AA frequent-flier policy changing
BY SHERYL JEAN The Dallas Morning News
Thursday, November 01, 2012
11/01/12 at 3:17 AM
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Carl Youngberg has been saving miles he earned flying on American Airlines Inc. to use for a once-in-a-lifetime around-the-world adventure.
Two-thirds of his 300,000 miles are deemed miles that never expire because he accumulated them more than 20 years ago.
That changes Thursday, when those nonexpiring miles gain an expiration date and fall under new redemption rules.
Now the Richardson, Texas, resident faces a dilemma: Does he rush to book a complex trip or use up more of his miles later to book the travel?
"It's kind of a dream vacation," said Youngberg, an executive coach who has accumulated more than a million miles, mainly when he worked for Neiman Marcus department store. "It feels almost like a currency devaluation in a Third World (nation)."
An untold number of American frequent fliers face a similar question.
In July, American notified certain frequent fliers in its AAdvantage program that the rules regarding nonexpiring miles earned before July 1, 1989, would change. As of Thursday, those "old miles" will convert to miles that expire, and more miles will be required for a free ticket. Fliers can keep those converted miles from expiring, however, by earning or redeeming miles at least once every 18 months.
American, which is in bankruptcy reorganization, gave no reason other than "to streamline our program," according to an email letter sent July 13 to affected members.
Last week, Suzanne Rubin, president of American's AAdvantage loyalty program, said American is the last major U.S. carrier to eliminate dual expiration policies and the only airline to offer a mileage conversion bonus for a frequent flier program change of this type.
Two customers - Karen Ross of Connecticut and Steven Edelman of Oregon - were so outraged by the changes that in September they sued American, claiming breach of contract and unjust enrichment by the airline. They seek class-action status to include all AAdvantage members with old miles.
American has asked the bankruptcy court to dismiss the suit.
At the end of 2011, 69 million AAdvantage members had about 591 billion unredeemed miles.
A "small" number of AAdvantage members have old miles, Rubin said. She didn't have an estimate of how many old miles have not been redeemed.
Clinton Krislov, a Chicago lawyer representing the two frequent fliers in the lawsuit, estimates 1 million AAdvantage members hold old miles.
Fort Worth, Texas-based American launched its frequent flier program in 1981. In 1988, the airline began distinguishing old miles (those acquired before July 1, 1989) from new miles (acquired after July 1, 1989) with separate expiration rules and award charts.
In its latest change, American let these frequent fliers book flights before Thursday for travel completed by Sept. 25, 2013. For unused old miles, American will convert them to expiring miles with a 25 percent mileage bonus. For example, 100,000 old miles will become 125,000 miles under the new system.
American said it could not explain how it chose the mileage bonus percentage because of the pending lawsuit.
Some American customers aren't happy with the bonus.
"What's frustrating is it seems that the people who will take the biggest hit are those with the most points who've been the most loyal," said Bobby Finken of Coppell, Texas, who has about 2 million unused points, with 980,000 categorized as never expiring. "The bulk of the people who have 2,000 miles or 5,000 miles will get the bonus on miles that are somewhat worthless. For them, that's great."
Finken typically uses his earned miles to fly his family of five to Hawaii in first-class seats. Under American's new system, his old miles will convert to more than 1.2 million, but he estimates he'll need to use 60 percent more miles to go to Hawaii. (He acknowledged that flying coach to a different destination would require fewer miles.)
At least one industry observer thinks the frequent fliers are making too much of the change.
"If you have a lot of people who have hundreds of thousands of miles from 20 years ago, my advice to them is get a life," said Michael Boyd, chairman of Boyd Group International, an aviation consulting and research firm in Evergreen, Colo.
An American Airlines customer checks in for his flight at LaGuardia Airport in New York. Rules for the American's frequent flier program are changing, effective Thursday. Bloomberg file