AA Award Chart Devaluation Leads to Revenue Loss
A new SEC filing shows a roughly $200 million drop in revenue since moving to a more spend-based award travel reward system. View from the Wing declares this to not be a coincidence:
AAdvantage was the shining jewel in the airline’s crown. One financial analyst thinks the AAdvantage program alone is worth over $35 billion when the whole airline’s market cap is just over $20 billion.
That’s an exaggeration, but the loyalty program itself is big business and it was the one unique selling proposition for the airline over its competitors. Under the leadership of Scott Kirby they ratcheted down its value, reducing the percentage of seats flown by passengers using miles to below the levels of Delta and United, reducing the number of miles given out to flyers, and raising the cost of awards that customers have to pay.
In other words, they’ve made the program worth less to customers . . .
I have to say there seems to be merit to this contention. I largely cashed out of the AAdvantage program last year with a first-class tickets to Peru (though I returned to snag a couple of no 24-month language Citi AAdvantage cards earlier this year!).
Hopefully this loss in revenue sends executives scrambling to return the AAdvantage program back to its pre-devaluation heights!