Two Reasons I Don’t Believe the American Airlines Statement about Fuel Surcharges on Awards

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The Points Guys says he has an official statement from the American Airlines PR department:

“Last night, in a routine effort to better align American to industry standards with other global carriers, American began collecting carrier-imposed surcharges on tickets for travel on other carrier’s metal.  This change was intended for revenue tickets only, but the surcharge was erroneously added to AAdvantage award redemptions on other airlines as well.  Except in the cases of British Airways and Iberia (where American currently collects these surcharges), no carrier-imposed surcharges will be applied when redeeming AAdvantage miles for award travel on other carriers.  Any customers who encountered this fee in error will be fully refunded.”

This clears up the horrible scare we all had that American Airlines was going to collect fuel surcharges on all international awards.

But I just don’t believe the statement for two reasons.

What really happened?

1. American Airlines has always collected fuel surcharges on cash tickets.

A fuel surcharge on a cash ticket is something one doesn’t notice because all one cares about is the all in price, which is the price listed on kayak.com and all airline sites by law now.

But even though we don’t care how an all in fare breaks down between the base fare, taxes, and fuel surcharges, there is a breakdown between those things.

I read American’s statement to say that before they were only collecting the base fare and taxes on cash tickets booked through American to be flown on partner metal. That’s bollocks. If that were true, it would have been possible to buy a ticket on Malaysia Airlines or Qantas or Cathay Pacific from American Airlines for hundreds of dollars cheaper than from those airlines themselves. That was never the case.

2. American Airlines official twitter account was confirming a change this morning.

I asked about changes to the AAdvantage program and @AmericanAir confirmed them (and apologized.)

What Really Happened

I don’t believe the statement, so what do I think happened? I think the backlash on blogs, forums, and Twitter caused American to backtrack. I’m not sure of it, but having eliminated the possibility that the statement is true, what explanation do we have left?

Going Forward

I am ecstatic that American Airlines miles have not been gutted. I would have dropped their value to about 1 cent each if fuel surcharges were to be collected on all international awards, and even 1 cent of value would have been impossible on most economy international awards.

I like American Airlines miles too much to really change my behavior towards them. But I will be a bit more wary that we might see future negative changes coming from the old American (pre-merger) or the new American (post-merger, which yes I think is going to happen still).

22 Responses to Two Reasons I Don’t Believe the American Airlines Statement about Fuel Surcharges on Awards

  1. Agree with you on both points. It’s too fishy. I wonder when they will find the “right” time to implement these changes though.

  2. Earlier this morning I tweeted that I was taking the AA credit card out of my wallet and my wife’s purse. It’s going to be sitting in a drawer for a couple of months until this gets sorted out. Maybe AA let the cat out of the bag. Who knows.

    A friend of mine worked at UA WHQ. He said after they made changes to the program on a Friday, they’d read Flyertalk to see what needed ‘adjusting’, and where they made a mistake. Then, on Monday morning, they’d tweak it.

  3. I think you’re wrong.

    Do you really believe that AA decided to roll out a MAJOR change to its frequent flier program with absolutely no notice? Do you believe they did so without even bothering to write and release at statement about the change at the moment it went live? And, having done so, do you believe that they were surprised by the negative reaction and decided to backtrack completely in the first few hours of the change being live?

    None of that makes any sense.

    More likely is that this was a glitch. Either this genuinely was a change in fare allocation never intended to affect the redemption pricing system or, more ominously, it was test code for an as-yet-unannounced change to the redemption system that somehow escaped into production code.

    • It’s a tough call. I mean I agree that what I’m saying is not a slam dunk, but the statement makes NO SENSE. So I think my interpretation makes MORE sense.

  4. JUST THINK THE AMOUNT OF MONEY THEY WOULD’VE MADE IF THEY DID IT. Vegas is the same way they upped their so called resort fee and even with free air I now go to Laughlin NV.
    That’s Scott job to keep an eye on this muck , this is his website.. I really don’t think we can change anything BUT the whole internet can .Remember the BOA $5 ATM fee didn’t make to light of day (Test Balloon)..

    Cave Dweller

    Cj

  5. @Larry,

    AA tried, and failed in this attempt. We know that the airlines always think they can get away with these things. Why?? Because they’re the airlines. AA had to know this would be perceived poorly. I’m sure AA has an algorithm to measure success/failure based on all the reaction.

    As of August 28, I don’t trust them. I’m anxious to see how this plays out over the next x x months.

  6. There was a relatively new AA fuel dump that has now been closed.

    • Interesting detail in a Bayesian sense.

      • Why in a Bayesian sense? Do you think the change had anything to do with a fuel dump?

        • Knowing this fact I have to update my prior probabilities for what happened yesterday. As this post states, I don’t believe the PR, but I don’t know the truth either. I am leaning more and more toward this explanation (fuel dump Malaysia), the more I hear.

  7. I plan on finishing the spends on my current cards, snagging the Citi Biz, and heading back to my nice, safe, UR cards (with the SPG for Costco).

    These airline points are becoming more and more useless, even with AA walking back the surcharges. I’d like to think that my tweets this morning helped contribute to the outrage:

    @AmericanAir was excited about your status challenge and considered switching from @united. Today’s UNannounced fuel surcharges fixed that.

    @dave_marcus Dave, these charges are only being collected for select carriers. Some carriers may have exemptions.

    @AmericanAir I think you missed my emphasis on UNannounced. People don’t like when you change the deal on them.

    @dave_marcus Dave, we’re sorry for any confusion on our part. We hope you have a great day.

  8. Larry, I do believe AA tried to sneak a fast one and failed here.

  9. Before today I had just started to switch my credit card spend to my UK AA MBNA card because of the allure of cheap One World reward fares booked through AA (such as AY from Europe to Asia – only £12 in taxes) compared to BA’s sizeable YQs. Unfortunately the events of today have reversed my decision, even with the later “clarification”. The AA card’s going in the sock drawer and I will burn my 40k AA miles ASAP.

    The whole sorry affair is a useful reminder that your miles can be devalued almost overnight. Earn and burn.

  10. I suspect this is a future change let out of the bag. I don’t expect to see it rolled out until post-merger, and then it will be given with notice. It’s an awful change, but it’s worse in implementation if Star does it than if AA/OW does. With only this change, the AA value is retained on LAN (no fuel surchage), somewhat on CX (smaller fuel surcharge), and on EY (none). The worst effect would be on travel to Europe, incl. the off-peak sweet spot.

  11. You would’ve dropped your valuation down to below 1 cent despite valuing Avios at 1.7c? That makes no sense unless you travel on LOTS of [very] short haul, direct flights without surcharges.

    I do agree, though, that their explanation is fishy as hell…

  12. I believe AA’s statement for 1 reason – they would have gotten a huge PR ‘high-five’ for being able to claim that “after listening to our customers and always putting them first, we are not going to implement these changes.” (e.g. Xbox One, Netflix, etc.) Instead they now look even more incompetent for not being able to implement a simple pricing update.

  13. I think it was a mistake. First, they have a DOJ lawsuit they intend to defend. DOJ is basically saying a merger would be bad because the airlines will screw the consumers any chance they get. To do just that in a major way isn’t really the best way for American to strengthen its defense. Second, AAdvantage is one of American’s most solid assets. Do you destroy the value of your assets while in bankruptcy? The whole thing was terribly bungled, and maybe it’s something they’re considering for sometime down the road, but I find it hard to believe American would be so naive as to think they could make such a huge devaluation right now without cataclysmic repercussions.

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