We're on record here as supporters of the Big Three U.S. airlines migrating their loyalty programmes from mileage-based to revenue-based earning structures. Grumbling and entitlements aside, the changes preserve the long-term financial health of the programmes and re-focus them on the airlines' core constituency of high-revenue best customers. That said, there are plenty of naysayers - and, as Skift's Grant Martin reports, American Airlines' AAdvantage members seem particularly incensed by the change.
What Martin eludes to, and what Gary Leff states plainly over at the Boarding Area, is that, by changing the programme structure to follow suite with the other two of the Big Three, American Airlines may lose the "brand insulation" provided by the AAdvantage programme. "Brand insulation" refers to the protective cocoon a loyalty programme can provide to a brand that insulates it from customer defections due to service breakdowns, systemic operating challenges, and competitive promotions. Once members build up equity in the form of frequent-flyer miles, and earn elite status in the programme, they become much more forgiving of these negative forces, and much more likely to continue the relationship despite those forces otherwise motivating them to switch.
Leff, in particular, believes that the AAdvantage programme changes have frayed the insulation deeply enough to short out his relationship with American. The reasons why AAdvantage members are up in arms appear two-fold: one, the heretofore richer AAdvantage programme had provided a competitive advantage (no pun intended) for American; and 2) American provides a poorer overall flight experience than Delta or United, and now that AAdvantage has become a me-too programme, disgruntled AAdvantage members have a bona-fide reason to switch. Money quote from Grant Martin:
"American isn't doing anything above and beyond what its competitors did, but the recent merger with US Airways already has both employees and customers on edge and as many point out, unlike Delta and United, AAdvantage was one of the best things about the carrier."
Gary Leff, meanwhile, is much more blunt:
Delta earns a revenue premium not because of its SkyMiles programme, but in spite of it. Their recent IT meltdown notwithstanding, they offer a better on-time reliable product. American isn't Delta. You don't choose American in spite of AAdvantage, the underlying airline isn't nearly as good. With the airline operation lagging, cuts to the AAdvantage programme, and strong indications of more cuts to come, I've been flying American less.
Martin points out that over on the Flyertalk message boards, he found 118 pages of AAdvantage members posting complaints about the programme. A recent Flyertalk poll on the AAdvantage changes found 23% of responding members ready to switch to another airline's programme and 29% ready to become deal-seeking free agents. That's over half of respondents ready to jump ship. Granted, the results are from an unscientific survey, but they should still give AAdvantage executives the night sweats.
What can American do now to molify the Gary Leffs in its programme? Short of reversing course on the programme changes, targeted generosity is arguably the best approach. Target those elite flyers most in danger of defection and extend their elite status for a bonus period, round up their miles to the next redemption level, or gift them with free companion tickets. A few million dollars spent now on salvaging damaged relationships will pay long-term dividends.
It would certainly also help the situation if American can improve its flying experience to compare more favorably to its rivals. American's move to restructure its programme isn't the wrong one- but if your core service offering doesn't compare favorably to the competition, then brand insulation will only get you so far.