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American Airlines is changing the way it rewards frequent flyers. Starting on August 1, members of the AAdvantage program will no longer earn points based on the number of miles that they have flown. Instead the airline will follow the lead of most of the country’s other carriers and award loyalty points based on the amount spent, not on the number of miles flown.
This is not a new trend
American's legacy carrier peers have already made the shift to a spending-based reward system.
Starting in August, most flyers will earn five miles for every dollar that they spend. Big spenders can achieve a greater points-to-dollars ratio with the most-elite frequent flyers earning as much as 11 miles per dollar.
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Some people might not think that the idea of earning miles by spending is unfair. It makes sense from the airline's perspective, however. The change makes it impossible for savvy travelers to beat the system by earning a full compliment of miles on discounted flights.
Furthermore, big spenders have been fleeing American. They can get more miles with AA's competitors because of the miles bonuses that they offer.
Though American has denied that these defections were the motive for its change, it seems likely that at least one of the reasons for the switch was to bring these big spenders back into the fold.
So on August 1, Alaska Airlines will become the only major carrier in the country to still keep a miles-based loyalty program.
Who will benefit from the switch?
The change is bad news for economy-class passengers, but the new program could give fliers with elite status more rewards than they currently get.
Flyers who spend more than $3,000 could qualify for gold status, which bumps up their miles earning from five per dollar spent to seven per dollar. Those who spend more than $9,000, meanwhile, will get to enjoy a new level of membership, called Platinum Pro, which will offer an even better dollars-to-miles ratio.
U.S.-based airlines are not the only ones to make these changes to their loyalty programs. British Airways has cut the value of miles earned for an economy class flight. Passengers who fly economy earn 75 percent fewer miles than they did before. Meanwhile, premium class passengers have seen a 50 percent rise in the value of their points.
So airlines seem intent on closing the loophole. Passengers won’t be able to score a full complement of miles by taking a discounted long haul flight. At the same time, elite flyers, who spend more anyway, will be able to earn more points than they have before.
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This is probably disappointing for people who had perfected the art of miles collecting. However, it is a shrewd move for airlines, who are going out of their way — with new lounges and enhanced business class cabins — to woo free-spending flyers.