How will American Airlines reward frequent flyers?

American Airlines (NASDAQ:AAL) announced that it plans to changes its frequent-flier program in 2016.

Starting next year, AAdvantage members will be awarded frequent-flier miles based on the dollars they spent rather than distance flown. The new changes are designed to increasingly reward elite members who purchase expensive, last-minute tickets.

By announcing these changes, American Airlines joins other Delta Air Lines and United Airlines, which already switched to reward programs that gives points based on dollars spent.

The changes, according to American Airlines, will become effective in the second half of 2016. Exact date was not disclosed. The airline company, however, said that these upgrades will be rolled out in phases over time. Until then, members can still earn award miles based on the distance flown.

First 757 With New Livery
First 757 With New Livery

Under the new plan, AAdvantage members will be earning award miles based on the price of the ticket purchased. Basic members will get five miles for every dollar spent on the fare and carrier-imposed fees. Gold members will get seven miles, Platinum members eight, while Executive Platinum members will get be getting 11 miles per dollar they spent.

American Airlines is making it easier to become to qualify for elite status. Starting January 2016, the AAdvantage program will offer two simple ways to gain elite position. Members will earn more Elite Qualifying Miles (EQMs) for purchasing higher fares, while Elite Qualifying Segments (EQSs) will still be awarded for each eligible flight segment flown. Elite-qualifying points will be discontinued.

“American Airlines has spent the last two years being singularly focused on integration. Now we’re at a point where we can begin to look ahead and lay the foundation for the future of the AAdvantage program to ensure we’re rewarding our most loyal customers with the benefits they value the most. We seamlessly integrated our programs in 2015, and we’re excited about the opportunities that the program will offer our customers in the years to come,” Suzanne Rubin, president of AAdvantage, said in a statement.

Experts believes squeezing rewards programs by airlines is a way of raising their profits.

On Tuesday, shares of American Airlines are trading down by 1.24% to $42.30. The company has a market capitalization of $26.6 billion.


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