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AAdvantage / US Airways merged frequent flier program won’t come until April – June 2015

by on Fri October 24, 2014 • No Comment

Frequent fliers are anxiously awaiting the merger of the American AAdvantage and US Airways Dividend Miles frequent flier programs (though if past mergers are a guide, they should be calmly hoping it all gets delayed as much as possible).

There is some new clarity on exactly when that will happen.

On its earnings call Thursday, American Airlines management said the frequent flier program merger is currently planned for “the second quarter of 2015” which translates to April – June of 2015, and made it clear they don’t yet have a firm date on that, or at least aren’t announcing at this moment.

We’ll probably hear the details that will be implemented in the Spring very soon though.

The other big component, merging reservation systems, is planned for the back half of next year, with the timing most likely toward the end of the year.

But they put a big asterisk on both changes saying they are willing to delay them if they don’t feel they are ready. There will be no rushing.

American already made big changes to its frequent flier award chart last Spring, introducing a 5 tier award pricing structure from the old 2 tier before, and aligning it with US Airways pricing.

While some award prices are different among American and US Airways, with the US Airways prices somewhat more favorable for some international partner awards, the big work there has been done. We don’t expect much change on that front.

What will change?

The big differences that need to be reconciled include:

Domestic upgrade schemes. American forces all but its top tier Executive Platinum frequent fliers to use 500 miles ‘stickers’ to get upgrades into first class, while US Airways gives space available upgrades for free to all elites, in the order of their elite priority.

There are merits to both systems, but United and Delta both migrated to the US Airways approach before their respective mergers. Too close to call this one.

International upgrades. American offers an industry leading 8 upgrades good on any fare and any flight to its top tier elites, while US Airways only offers 2 plus 2 for companions. American has a more extensive international route network than US Airways, so don’t expect them to downgrade American’s elites to the US Airways level right off the bat.

But something in the middle is a distinct possibility. United offers 6 upgrades, but with a minimum fare requirement, while Delta offers 4 with no fare requirement. Maintaining 8 would be a big point of differentiation and go a long way toward goodwill with top tier fliers, but that’s a big wish.

Elite tiers. American has 3 elite tiers (Gold at 25,000 miles, Platinum at 50,000 miles, and Executive Platinum at 100,000 miles), while US Airways has 4 tiers, with a 75,000 tier sandwiched in. This is almost identical to United and Delta’s 4 tier system. Expect 4 tiers, and the possibility that next year will require more than 100,000 miles to achieve top tier status.

Award fees. US Airways charges a fee just to book an award ticket if you are not a Gold or higher elite member – $25 for the mainland U.S. / Canada, $35 for Mexico / Caribbean, and $50 to all other destinations. American does not.

In addition, American allows you to change the date of any award ticket free as long as its at least 21 days before departure. US Airways charges a $150 fee for any change unless you’re a top tier elite.

We suspect and worry the US Airways approach may win on fees, which won’t impact its most frequent fliers, but will hurt other loyal members.

Mileage earning. We think it’s too soon for the new airline to adopt the revenue-based earning that United and Delta have announced, though that doesn’t mean it’s wont’ be considered at a later time. With respect to earning the old fashioned way, there are only slight differences in how miles are earned on American vs US, primarily for Business and First Class fares.

The biggest difference is that American has a separate ‘elite qualifying points’ scheme that provides an alternative way for big spenders to achieve elite status with less flying. Expect that to remain in place.

All in all it should all be a non-event. The big mileage structure changes were made in the Spring, and upgrades are the issue most likely to get notice from frequent fliers.

A change to the style of upgrade has the potential to alienate at least one population since the structures are so different. Taking away ‘free’ upgrades from US Airways elites is likely to be met with resistance without some other giveback. But American elites like their program and system, and changing it radically is as risky, if not more so.

What should put fliers at ease

American fliers can take heart that Scott Kirby, American’s president, and an executive from the US Airways side, said on the earnings call:

“American had much more capacity in competitive markets, in places like New York, Chicago and Los Angeles.

And so, for me it is has also been educational to learn how important product considerations are in some of those markets and that is why you see — saw American historically and see American today continuing to invest so much in our product into markets like that, things like the A321 trans-con. They have been quite successful for us, but there is really probably more similarities.

I think the best thing that happened really in the merger is — or one of the best things that happened is the ability to put two teams together and truly learn from the best of both.”

Which we can translate to say…the US Airways way won’t prevail on everything, and they will at least attempt to hear out the American side of things for customer facing benefits that might not have been viewed as viable for US Airways.

They get that they are now operating in more markets where high value flyers have choice, and keeping product and benefits competitive and leading edge is an important part of being able to compete profitably.



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