by Simon Black, Sovereign Man:
On March 5, 1997, I signed up for the American Airlines “AAdvantage” loyalty program. I was 18 years old and didn’t know anything about travel. Back then it was exciting to even set foot on a plane.
But over the years travel has become a huge part of my life.
I’ve been all over the world to more than 120 countries and have travelled millions of miles, including on American Airlines.
Last night, in fact, American Airlines sent me an email informing me that I had just crossed the two million mile threshold.
It took 19 years from the time I originally signed up for the program in 1997.
Now, 2 million miles on American comes with a lot of unique benefits.
For example, I now have “platinum” elite status for life.
This is common across just about every airline– they reward frequent travelers with various tiers of elite status.
So if you travel a fair bit, they reward you with “gold” status. If you travel even more, they give you “platinum” status.
And if you fly a LOT, you achieve “executive platinum” status, which is what I currently have with American (and several others).
Each tier is supposed to come with certain perks.
The highest tier travelers often receive free upgrades, bonus miles, and a dedicated reservations hotline where you can quickly get through to a real, live human being.
Lower tier travelers still get a fair amount of benefits, like being able to board the plane before anyone else and access to the priority check-in line.
Hitting the two million mile mark means that Platinum benefits have been conferred upon me for life.
Two decades ago I didn’t even think about this.
I’m sure I must have read about it in the welcome kit that American Airlines sent to me in the mail in 1997.
But the prospect of reaching two million miles and receiving some benefit for the rest of my life never factored into my calculus back then.
Over the last year or two, however, it did.
As I got closer to the milestone, I began to learn a lot more about the benefits and started arranging my travel more deliberately to include American and its partners.
But a few months ago something interesting happened.
American Airlines announced a MAJOR overhaul of its elite program. And most of the changes are bad for passengers.
For starters, they’re taking away a LOT of benefits, like making it much more difficult to receive and use the upgrades they’ve promised.
They’re also reducing the mileage bonus they provide to most members (including Platinum members).
And most notably they’ve introduced a fourth elite tier status called “Platinum Pro” that ranks ahead of “Platinum” in the pecking order for increasingly scarce benefits.
So basically this lifetime Platinum status that I just received isn’t worth very much… certainly not worth what it was a few years ago, let alone when I signed up in 1997.
It’s ironic that after 19 years in the program, they changed everything just a few months before I hit the milestone.
Candidly, the writing was on the wall. American Airlines spent two years restructuring its debts a few years ago.
The company is hardly on sound financial footing.
And since these benefits, miles, and upgrades do represent a significant liability for the airline, it was obvious that they would take some action to reduce what they owe to their passengers.
That’s exactly what they did. Because this elite status overhaul effectively represents a default.
They made certain assertions for years about what elite status means. Now they’ve unilaterally changed it to reduce a bunch of liabilities that they can’t fulfill.
Now, I’m not here to complain about elite status changes. Frankly I couldn’t care less about the program.
But it is a wonderful example of how governments, pension funds, and Social Security will do the same thing– default on the promises they’ve made to taxpayers.
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