. But I would think that AA would rather have some professional agents to help take up the slack – agents that get paid very little directly by the carrier. My two cents.

      1. They do answer the EP line… But it can be a couple hour wait.

        The problem here is not American. If you are on Spirit or Frontier, you are not getting a person to answer during an irrops period. Right?

        But people expect the same price on American.

        The customer does not understand the value or the extra fare in terms of customer service. All many fliers look at is who is cheapest and then they click it.

        The people who complain about being squashed into tiny spaces, no humans on the phone, and God help you if there is weather…but still buy the cheapest flight available? Those are the ones that brought us here.

  9. Brett – forgot to mention the Business ExtrAA number is now no longer available. Not “this is going away in 30 days” – its gone now!

    About AA and its war on travel agents, they are basicly pissing us and our travelers off. I just spend *3 days* and about 5 hours total on something that could have been done in Native Sabre in 2 minutes, max. A traveler was on a codeshare booking, that had an irrop. 2 passengers in the PNR. Had to book via AA.com because in Sabre it was $400 higher. Needed to divide the PNR (take 1 passenger out) so that said partner can cancel outbound flight (passenger B was in a totally different city, courtesy of an IRROP the night before, on codeshare airline). Somehow Passenger B got checked-in, so e-ticket status was marked “checked in”. Passenger A totally ok to fly itinerary.

    Sales Support (AA) wouldn’t help me – despite being a former “top tier” agency, was told to call reservations. Res had no clue what I was asking. Then called friends that work at airports. AA has now installed a newer version of an overlay on Sabre that limits what they can and can’t do. Since the flight wasn’t out of an AA city, no can do. Called back to support at original codeshare airline. They were able to divide it, but not change the e-ticket status. Call back to AA, they now can’t do anything because Airline A touched it. Back to Inside Sales at Airline B. They still can’t do anything.

    Call back to Sales Support, got a long time agent who remembers me on previous transactions. Said she’s NOT supposed to help but will. Was able to get the e-ticket status changed. She thinks Passenger A accidentally checked in both customers (the E-ticket status is what botched most of this). But could NOT cancel the outbound flights, airport has to do that. Passenger A then waits for an hour in line at XXX to have agent cancel legs so they can fly back on original flight for Passenger B, but the agent told them no, originally, because it was now in a separate PNR. Had to get a supervisor to see the history and how they WERE booked together in the same PNR.

    This transaction was exhausting. And one that would have been a mere… 6, 7 key strokes? D1.1 6P F *XXXXX X1-3 6P ER Bam, done.

    But nope. AA is even tying the hands of their agents. I’m exhausted. 5 hours of my time should be billed at $500 easily. Instead all I got was a measly $35 ticketing fee.

    1. Let me ask one question.

      If this itinerary was on Spirit, Frontier, or some other ULCC, how would the experience as an agent have been different?

  10. Would love a paragraph about how these changes materially impact your livelihood before I decide how to react to your reaction

    1. Stvr – Not much impact, if any. The majority of our bookings are for leisure travelers. But for our business clients, we have three small businesses that have Business Extra numbers. At least two of them don’t have enough people to qualify for the new AAdvantage Business program anyway. So there’s one company that we rarely book that could be impacted, but we actually would be surprised if they left us for direct booking anyway since they seem to value our help when thinigs go wrong pretty highly. Even if they left, it would not be material.

  11. AA posted fairly weak earnings today aside from their nearly $1 billion expense for retro payments as part of their new pilot contract.
    However, they also posted weaker revenue numbers than DL and UA.
    There are alot of factors that COULD be the issue including the end of the NEA and some related network issues but you gotta think that AA is losing some premium revenue to DL and UA because of its distribution issues.
    AA has deeply committed to this move but you have to ask how long it will take before they admit they made a mistake if their revenue performance – even on domestic – continues to fall below AA’s direct peers.

    1. AI big part of the reason AA’s premium revenue is lower is because they have significantly fewer widebodies than DL or UA.

      American has 126 (777 and 787). Delta has 159 (767, 777, 330, 350), and UA has 220 (767, 777, 787).

      It makes a difference as to how much revenue you can pull. In general passengers are more willing to pay premium prices for the seats on widebodes than narrow ones.

      It’s not the only reason, but Americans decision to dump their 767s and 330s during the pandemic is looking less wise today.

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