American Airlines previously offered excellent availability of their eVIPs or systemwide upgrades (SWUs) distributed to elite Executive Platinum flyers. Restricting access to premium space and halving the number of eVIPs given out should lead to more cash with fewer upgrades given away for free. Except it doesn’t work that way.
The Good Old Days
Prior to the merger with US Airways, American Airlines had one of the strongest elite offerings in the business. Executive Platinum members in American’s AAdvantage program received (8) eVIPs (systemwide upgrades – SWUs) to use each year. Each could be redeemed to move the traveler up one cabin (coach to business, business to first) for one-way and would apply to any coach ticket otherwise eligible for mileage credit.
American had just prior to the merger released the ability to see which routes were eligible for eVIP upgrades before the merger and (8) was the perfect number for a family of four. My family would find the perfect place to burn them, usually on very long haul routes and the three of us could upgrade from coach to business. I would use the other pair on a long haul flight when my family couldn’t join me.
Life was so good in 2013.
US Airways “Merger”
The acquisition of American by US Airways merger between American and US Airways left the US Airways team in charge for many of the important aspects of the day-to-day operations. The same team started at America West where they changed the ticker symbol to LCC (how clever!) before swallowing the much larger US Airways. They wisely left Dividend Miles alone when LCC swallowed US Airways but that was not the case when the new US Airways took over American.
The problem is that the America West team never really understood the client that American (and other majors) catered to. The cutbacks that they have made make sense for a short-sighted approach where every customer makes a decision based on cost and time. But that’s not the case for all customers and US Airways executives may understand this but their actions don’t demonstrate it.
The State of eVIPs
In a popular Executive Platinum Facebook group, the notion of upgrades clearing in advance (or at all) has become a running joke. Not only has availability in advance dried up nearly entirely, but Executive Platinums now earn just four annually.
Over the last two years, I haven’t even been able to use them myself. I let all four – yes – all four of them expire in 2017 and last year I distributed two to a friend and held back two in case of a last-minute trip. I tried to help another friend but, alas they too died on the vine because they would not clear.
They have become the butt of jokes with some of American’s most frequent flyers. What once was the best perk possible (book a cheap coach ticket, fly in business with your family) has now become unusable making them literally worthless to me and many peers.
American Thinks They Make More Money This Way
Giving away the most expensive real estate in the world is a bad way to do business in theory even if it’s to your best customers and on a limited basis. And in the world of Low-Cost Carriers like America West, they may have had a point. The theory is that when a traveler of means is staring down the barrel of a long-haul flight in a packed coach cabin, they may be more likely to buy their upgrade rather than chance it, thus creating more revenue for the company. If they have free coupons to get them out of that coach seat then they wouldn’t spend money to do so. However, if you take away the “coupons” then the only choice left is coach or more money.
But They Don’t
The theory that American sells more premium seats because they no longer give them away is flawed for many reasons. The first is that business travelers, those most likely to be Executive Platinum members due to the amount of flying and revenue required, may not be able to book business class seats due to their company policies. If their company allowed such, they would have booked in business class in the first place. Inexpensive first and business class buy up offers are rare from American, especially in advance of travel so the company is not gaining any revenue from business customers who have decided to buy a more expensive fare because they cannot use their eVIP.
Anecdotally, in the last two years, my family has not purchased a single revenue long-haul flight with American. We have redeemed for one (a miracle in and of itself) but have not purchased one. American is losing out on three roundtrips that would have meant incremental revenue for the carrier. Instead, we booked a comparable flight in business class with a competitor for not much more than the price we would have paid to fly American in coach had we been able to use our upgrades.
Neither Delta nor American have a fare class requirement to use these sorts of certificates, United does. However, American offers the fewest upgrades with the least availability at time of booking. American recently offered free status challenges which suggest to me that elites have taken notice and headed for the exits.
Maybe American will finally see that their pennywise/pound-foolish approach doesn’t work. Then again, maybe they won’t.
What do you think? Does American lose money by customers booking away from the carrier? What about those that decide they have no value and leave the carrier?