May 18, 2017

Travel Thursday: American Airlines Changes Upgrade Policy

It’s Thursday, and I’m thrilled to be on my way back to Denver tonight. Well… I guess to be more accurate, I would say that I’m thrilled to be going home. But I’m not-so-thrilled to go from the sunny beaches of Florida to the apparent winter wonderland that is Colorado right now. The power went out in my neighborhood this afternoon, it’s snowing now and supposed to continue through tomorrow, and I’m pretty worried about both the garden of annuals I planted last weekend (probably a goner) and the status of my sprinkler system (I am still holding out hope that my backflow pipes haven’t burst).

These are all in my backyard after a big plant shopping expedition last week 🙁 I’m hoping at least the perennials will survive?

But since it’s “travel Thursday” for me, in line with last week’s post about the potential global laptop/tablet ban, I thought I’d post about another airline policy change. This topic is a bit more obtuse for those of you who aren’t frequent flyers, but I thought the explanation might be interesting nonetheless.

This week, American Airlines announced that they revamped their formula for granting upgrades to frequent flyers. The previous algorithm had different upgrade “windows” for each tier of elite status – so executive platinums would get upgraded first, then platinum pros, then regular platinums, then golds.

As a side note: I think it’s hilarious how every level of American’s hierarchy sounds like it could be the top tier, if you didn’t know about the others. Definitely goes along with the “everyone’s a winner!” participation trophies that schools give out 🙂

OneWorld (AA’s global alliance) status tiers are emerald, sapphire, and ruby…. so basically the same concept.

The problem with the upgrade algorithm was that within each tier, there were always many flyers wanting upgrades – so how do you force rank the people to decide which ones win a comfy first class seat and which ones stay in the back of the bus? Under the old system, AA gave upgrades in each group based on when you requested an upgrade: whoever booked/asked first won. Under the new system, AA will first sort the travelers by type of upgrade requested: first systemwide and mileage award upgrades, then 500-mile upgrades on purchased tickets, and finally 500-mile upgrades on award tickets. Within those sub-groups, AA will rank the travelers by highest dollar spent in the previous year (on a rolling basis). Then they’ll look at booking code (based on the revenue management hierarchy), and finally they’ll go by date/time of the upgrade request.

To me, this makes logical sense – particularly in line with their move last year to use dollars spent as the basis for awarding miles rather than miles flown. AA wants to reward those customers who spend the most money with them, and who are spending the most money on that particular ticket. While it may suck for those of us who like to find and buy cheap fares, it makes sense that the airline would give upgrades according to those criterion.

On the flip side, I’ve been on the opposite side of the equation before. When I worked at JetBlue, I really loved that our seats for non-rev travelers (e.g., employees and their families) were given out by check-in time, rather than by seniority. I’m sure if I had been at JetBlue for years, it would have been frustrating, but it seemed fair to me that each employee had some level of control. If you *really* wanted to get on a flight, you made sure to be online and ready to check in the second the clock ticked over to 24 hours before departure – and if someone checked in late, they couldn’t bump you from the top of the list. Likewise, with the old AA upgrade rules, if you *really* wanted to get upgraded, you could buy your ticket early… but that took upgrades away from any high-revenue passengers who booked at the last minute. It’s good for those who want to game the system to ensure a seat, but doesn’t really incentivize loyalty.

Overall, while the new system is somewhat complicated, I think it’s a good thing for customer loyalty. AA will be making their most valuable customers the happiest with upgrades, which is a solid goal for a loyalty program.

For more thoughts on this change, The Points Guy has a great writeup of the change that highlights the winners and losers.


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