Surge in American Airlines revenue and profitability for third consecutive quarter (Part 5 of 14)
Integrating Dividend Miles with AAdvantage
Integration of loyalty programs of the two merged entities is one of the major tasks related to the merger of any airline. In October 2014, American Airlines announced that it will integrate US Airways’s loyalty program, Dividend Miles, with American Airlines’s AAdvantage by 2Q15. This will be accomplished by combining mileage balances and aligning the elite levels and qualification criteria of the two programs.
Aligning elite status membership
American’s AAdvantage program has three levels of Elite status membership: Executive Platinum, Platinum, and Gold. US Airways’s Dividend Miles program has four levels: Chairman’s Preferred, Platinum, Gold, and Silver. The company plans to map the four elite status levels in the Dividend Miles program to the three elite status levels of AAdvantage program as follows:
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US Airways’s Chairman’s Preferred will be mapped with Executive Platinum.
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Platinum and Gold will be mapped with AAdvantage’s Platinum level.
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Silver will be mapped with AAdvantage’s Gold level.
Combining mileage balances
For customers who have accounts in both programs, the mileage points under Dividend Miles will be transferred to their AAdvantage account from 2Q15. American will create an account for the Dividend Miles members who do not have an AAdvantage account, and the balance will be transferred to the new account.
Complimentary upgrades
After combining the programs, all elite members will receive complimentary, auto-requested upgrades on eligible American-operated flights less than or equal to 500 miles. Executive Platinum members will receive complimentary upgrades regardless of the length of the flight. Until both airlines share a common reservation system, the upgrade policy for US Airways-operated flights will be different (refer the above table).
American Airlines provided customers with other benefits, including an increase of bonus miles from 25% to 50% for AAdvantage members on business class tickets. This bonus program will start in January 2015. All airline-run loyalty programs are intended to increase their customer base.
Delta Air Lines, Inc. (DAL) runs SkyMiles, United Continental Holdings Inc. (UAL) runs MileagePlus, and Alaska Air Group, Inc. (ALK) runs Mileage Plan. Also, JetBlue Airways Corporation (JBLU) runs TruBlue, and Southwest Airlines Co. (LUV) runs Rapid Rewards. These airlines are held by Transportation ETFs such as the iShares Transportation Average ETF (IYT) and the SPDR S&P Transportation ETF (XTN).