American – Elite Status, Redeemable Miles and Awards - It's Changing!

May 2016

I'd like to start off by saying, the new changes to the AAdvantage program weren't completely unexpected. While Delta and United made significant changes to their loyalty programs in 2015, those loyal to AAdvantage enjoyed a year of loyalty program stability while American sent US Airways off to that great airline retirement home in the sky. 

While some things are changing for the better, other changes will negatively impact some AAdvantage members. The new revenue model for earning redeemable reward miles American will introduce in mid-2016 clearly rewards those who pay the most for their tickets and therefore produce the most profits for the airline, which is quite frankly the flyer all airlines want to attract. 

And for those who'd rather earn miles based on actual miles flown plus Elite status and premium fare class bonuses, you can always consider a status match to Alaska Airlines, which is a strong partner of American Airlines offering many comparable Elite benefits for those Mileage Plan members who choose to fly with American and credit their miles to Alaska. 

That being said, we feel the AAdvantage program is incredibly valuable and through this comprehensive overview, you will have a better understanding of how to maximize your 2016 AAdvantage Elite status, earning and redemption opportunities. 

In 2016, how you earn AAdvantage Elite status and redeemable AAdvantage reward miles has changed and with so many ways to redeem miles and new changes to American Airlines and oneworld and other airline partner awards charts, it’s hard to know a good from a bad redemption.

We’re here to help and have outlined four important things you need to know:

1. The Benefits of Each AAdvantage Elite Status Level to know what you are working towards.

2. AAdvantage Elite Status Qualification Requirements as of January 1, 2016.

3. How to Earn Redeemable AAdvantage Reward Miles and what is changing in the second half of 2016.

4. Ways to Redeem Your Hard-Earned AAdvantage Miles for the most value and what is changing March 22, 2016.

1. THE BENEFITS OF EACH AADVANTAGE ELITE STATUS LEVEL

An important first step for any AAdvantage flyer is to become familiar with the benefits at each level of AAdvantage Elite status. Travel loyalty leads to more comfort and luxury whether you are traveling for business or pleasure. Frequent flyer miles turn into free trips. Here’s a handy overview from AAdvantage:

But, in addition to above, we suggest you also review the AAdvantage miles benefits page to clearly understand all of the benefits for each AAdvantage Elite status level when you fly with American, a oneworld airline or Alaska Airlines.

And as a result of the changes to the 2016 AAdvantage program, a few adjustments are being made to AAdvantage upgrades and how they are earned at each Elite level:

• Once a member achieves Executive Platinum in 2016, 4 systemwide upgrades will be awarded (instead of the 8 awarded in 2015) with a chance to earn 2 more after 150,000 Elite-qualifying Miles (EQMs), and another 2 after 200,000 EQMs

• Gold and Platinum members will earn 4 500-mile upgrade certificates for every 12,500 EQMs - the threshold is currently 10,000 EQMs until February 29, 2016

• Gold and Platinum members may purchase 500-mile upgrades for $40

• All Elite members will still be eligible for complimentary upgrades on flights of 500 miles or less, with Executive Platinum members eligible for upgrades on all domestic flights and flights between the US to Canada, Mexico, the Bahamas, the Caribbean, Bermuda and Central America

• The price for purchasing 500-mile upgrades with miles will increase to 40,000 miles for 8 upgrades

2. AADVANTAGE ELITE STATUS QUALIFICATION REQUIREMENTS

AAdvantage status qualification is based on distance flown with American Airlines or with an American airline partner between January 1 and December 31. Starting in 2017, the AAdvantage Elite status benefit year will begin on on February 1 and runs through January 31 the following year.

AAdvantage members continue to earn credit toward AAdvantage Elite status through a combination of Elite-qualifying Miles (EQMs) or Elite-qualifying Segments (EQSs). American eliminated Elite-qualifying Points as of January 1, 2016 (which is a positive move and simplifies the program).

You must meet these EQMs/EQSs qualification requirements to achieve AAdvantage Elite status:

And you also need to understand how Elite status translates across the oneworld airlines. Here’s a quick breakdown:

AAdvantage Gold = oneworld Ruby

AAdvantage Platinum = oneworld Sapphire

AAdvantage Executive Platinum = oneworld Emerald

What are Elite-qualifying Miles (EQMs) anyway and how do they work?

For travel on American Airlines, oneworld airlines, Alaska Airlines and American-marketed codeshare flights you earn EQMs based on the percentage of the actual distance flown. EQMs are not earned on award travel.

For flights operated by American Airlines you earn EQMs as outlined below:

When you travel on a flight marketed by one of American’s many oneworld and other airline partners and choose to earn AAdvantage miles for that flight, the number of EQMs you earn will vary. Click here to determine what you earn before you buy.

You can also earn EQMs through credit card spending (the enrollment bonuses occasionally vary):

Currently Citi/AAdvantage Executive World Elite MasterCard card members earn 50,000 non Elite-qualifying bonus AAdvantage miles after spending $5,000 in the first three months upon initial approval for the card. Members then earn 10,000 EQMs after spending $40,000 in a calendar year.

EQMs from credit card spend should post shortly after meeting the spending thresholds and will be credited toward Elite qualification in the year they post. If you meet a spending threshold near the end of the year, it is possible your EQMs will post in the following year and will then count toward that next year’s Elite qualification requirements.

Ok, so then what are Elite-qualifying Segments (EQSs) and how do they work?

• EQSs are simply each segment of your flight (e.g. if you have one connection on a one-way flight, you’ve completed two EQSs)

• EQSs are not earned on award travel

And, now that we understand EQMs and EQSs, let’s look at two possible ways to achieve AAdvantage Elite status faster:

1. AAdvantage Boost or Renew Opportunities - American Airlines is once again offering an AAdvantage Boost or Renew opportunity for members who will fall short of qualifying (or re-qualifying) for AAdvantage Elite status in 2016. It is very expensive to boost or renew and requires 2015 AAdvantage Elite-qualifying activity within 15,000 EQMs or points, or 18 to 20 EQSs of reaching AAdvantage Gold, Platinum or Executive Platinum, and you must have held some level of AAdvantage Elite status in 2015. In certain circumstances it could make good sense to boost or renew for those who were close to achieving their desired status level and really value AAdvantage Elite status.

2. AAdvantage Elite Status Match Challenge - The 2016 AAdvantage Gold and Platinum status match challenge requires you to simply sign up, pay and earn the required Elite Qualifying Miles (EQMs) within 90 days of registration. And United Mileage Plus 1k flyers have a chance to achieve AA’s Executive Platinum status by earning EQMs with no payment required! Click here for more information on the AAdvantage 2016 status match challenge.

3. HOW TO EARN REDEEMABLE AWARD MILES

While you can earn redeemable miles by flying with American or one of American’s airline partners, you call also earn miles with any of American’s many partners including credit card, dining, shopping, car rental, hotel and other partners. And redeemable miles can be used for award flights, upgrades and any other goods and services that accept AAdvantage miles.

That said, American will be changing to a new revenue based earning structure in mid-2016. And these changes significantly reward those who purchase premium class seats, last-minute flights and other expensive tickets by providing them with more redeemable miles. And the higher your AAdvantage Elite status, the more miles you earn. Unfortunately, this change hurts the leisure, main cabin flyer who diligently books early to save money, especially those without AAdvantage status.

Until mid-2016 you will continue to earn miles based on the actual distance you fly plus a fare class bonus of 50% for First and Business Class. In additional American is extending their special premium bonus of up to 12,000 miles for First and Business Class flyers until mid-2016. You will also earn an Elite status bonus of 100% of actual miles flown for Platinum and Executive Platinum members and 25% for Gold members. Redeemable miles are not earned on award travel.

Beginning in mid-2016 you will earn redeemable miles based on the price you pay for your base fare and carrier-imposed surcharges as well as your elite status level. You do not earn miles on government-imposed taxes and fees.

Here is the redeemable AAdvantage miles earning structure that will take effect some time in mid-2016:

• General members - 5 miles per USD

• Gold members- 7 miles per USD

• Platinum members - 8 miles per USD

• Platinum Elite members -  11 miles per USD

Partner-marketed flights that are not ticketed by American will continue to earn miles based on a percentage of distance flown as determined by the fare class paid, but the earning percentages vary by partner airline. We suggest you click into each airline partner to review the details. It’s important to know what you will earn before you buy!

4. WAYS TO REDEEM YOUR HARD-EARNED AADVANTAGE MILES

Ok, you’ve figured out the best way to earn miles. But now you wonder how best to redeem them. Is this free flight that requires tens of thousands (or even hundreds of thousands) of AAdvantage miles a good value?

While redeemable miles can be used for award flights, upgrades and any other goods and services that accept AAdvantage miles, using AAdvantage miles for American and American airline partner upgrades and flights is typically the most valuable way to use of your hard-earned miles.

We value AAdvantage miles at 2 cents per mile, which is the estimated value we would be willing to pay for AAdvantage miles if we could buy them for cash. It is also the minimum value we feel you should expect before redeeming your AAdvantage miles. And the value you realize for each AAdvantage mile can vary greatly based on how strategic you are in your approach to redeeming.

It’s rare to find a redemption opportunity with one of American’s non-airline partners that is more lucrative than redeeming your AAdvantage miles with American or one of American’s many airline partners, especially when you find a Miles SAAver award flight or use your AAdvantage miles for international flights and premium class flights and upgrades.

But what if you want to redeem your miles for something other than a flight purchase? How do you calculate whether it’s a good deal or not?

Simply take the total retail value of the good or service and divide it by the number of AAdvantage miles required. Does it yield a value over 2 cents per mile? If so, it’s a decent use of your AAdvantage miles - and the higher the value the better.

Using miles for award flights is typically the most lucrative use of your miles. So here is a quick calculation to determine the value per mile for a flight:

1. Find an award ticket.

2. Determine the full price of that ticket if you were to pay cash, including all taxes and fees.

3. Add to that amount any taxes and fees you will be required to pay on the award ticket.

4. Divide that amount by the number of miles required.

5. If the value per mile exceeds 2 cents per mile then you’ve found a decent deal - and the higher the value the better.

And finally, unfortunately, most award flights became more expensive in March 2016

Here is a summary of the award flights that becaame less expensive on March 22, 2016.

• A new category will be introduced for 1-way, nonstop, domestic US flights under 500 miles at a cost of 7,500 miles in the Economy Class and 15,000 miles in Business Class

• Economy and Business Class between the US and the Caribbean, Central America and Mexico will be reduced from 17,500 to 15,000 miles each way in Economy Class and will be reduced from 30,000 to 25,000 miles each way in Business Class

• Economy Class between the US and Central America from September 7 through November 14 will be reduced from 15,000 to 12,500 miles each way

• Economy Class travel between the US and the Middle East and India on an American Airlines partner will be reduced from 45,000 to 40,000 miles each way

And here are seven award-flight redemption tips to use in 2016:

1. Become familiar with the American Airlines and oneworld and other airline partner award redemption charts for travel booked by March 21, 2016. And also become familiar with the American Airlines and oneworld and other airline partner award redemption charts for travel booked on or after March 22, 2016.

2. For travel booked on or after March 22, 2016, the number of miles needed for American award flights and upgrades will be based on destination, demand and other dynamics, which in most cases will increase the number of miles required.

3. Any award tickets you secured before March 22, 2016, will allow FREE changes to the dates of your travel and still maintain the original award price you booked as long as award availability is offered for the new dates you choose and you make the change within 365 days of booking the original flight. But, if you change the origin, destination or airline, you will pay a $150 change fee and any difference in the number of miles required for the redemption per the March 22, 2016, award charts.  
   

4. While American’s online booking system is robust, we always suggest calling a AA reservations agent to explore award travel availability if you are having any challenges finding dates and routing that work for you. While it will cost $30 to $40 to book an award by phone (this fee is waived for Executive Platinum AAdvantage members), American’s reservation agents typically have access to more than you see online and it may save you a lot of time and frustration. And you only pay if an award is successfully booked for you.

5. After March 22, 2106, be flexible and attempt to book as early as 11 months out for the best chance at securing a convenient and economical award flight and remember airlines also typically open up award seat availability in the days leading up to a flight if you have the ability to travel on short notice.

The Wrap-Up:

We hope this Tip provides the information you need to better understand the 2016 changes to the AAdvantage program, the benefits of each AAdvantage Elite status level, the AAdvantage Elite status qualification requirements and how to earn and most economically redeem AAdvantage miles.