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

• Angelina from Just Another Points Traveler
• Gary from View from the Wing
• Julian “The Devil’s Advocate” from Travel Codex
• AAdvantage Geek
• Howie from Frugal Travel Guy
• Me (I guessed before seeing anyone else’s)

The Questions and Answers

• Average: September 3, 2015
• My guess: November 1, 2015

• 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.

• 100% of respondents said that the new chart will be for bookings–not travel–after a certain date.

• 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.

• Average: 16%
• My guess: 5%

• 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.

• 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.

• “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.

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.

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

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.

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.

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.

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