I have been following this for a while and reading a lot of reports and I still don’t know what AA is thinking with these new moves. But, here we are at the end of 2019 and we have an airline shutting down accounts for credit card applications they feel violate their terms (airline shutting down accounts – not the card issuer) and that same airline is both making award rates go through the roof while also offering lower rates!
American Airlines Shutting Down Accounts and Raising Award Prices
American Airlines Shutting Down Accounts
When an airline, hotel, reward program goes on some kind of streak of shutting down accounts, clawing back miles/points, or similar, it can sometimes show us that they are trying to clear some of their awards off the books. Maybe they have some new partners coming to the table or maybe they have a new product and don’t want to lose a massive amount of money through customer acquisitions – hard to tell.
American Airlines has, for the last month or more, been systematically shutting down actual frequent flyer accounts of people they deem had violated their terms (remember, their terms and conditions always have some vague part that gives them cover when they feel like doing something like this). Apparently, it had something (largely due to this, at least) with members setting up multiple accounts and using mailers from AA credit cards (that bypassed the 48 month rule) to apply with the invitation and earn miles in their main accounts from that – in spite of the fact that they were not eligible under the 48 month rules).
In the past, we have seen banks claw back awards or shut down accounts due to activity/practices that they felt did not fit within their terms and conditions but this is the first time I have seen a US airline shut down multiple accounts in waves like this.
Tickets Being Cancelled
Possibly the worst part about these shutdowns is that people that were traveling on award tickets found that their return tickets were voided when these shutdowns occurred. Not only were they stranded but they were now facing having to get a new ticket with new miles from another airline account or paying cash – both costly measures.
If you have not tried to circumvent the credit card bonus rules, then you should not have anything to worry about. Most of us had likely not done anything worth shutting down accounts over – this is going to be mostly about those that were essentially minting miles through alternative methods of card applications.
Another Attempt to Fight Sales of Miles?
American Airlines has long been the most aggressive about auditing accounts of award tickets. AA miles have been popular with brokers (most likely since AA is the only major US airline that doesn’t have an award transfer partner from a bank) who will pay an AA member for their miles and then sell those miles as “business class tickets” to other travelers. AA will often check with that person at check-in to determine if they really know the person who paid for the ticket with miles. If they cannot show they have a relationship with the account holder, the ticket is voided.
It would appear that AA is trying to eliminate as much of this as possible and clear the decks of excess miles. Which makes the next part curious with the timing of it all…
American Airlines Raising Many Award Tickets
That brings us to the next thing that happened recently with AA – the implantation of Web Special tickets for premium class cabins and the somewhat obliteration of the award chart at the same time. I wrote last week about some awesome deals to/from Europe with AA in business class – as low as 84,000 miles roundtrip!
The downside is that those tickets are for extreme off-season travel. If you want to travel during the better season, you may find that the rates have gone up considerably from the Saver level amount of 115,000 miles roundtrip. While that happens for Anytime awards and other tiers, it is the Web Special pricing that has also gone whacky on this (since it is still giving a “discount” over the new, regular pricing).
This is how this will likely be playing out – AA premium awards will be loosely tied to revenue prices going forward. By this, we can expect cheaper business class awards during very low seasons and we will see the prices go way up during high seasons of travel or close-in booking timeframes.
So, what is going on? If American Airlines was really worried about a ton of miles out there, I would totally expect them to hike award rates – like they did. That would seem like the “logical” airline way to get rid of the mileage amounts on their balance sheets.
But, at the same time, they are shutting down accounts that have accrued a lot of miles in a short amount of time. This is the first time they have done this and THEY are the ones doing it, not Citi. Remember the days when you could get a number of Citi Executive AAdvantage cards with the 100K mile bonus in a short time period? No award cost increases and no shutdowns.
So, what is AA doing? Any ideas? I understand going after people they feel violated the terms but it seems that there are quite a few shutdowns and not much in the way of warnings being issued. AA wants those miles back and those “earning” them to be out of their program. But, for the rest of us with AA accounts, we also have to pay these big prices now for awards that, not long ago, used to cost just 57,500 miles one way – instead of “Web Special” pricing at over 4 times that amount.