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This morning, American Airlines launched a new set of fare products aimed to bundle some of the extras flyers pay for a la carte or get with elite status. I talked to Rick Eleison, the American Airlines Managing Director of Digital Marketing about the changes and what they mean for flyers.
Until now, customers have just 2 dimensions for choosing their tickets: price and schedule. American is adding a third axis to the decision-making process aimed at giving their flyers more value without resorting to the nickel and diming of a la carte add-ons.
As Eleison sees it, the age of one-off fees for various perks such as checked luggage and priority boarding was just an adolescent phase in the evolution of fare pricing, and this is a move to “change the conversation by leading the industry back from a line of products to the value of their product line.”
While that may seem like corporate speak for trying to squeeze more revenue out of passengers, I was actually very surprised by the new products being launched and may considering purchasing them, even as an Executive Platinum member.
American will now break down its Main Cabin economy fares in three different tiers for routes within the 48 contiguous United States.
1. Choice Fares: These are basically the discounted economy fares as they are today – the least expensive way to get from point A to point B with no extras added on. You pay fees to make changes and you accrue miles normally.
2. Choice Essential: For an additional fee of $68 roundtrip, these fares will include 1 checked bag, Group 1 priority boarding and no change fees.
3. Choice Plus: These fares cost $20 above Choice Essential (so $88 above Choice/Regular Fares) and have the same three perks as Choice Essential plus a 50% AAdvantage mileage bonus (not Elite Qualifying Miles), waived same-day confirmed flight changes, same day standby and a premium beverage (including alcohol).
I asked for some clarification on a few of the points and here’s what I found out:
AA.com will start automatically displaying these 4 fares during the booking process as well as discount and full-fare business and first fares. American will also be distributing all these fares through all channels through which you can now buy American tickets. Just note, the airline is not sure about those channels’ abilities to display or present the product, so their availability through sources other than AA.com may vary.
Change fees are waived, but if the fare on the new ticket is higher, the customer will still have to pay the difference in fares. If the fare of the new ticket is lower, you will be issued a credit in the form of an airline voucher. If you purchase one of the Choice fares, you can change your ticket as many times as you want without a fee.
Don’t worry, elites will still be the first to board. Customers with these purchased fares will just be entitled to Group 1 of general boarding.
The new fares do not include Priority AAccess for security, so if you don’t have elite status, you’ll still be stuck in line.
With the same-day changes, your routing and departure and destination must stay same. There are a few exceptions – such as the fact that JFK and LGA are coded as co-terminals – but otherwise the airports have the stay the same. The same-day flight change will make it easier to switch flights on the same routes and will have a looser availability threshold to be confirmed on a different flight – basically you will be able to same-day change on flights that are up to 96% full if a seat in your class is available.
In addition to the mileage bonus on Choice Plus tickets, American still offer bonus miles through its Miles Multiplier.
If you already get perks through your elite status or credit cards such as the Citi AAdvantage Platinum Select, the add-ons you get by purchasing the higher fares are in addition to the perks you already get. So for instance if your status or card entitles you to a checked bag, purchasing Choice Essential or Choice Plus will get you an additional checked bag. Or if you get a 25% elite mileage bonus from Gold status or 100% from Platinum or Executive Platinum, you will get an additional 50% bonus miles on the base mileage of Choice Plus fares (not on your elite bonus).
The premium beverage that is included with Choice Plus is 1 per flight direct (not segment) and is basically any drink you’d pay for, including alcohol or drinks like Red Bull. Your boarding pass will have an indicator on it (either the print out or your mobile boarding pass) and the flight attendants will have the same information on their manifest since they carry these on electronic tablets now. These beverage credits are intended for a particular itinerary and will be deactivated 24 hours after the flight, so no hoarding allowed.
Seating selection is not affected by these new fares. Since seat inventory is a limited item, it was not possible to include select seating choices in the bundled options.
If you choose to buy the Miles Multiplier your bonus will be just on base miles, not on the bonus miles you would earn by purchasing a Choice Plus fare or on any elite bonuses. Each bonus is calculated individually on the base miles earned. I’m still waiting for verification that the 50% bonus is good on the 500-mile minimum that elites earn when flying short routes.
Eleison said that these new fares are designed for customers who still want the lowest fares, but also want to have a fuller, more transparent understanding of what they are turning down for $68 or $88 by understanding how much those individual benefits would cost a la carte.
Even though I get many of these benefits for free as an Executive Platinum, this fare system appeals to me specifically for the confirmed same-days, which I still have to pay $75 for, and the waived change fees since I change my plans all the time and I would appreciate the extra flexibility and saving that $200 penalty. As Eleison said, people will pay for perks that they know will make their experience better and suits their specific needs.
Flyers like me end up paying for these things already – so in certain circumstances where I might need to take advantage of several of them like first changing my flight and then same-day confirming to a different flight, I’m already ahead on fees. When you throw in the extra 50% bonus miles, I would really be coming out ahead. I would just need to pay for it all up front, which I’m comfortable doing.
That said, at least American has left the option for budget travelers to get a no frills fare without any bundled benefits that flyers who know their plans and stick to them can take advantage of.
The other good thing is that these fares – including the new ones – will all shop up as a single charge as “airfare” when you pay for them so you can still get the travel category spending bonuses on cards like the American Express Premier Rewards Gold card and the Sapphire Preferred.
On a roundtrip transcontinental itinerary from JFK to LAX – a route I’m often on – I’d earn the 4,950 base miles, my 100% elite bonus for another 5,000 miles, plus a 50% bonus if I paid the $88 for Choice Plus for another 2,475 miles. Just on the surface, that would bring my CPM for those bonus miles to 3.5 cents each, which isn’t great, but factor in the waived change fee and Same Day Confirmed and now we’re talking about value- even if I use those extra benefits once every couple trips.
I’m not saying this is for every traveler and every itinerary, but on those longer flights where you think you might want to alter your plans, the extra flexibility these new fares provide could be well worth the extra cost.
As airlines struggle to turn profits, it is interesting to see American lead the pack with new ways to proactively seek new revenue sources. We see all the time that travelers will pay for a better travel experience – whether it is a $450 annual credit card like the Amex Platinum that provides lounge access and other premium travel perks. I like these new changes because they don’t degrade any current elite benefits and even offer elites a solid (and in my honest opinion, affordable) value proposition, since my plans always change and I’m too cheap to pay for refundable fare classes. But $88 to have waived change fees (same day and to other dates), 50% bonus miles, an extra bag and a cocktail if in coach? Sign me up.