Late last week, we learned that United MileagePlus will be dropping award charts in favor of dynamic award pricing. This will only affect flights operated by United (for now) but the news hurt nonetheless. Now, we’re hearing from JonNYC that American Airlines is working on the same thing.
The news of United caused a flurry of discussion about if/when American Airlines might do the same thing with its AAdvantage program. After all, it’s the only one of the Big 3 US carriers yet to announce or introduce dynamic pricing of award tickets.
If you didn’t catch our coverage of the news last week, here’s what dynamic pricing means for you. Instead of looking at a simple award chart to find out how many miles you need for a ticket, you’ll be at the airline’s mercy. If you’re wondering, Delta’s move to dynamic pricing has led to unannounced devaluations and big jumps in the miles required for premium cabin award tickets.
Whether you earn American miles through work travel, the use of co-branded Citi or Barclays cards, or you transfer Marriott Bonvoy points to your account, this is not a positive development for you.
American Already Has Multiple Award Levels
American Airlines does a poor job of releasing saver level award space — the cheapest awards — on its own flights as things currently stand. In fact, many have given up trying to book American flights and see American AAdvantage miles as a way to book flights on Oneworld partners and Etihad.
When you think about it, American already has more expensive award prices with its AAnytime Level 1 and AAnytime Level 2 awards. You can find more availability with these award levels but they require a significant number of miles.
So, why exactly would American switch to dynamic pricing?
If we look at Delta as an example — they were the first of the Big 3 to use dynamic pricing, you can see what’s coming. International premium cabin award tickets on Delta have skyrocketed in cost while deals can be found in economy. However, even the “deals” you find with economy awards aren’t that great since cash prices are usually very low as well. In doing so, Delta has moved toward removing the aspiration from award travel and toward making award travel a small rebate.
This is becoming a pattern with the Big 3 and it certainly seems like American is hoping to do the same. The more American pegs the price of an award to the price of a cash ticket, the less aspirational award travel becomes.
If you’re looking for a silver lining it’s that American might release more premium award space on its own flights at rates lower than the current AAnytime rates but higher than the current saver level. It would seem American could just create another award level that is clearly stated to accomplish this but that’s clearly not happening.
How Can You Plan With Dynamic Pricing?
Without dynamic pricing, you won’t have a clue how many miles you need to earn for a particular flight. Currently, you’re able to calculate how many miles you need for any given trip based on a simple chart. While finding saver level award space isn’t a guarantee, you’re able to set a target. With that info, you can decide which credit card to use and if you want to credit flights to American Airlines.
We wouldn’t be surprised to see American follow Delta’s lead by offering short flights for fewer miles than it does currently with the occasional deal on international economy flights. We’ve seen this too many times to be fooled, though. You know the saying though, fool me once…
In the meantime, make sure you know the ins and outs of redeeming American miles like a pro.
American’s New Search Platform
If you had any doubts that American is moving to dynamic pricing, we’d suggest you look at its new search platform. The search page and the results page look much, much better than the old search. Just because it’s pretty, though, doesn’t mean it’s better. In fact, take a look at the results we found when we searched for a flight from Philadelphia to Amsterdam.
You can see that the non-stop business class flight operated by American requires 110,000 miles. This is an AAnytime Level 1 award ticket. if you were to book the second option on British Airways, you’d only need 57,500 miles which is a saver level ticket. Frustratingly, American doesn’t give you any indication that one is saver level and one is not.
With the old search platform, your results would like this:
You can see that American clearly indicates both the miles required and the fact that you’re seeing saver level results. This is why you don’t see the American-operated non-stop flight. If you were to select “Business/First AAnytime” at the top of the results, that’s where you’d find that option at 110,000 miles.
While the coming change to American is technically a rumor at this point, it’s happening.
What About Partner Awards?
We don’t expect to see a change in how partner award tickets are priced right off the bat. However, we can again look to Delta for guidance. Delta has generally stuck with set award rates for partner flights, but it has bumped up the rates without notice and even started requiring more miles close to departure. This is what happens when an airline moves to dynamic pricing. There’s no public point of reference so airlines change rates and let you find out on your own.
So, while American might not mess with partner rates today, don’t count on that to last forever.
Final Thoughts
Last week, we talked about how we’re tired of customers being treated like chumps and that these kind of moves are maddening. With yet another airline pulling this dynamic pricing stunt — re. devaluation, it can be hard to take.
Sure, dynamic pricing can mean more award space. It’s just that the award rates will be so staggeringly high that booking an award ticket is pointless and, in many cases, impossible. Just think about the rates we’ve seen on Delta. Some business class awards require 500,000 SkyMiles.
If airlines want to keep things simple, they should keep their award charts so you, your friends and your family know the lowest level award rate. If/when American removes its award charts, it’s going to be tough to determine how many miles you need for your next dream trip.
For now, take this as a reminder that airline miles are not an investment. The value of your American miles isn’t going up. When you find a trip you want to take and you see saver level award space, book the ticket with miles and have fun.
Until then, we’ll keep an eye on how this unfolds.
Every single program will do it. They have to.
I continue to hold out hope that airline will stop making decisions based on their quarterly earnings calls and focus on the long-term, but it’s hard to stay optmistic these days.
@Billy Bob – They absolutely do not have to. Since they set the award prices, they can charge whatever they want anyway. Obscuring prices doesn’t change that. From a longer term perspective, when a company wants your loyalty but gives you a big middle finger in return, they’re doing the company a long term disservice.
The big 3 US airlines earn many billions of dollars selling miles. If the value of miles drops substantially, people will buy less. The airline earns less as a result. The problem is, this only shows over time when the damage is already being done. In the short term, the financial results look great.
One irony here is that the airlines are intentionally hurting their most engaged frequent fliers. You’d think that if they were going to burn anyone, they would go after the least engaged.
It seems airlines regularly make decisions based on the quarterly earnings calls rather than long-term vision. It’s pretty frustrating.
I don’t get it…On AA is 110k point plus $5.60
On BA is 57k points plus $645!!!!
Is that a deal?
Hey Joel – Neither are a good deal, in my opinion. 110k AA miles is not saver award (it’s an AAnytime award). Our concern is that the new search results format doesn’t indicate that and that American is moving to dyanmic award rates which means there’s not set standard. As to the award on British Ariways, the 57.5k rate is saver level — you can only book partner awards at saver level — but American passes on the BA surcharges which are very steep. Only used that as an example to show the difference in the number of miles required and the fact that AA isn’t distinguishing between saver and AAnytime rates.
From my understanding, this change will mainly affect the prices of business tickets and not affect economy as much. Is this true?
Using Delta as a guide, we’ve definitely seen dates with cheaper economy award tickets while business class award tickets are very rarely cheaper. In fact, Delta has pretty much gouged members. Moving from 70k to 82k to 105k for biz class on its own flights has just been silly.
They are kind of doing this already domestically. When you search for a domestic award on the old award search, many times one of the options is web specials which are all dynamically priced tickets.