American Airlines Devaluation
Reports started rolling in that people’s American Airlines miles were posting from their Simply Miles promo yesterday. It was touch and go there for a minute with miles showing up in the account and then disappearing a few hours later. It looks like there will be quite a few new American Airlines millionaires out there in the coming days. I think one saying may ring true, old money will not like the new money. At least when it comes to American Airlines millionaires. This has to lead to an American Airlines devaluation doesn’t it? You can’t have a promo giving miles at 75% off and then just keep things as normal, can you?
What Does The Future Bring?
If I could tell you that I wouldn’t be here, I would be a real millionaire, not an AA millionaire, sitting on a beach somewhere. But logic dictates when something is too good to be true that a hammer must drop somewhere. On the other hand this is American Airlines so logic doesn’t always play a part.
Years ago people were signing up for Citi AAdvantage Executive World Elite cards like they were going out of style at 100K a pop. Some were even canceling them immediately after the 100K posted to avoid the $450 annual fee. That went on for some time, minting many millionaires, and nothing really happen. Maybe because Citi was eating some (or all) of that cost purchasing the miles from American for the promotion.
A few years later something similar happened with credit card mailers. This time American did not sit idly by and let the millionaire mint get off the ground. They shut down accounts right and left and confiscated back their nest eggs.
Both of those instances were coloring outside the lines where this was a posted offer. Because of that I don’t think they can bring the claws out like they did last year, I think they have to be more nuanced this time around.
So What Will Happen This Time Around?
American Airlines is deep in the red, $30B+ in debt. Is this a money grab and then they slash the value of their program? The AAdvantage program is their most valuable asset but they can devalue with program without really devaluing the asset. Crazy how that works isn’t it?
Think of the people that likely bought the most miles during this program. You know mileage brokers jumped in neck deep. They will be able to make a 75% or more profit off those miles. Will American sit by and let others make a mint of their back?
American Airlines has never been afraid of the devaluation. They were once thought of, all of 5-10 years ago, as probably the best airline loyalty program out there. Now they seem to be in a hurry to ride shotgun next to Delta’s Skymiles program.
Potential American Airlines Devaluation – Final Thoughts
If I were a betting man I would imagine American will tweak something to offset this new liability they have taken on. The fact that they honored this amazingly lucrative deal may be simply because they legally had to, not because they wanted to. There is nothing to say, or laws prohibiting them, from getting even after the fact. Does that come in the form of a loyalty program devaluation or in a deep dive of the accounts involved? We all know someone has to pay for those miles. There is no Citibank to help carry the water this time around and we know the charity isn’t going to be doing it. Do you think American Airlines is willing to take it on the chin all alone? I know I don’t.
What do you think the future holds with the AAdvantage program? Is a devaluation coming or do they take this loss on the chin? Let me know in the comments below.
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