No More Minimum Frequent Flyer Miles for American Customers

Here’s the policy change announcement from American’s website:

Effective for travel beginning January 1, 2009, non-elite status members traveling on flights currently governed by a minimum mileage guarantee will accrue the actual base miles flown or the applicable percentage* of base miles flown, and any associated bonuses will be calculated accordingly.

A few sentences later, readers are treated to a more intelligible formulation of the new policy: “Members will no longer receive a minimum of 500 points for each eligible flight.” Non-elite members, that is—[[Elite Programs | elite members]] will continue earning 500 miles, plus the associated elite bonuses, for short-haul flights.

This is hardly an industry first. Nor is it the harshest version of the no-minimum-miles policy. [% 2513509 | | US Airways %]—the first airline to scrap its minimum miles policy, effective this past May 1—denies minimum miles to all Dividend Miles members, making no exceptions for elites. [% 2567462 | | United %] followed US Airways’ lead, effective July 1.

[% 2660633 | | Continental %] initially announced a similar policy, effective January 1, 2009, but later reconsidered and modified the modification, reinstating minimum miles for its elite members.

The old industry standard among full-service carriers was to award 500 miles or the actual number of miles flown, whichever was greater. While it was never explained as such, I always understood the 500-mile minimum as recognition that anything less just wasn’t a meaningful incentive. Plus, it implicitly acknowledged that shorter flights are often disproportionately more profitable than longer ones. And besides, how much more expensive could it possibly be for the airlines to give away a few extra frequent flyer miles?

Thinking along those lines clearly has not carried the day, with just two of the largest airlines, [[Delta Air Lines | Delta]] and [[Northwest Airlines | Northwest]], now retaining their 500-mile minimums. But with Delta and Northwest on course to merge before the end of the year, that will leave just one holdout, and no compelling competitive reason not to follow the others in abandoning the minimum-mile policy.

Under the circumstances, AAdvantage members should perhaps be grateful that American has at least spared its elite customers the pain of losing the minimum. But more broadly, this is yet another setback for AAdvantage. With the recent award price increases, its [% 2644851 | | cash co-payment for upgrades %], and now this, American has proven to be more focused on increasing revenues and reducing costs in the short term than increasing long-term loyalty.