Who'd Come Out Ahead If American Airlines Restricted Systemwide Upgrades?
Everyone loves getting something for free, and travel providers know that. One of the main ways that airlines and hotels try to keep frequent customers happy is through the power of the upgrade. This week, rumors started circulating that the world's largest airline is considering limiting how its top customers can use their most-valuable upgrade voucher. Let's get this out of the way first: American Airlines firmly denies that there are any changes in the works. But since the topic has come up, let's review how these upgrades work and how this modification would change things.
What are Systemwide Upgrades and how can they be used?
Currently, American Airlines grants its top-tier Executive Platinum elites four "systemwide upgrades" as one of the biggest perks for achieving 100,000 Elite Qualifying Miles (EQM) and spending 15,000 Elite Qualifying Dollars. Even more frequent flyers can earn an additional two upgrades for reaching 150,000 EQMs and another two for hitting 200,000 EQM.
Everything you need to know about how to use a systemwide upgrade is covered by TPG's Richard Kerr in this extensive guide.
To recap: it's an upgrade certificate that can be used on any flight operated by American Airlines to upgrade from economy (excluding basic economy tickets) to business class or from business class to first class. Passengers flying on connecting itineraries can apply the same upgrade certificate to up to three flight segments in one direction (i.e. the outbound of a round-trip flight).
An elite passenger can apply a systemwide upgrade to an itinerary flown by anyone he or she wishes -- themselves, a spouse, a family member, a co-worker, a friend or a lucky stranger.
True to the "systemwide" name, there are no limitations on which routes these can be used on -- including American Airlines' 17-hour, 8,123-mile flight between Dallas/Fort Worth and Hong Kong.
There's just one huge catch: there must be upgrade availability on the flight in order for the upgrade to clear. AA's revenue management team holds the keys to this availability, and it's been quite frugal with releasing it on many flights. When demand is high, the airline can fill those premium seats with paying customers instead.
American Airlines elites have grown increasingly frustrated over the past few years about the difficulty using these upgrades. Factoring in this difficulty, TPG's valuation of Executive Platinum status dropped by $800 this year as we downgraded the value of a systemwide upgrade from $500 each to just $300.
What's the rumored limitation?
Currently, Executive Platinum elites can apply a systemwide upgrade to almost anyone's itinerary -- as long as the upgrade is not, per AA's terms,
purchased, sold, advertised for sale or bartered (including but not limited to transferring, gifting, or promising mileage credit or award tickets in exchange for support of a certain business, product or charity and/or participation in an auction, sweepstakes, raffle or contest)
But a rumor has been making the rounds that AA might want to limit systemwide upgrade usage to the passenger who earned the upgrade, plus any others on the same reservation. You'd no longer be able to gift people upgrades.
An American Airlines spokesperson denied any changes are being made.
How does this compare with AA's competitors?
Both Delta and United offer elites something similar to American Airlines' systemwide upgrades, but the limitations are quite different between the two. United's Global Premier Upgrades can be applied to another traveler even if they are not traveling on the same reservation. However, on Delta, the "Global Upgrade Certificate" (GUCs) are limited to just the passenger who earned it and up to one traveling companion on the same itinerary.
In an industry that often sees copycat policy changes, it's peculiar to see that this policy difference has existed for years. And it's not too hard to imagine that American Airlines' loyalty team would consider copying Delta's restrictions.
Who'd benefit from this limitation?
While the speculation has led to some uproar, this limitation certainly wouldn't be unwelcome for all Executive Platinum elites. After all, elites who currently struggle to use their systemwide upgrades may be hopeful that the restriction would lead to less competition for upgrade availability.
Another group that'd benefit: lower-tier elites and non-elites. That's because passengers looking to use miles to upgrade from economy to business class rely on the same upgrade availability that systemwide upgrades use. However, these passengers are waitlisted with a lower priority. As long as the list clears in order, all Executive Platinum elites would have to clear upgrades before lower-tier elites are able to apply a mileage upgrade. If AA were to restrict systemwide upgrade usage, these upgrades would have a better shot at clearing.
But there's plenty of elite passengers who could be legitimately angry with the changes. Consider a road warrior who flies every week for business and can think of nothing more relaxing than staying home during his vacation time. While he doesn't care to use the upgrades himself, he values them for being able to upgrade his parents on an overseas trip. Or perhaps an Executive Platinum flies on routes where there are so many high-level elites that she isn't able to use all of her upgrades, but she's able to at least apply it to her sister's flight to Europe. As systemwide upgrades have gotten harder and harder to use over the past few years, there ares certainly many Executive Platinum elites happy to find any use for them.
However, there's no denying that there's a dark side to systemwide upgrade usage. Although risking retribution from the airline for breaking AAdvantage rules, some elites sell upgrades to other flyers. And the airline has an entire team dedicated to trying to catch these rulebreakers. If limitations were put in place on how systemwide upgrades can be used, it could save American Airlines a lot of time and effort.