Is it time for AAdvantage to once again follow Delta's lead?
Delta maintained their position as the industry leader in US aviation customer service with the announcement today that elite status and benefits would be extended due to the impact COVID-19 has had on travel.
The announcement has already been met with a huge wave of positivity from the frequent flyer world and will serve to score Delta a quick PR win in rather grim times. I believe there are downsides for Delta in making this move and remind you it would never have been made if times weren't as dire as they are for the US airline industry.
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Taking into account the downsides we'll discuss below of opening the proverbial flood gates and gifting all members an additional year of status, should American once again follow Delta's lead?
The downsides of gifting free status
Before even discussing the downsides of gifting flyers a free year of status, it has probably already become a moot point. The public backlash against any airline that doesn't extend status now that one of the Big Three has done it would most likely be insurmountable. Nevertheless, there are a few negative aspects of extending status to consider:
- By gifting status to your most loyal (and most profitable) customers, you actually de-incentivize them to fly you. There would be no reason to chase status until February 2022 — that's 22 months of your most loyal customers perhaps now searching by price and itinerary convenience alone.
- Co-branded card usage, a very profitable aspect of airline loyalty programs, drops because those looking to hit spend thresholds for added perks or Elite Qualifying Miles no longer have to worry about it.
- The data needed to weigh how many customers you'll gain by gifting status versus how many ticket sales you'll lose isn't available this early in the COVID-19 pandemic and no precedent exists to model off of.
Mark Ross-Smith, former head of the Malaysia Enrich loyalty program and creator of Travel Data Daily, argues extending status this early in the elite qualifying year is a "sugar hit" and a potential fallacy:
A business cannot solve a transactional problem (pax not flying) – with an emotional solution (extending status for free). All that will achieve in the member's mind is devaluing elite status. It won't help the members and it won't help the airline in the long term...Any perceived PR/branding/marketing benefits the airline may enjoy from the short-term sugar hit of gifting out free elite status to the entire loyalty member base – will certainly be overshadowed by the loss in ticket sales in the coming one, two, three years.
I'd argue that with Delta burning more than $60 million a day in cash and with revenue down 97%, the current situation meets the criteria of extending status and takes an emotional win from the customer base. There aren't any more passengers to lose right now and you want to take the first mover advantage in the headlines.
What Should American do?
I was gifted American AAdvantage Executive Platinum status through my Hyatt Globalist concierge at the end of 2019 and had been enjoying a fantastic domestic flying experience on American until we were all grounded. Being Atlanta based, my competition for upgrades has been nonexistent and I've cleared every upgrade five days out from departure.
Would I like to experience that all the way until January 31, 2022? Yes, and I don't think there's any alternative AAdvantage can offer that wouldn't now alienate customers. American should:
- Extend elite status an additional year through Jan 31, 2022 for all members at their current permanent status level regardless of how they earned it
- Count all Elite Qualifying Miles (EQM) and Elite Qualifying Dollars (EQD) from flying or co-branded card spend in the 2021 qualifying year for 2022 status
- Extend current system wide upgrades (SWUs) with an additional six months of time to be flown by July 31, 2021. However, I do not think an additional four SWUs need to be given to current Executive Platinum members.
- Allow anyone who was signed up for a status challenge before March 1, 2020 to re-sign up and try again from scratch, for free, at any date upon their request
- Extend all companion certificates, Admiral's Club memberships and other co-branded card benefits by one year (Note: 500-mile certificates do not expire but you must be an elite member to use them)
Bottom Line
I'm a bit surprised Delta pulled the trigger this early in extending status. With no end date in sight for the current crisis and with no one flying, I don't think it was necessary to make this decision or announcement so early. However, now that they have, the Big Three likely have to follow suit or face a public uproar, one that American Airlines may not be able to withstand given their current debt and existing discourse among their own loyal flyers that predated COVID-19.
American doesn't need to make an announcement any time soon, but they should go ahead and line up the specifics and then have those vetted by a few of their most loyal customers to gauge the public reaction. Now certainly isn't the time to try and come up with prorated elite thresholds for 2020, which would inevitably become complicated and would be illogical as there is no end date on the horizon to the pandemic. It's time for American to once again follow Delta's lead.
For more, check out:
- Delta becomes the first U.S. airline to extend elite status
- Here's how Delta, Hilton and Hyatt impressed me during a crisis
- Why TPG's Brian Kelly is becoming more loyal to Delta — without even flying
Here's how Delta, Hilton and Hyatt impressed me during a crisis
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