Expert Predictions for Timing and Extent of Next American Airlines Devaluations

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I gathered several estimates for the timing and extent of the next American Airlines devaluation from miles and points experts. I’ve averaged the guesses to produce a wisdom-of-the-crowd estimate that I hope is as close as possible to predicting the future as we can get.

Background

Last year, United gutted and bifurcated its award chart for Business and First Class redemptions. Now awards on partner airlines cost a lot more than they used to. For instance, one way in Partner First Class to the Middle East is 140,000 miles.

Delta released a few new award charts last year. The one that went into effect January 1 is quite a bit worse for Business Class redemptions than the 2013 chart.

American Airlines and US Airways didn’t devalue, probably because they are in the middle of merging with each other and prefer integration before innovation. Some time between April 1 and June 30, American Airlines’ loyalty program will swallow US Airways’. And some time after that–whether in 2015 or 2025–American will release a new award chart that is worse than the current chart. That’s just how miles work. They get less valuable over time.

The Set Up

I asked some of my favorite bloggers seven questions about the next American Airlines devaluation and to guess all of the award prices for awards originating in the continental United States on the next chart. I promised them that the point was just to average the guesses, not to call anyone out now or ever for being wrong.

The Guessers

The Questions and Answers

1. Exact date of new AA award chart announcement:
  • Average: September 3, 2015
  • My guess: November 1, 2015
2. Exact date new AA award chart takes effect:
  • Average: December 9, 2015
  • My guess: February 1, 2016
  • All guessers believe a new American Airlines award chart will be in place by February 1, 2016 at the latest. All but one guesser believes the new chart takes effect in early 2016, with one guesser in late 2015.
3. United’s new chart took effect for bookings after a certain date. One of Delta’s charts was for travel after a certain date. Will the new AA chart be for bookings made after a certain date or travel after a certain date?
  • 100% of respondents said that the new chart will be for bookings–not travel–after a certain date.
4. What percent chance is there that off peak economy award bookings will be eliminated?
  • Average: 11%
  • My guess: 20%
  • One guesser thought the chances of off peak awards being eliminated were very low, but thought we’d see tightening of the very generous off peak date ranges.
5. What percent chance is there that American makes booking partners more expensive than booking its own flights (a la United)?
  • Average: 16%
  • My guess: 5%
6. What percent chance is there that routing rules will be changed at the same time as a new chart is introduced?
  • Average: 31%
  • My guess: 5%
  • Answers ranged from 0 to 100%. I think I worded the question poorly because I think there will probably be at least one new rule, but I was trying to get at major rule changes.
6b. If you answered other than 0% for 6, what rule is most likely to be changed?
  • My guess (remember I think only a 5% chance): Stopovers may be re-introduced.
  • Other interesting ones: More exceptions will be added to the list of third regions you can transit. The MPM allowance may be lowered.
7. Any other predictions that the questions or chart fail to get out of you?
  • “Changes and timing of announcements are predicated on the IT integration of Dividend Miles with AAdvantage. If it turns into a cluster, as it did for United, then they’ll wait until later this year. They’re making so much money right now that they can afford to postpone changes until any IT problems are worked out.”
  • “AA holds out for 2016 but finally goes revenue-based on the earning side in 2017 with a system similar to Delta and United. Announcement is made in June 2016”

The Chart Predictions

Here is the average of our predictions. This chart shows the price of a one way award beginning in North America in thousands of American Airlines miles. I’ve noted in red the awards we think will go up by more than 5,000 miles one way on the next chart.

Screen Shot 2015-02-06 at 1.54.19 PM

The biggest jumps are in Asia, Australia, and Europe, which are the most under-priced currently compared to competitors. The only awards that none of us saw increasing in price are Business and First Class to Africa, which are already quite expensive.

Here’s my guess, for reference.

Screen Shot 2015-02-06 at 3.33.39 PM

I am much more pessimistic than average. I am the only one forecasting a jump in the price to the Middle East in First Class. I predict huge 17.5k-22.5k increases in First Class to Asia 1 and Asia 2. We’ll see if my pessimism is unfounded or–unfortunately–on the money. On the plus side, the only economy increases I see are tiny ones to Africa and Australia.

Context

Let’s look at the current United and Delta charts next to our projected next American Airlines chart, marked with an asterisk on the charts below.

The overall takeaway is that American Airlines’ award chart is currently way, way better than Delta’s and United’s. We’re predicting that the next chart will still be better on average, but more in line with the competitors. I’ve marked in red where American Airlines is still projected to be the cheapest.

Economy

Screen Shot 2015-02-06 at 3.45.45 PM

Those off peak awards, which we see only an 11% chance of being eliminated are mind-bogglingly cheap. The rest of the projected AA chart is basically in line with United and Delta, but cheaper in a few spots.

Business

American is currently a steal to Asia. We see American still being cheaper to Asia than Delta and United on the next chart, but the gap narrows considerably.

Slashes on the United chart indicate United-metal price/partner price. Slashes on the Delta chart indicate First/Business Elite.

Screen Shot 2015-02-06 at 3.46.09 PM

First 

For First Class, American awards are predicted to be in line with United-metal awards, which would make them way cheaper than booking United partners with United miles. Remember we see only a 16% chance of American charging more to book partners than its own flights on the next chart.

Delta miles can’t be redeemed for three-cabin First Class. Slashes on the United chart indicate United-metal price/partner price.

Screen Shot 2015-02-06 at 3.46.25 PM

Bottom Line

I don’t think anyone knows when we’ll see an American Airlines devaluation or what exactly it will look like. But by bringing together six experts, hopefully the average of our guesses provides a useful guide.

We see a new chart announced in the third quarter that takes effect around the New Year. Since American Airlines awards can be booked 11 months in advance, that would mean that you should be able to travel at current prices for most of 2016. We don’t see a bloodbath. American will retain its popular off peak awards and raise prices in line with or slightly below competitors.

Right now, I am totally focused on earning and redeeming American Airlines miles. The earning side is easy, and the redeeming side is the best in the world to many destinations. Hopefully our predictions can give you some guidance in your approach to earning and burning American Airlines miles. I’m not saying we’re right, but I am saying that this post represents the best guess out there for how the next devaluation plays out.

Hopefully you had as much fun reading the data as I had compiling it, and a special thanks to the bloggers who gave their guesses.


Editorial Disclaimer: The editorial content is not provided or commissioned by the credit card issuers. Opinions expressed here are author’s alone, not those of the credit card issuers, and have not been reviewed, approved or otherwise endorsed by the credit card issuers.

The comments section below is not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved, or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all questions are answered.

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29 COMMENTS

  1. More cards applied for and money spent that will fix that . However they may be nice because the price of jet fuel . This is what I would do get the rumor going that their going to devalue like 30% then do 10% and everyone will be happy just what the Gov. does..

    • I agree that there is a good chance that they will make a small-ish devaluation to highlight how much better the program is than United and Delta. If that works at attracting people, they may keep the best program around largely intact. This is the best case scenario.

  2. BA just announced a change in their Executive program….on April 28th….as a OneWorld member, it may foretell what AA’s approach May be..worth a look…

  3. To take the average, I assume calculated as the simple the numerical mean, to be a meaningful statistic implies that you think the distribution is normal, or Gaussian. Do you have any proof or reason for that? With such a small sample size do you think that is realistic?

    • I don’t know what that means, so I will assume you are mathematically correct that this isn’t perfect.

  4. I’m curious how you got the average for question two. I can’t see how the math would work unless somebody suggested something crazy like July 2015 and I feel like you would have mentioned such a response specifically.

    On second thought, this is a dumb thing to care about so you should ignore the response and not waste your time.

    • Mwwalk
      It’s something to look @ NOW because if you don’t have the points and can get them you could book the flt right before the price gos up 11 months out . Which maybe be a lot of points for 5 people then if you can’t go take the $150 ? cancel fee per and get them back . They may time the increase to help profits (earning)which any company would do and have their PR people deal with us .

    • I treated dates like numbers and averaged them. The average of September 1 and October 1 is September 16 for instance.

  5. One change I’m trying to estimate is when Dividend Miles and AAdvantage will combine, especially since I have a Barclays US Airways credit card. I’m hoping to go to Sichuan next summer, and the award price will likely rise from 60,000 miles to 70,000 miles roundtrip when the frequent flyer programs combine. On the bright side, though, one way award redemptions will be allowed.

    • “Will likely?” Will certainly. AA has said its chart will be the combined chart at the time of combination. We know combination by June 30, and you can only book 11 months out, so none of “next summer” will be bookable with US Airways miles unless the combination is pushed back beyond the dates already given.

      • By “next summer”, I actually meant summer of 2015. So, how much time do you think there is for me to book the award?

        • I think the new chart will be released 11/1/15 as stated in the post and will be effective 2/1/16. But those are just guesses. No one knows.

  6. Yes Scott when you done with that question can you tell me how much snow will be on the Matterhorn on May 25th which I booked on 8/3 /14 and will it be a Sunny day while drinking my Cheap French Wine ?

    CHEERs

      • That’s Fine I do the SAME thing .. I booked My Hi air 5 months out and SIX days before I got a better one so paid the $150 and changed it.. This stuff is just like the weather Sir ..

        Watch for Friday’s Giveaway.

        CHEERs

  7. […] According to the experts and me, we’re only a few months away from American Airlines announcing an increase in the number of miles needed to book an award on Cathay Pacific. By December 9, 2015, we expect booking Cathay Pacific Business Class awards (Asia 2) to rise more than 10,000 miles to 65,000 miles one way and First Class awards to rise more than 13,000 miles to 81,000 miles one way. […]

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