Monday, September 1, 2008

American Airlines AAdvantage

The grandpappy of all frequent flier programs, AAdvantage was designed to keep American Airlines most frequent customers on the right airplanes, American’s. According to Lalas (TCS_White_Papers) the first frequent flier programs in the 1980s had the intended benefit of better understanding the popular airline routes.

Of course, AAdvantage increases customer retention with the promotional currency of a free airline ticket. Furthermore, Thomaselli (2005, p 2) reports that

“There's not a lot of expense to the airlines. It might sound like it's a big thing, giving away a free ticket to someone who has accumulated enough points. The reality is, very few seats are given away at the expense of a revenue passenger."

More than a defensive mechanism to keep customers, it was a reconnaissance to better understand its routes and customers. This enables more effective yield management on routes to predict sales patterns and ticket pricing strategies to fill up planes while optimizing revenue. Of course, there is also personalized marketing. Jackson (2007, p 31) reveals that American used its AAdvantage database to more effectively personalize its web site.

During these desperate financial times, Financial Week (on AA) reports on another advantage of the AAdvantage loyalty program. The informative database has tremendous value and American is considering selling it to raise cash to stay alive, reflecting its legless frailty and incapacity.

American has already been using the loyalty program database for its retail web site (see Retailing for Miles ). It incents members to buy products from it with the inducement of earning frequent flier miles.

Solheim (2008, p 1) says that American also profits by selling miles to other marketing organizations.

“Airlines discovered that they could make more money by selling miles to ‘partners’ than by selling seats.”

AAdvantage has almost 1,200 partners who buy miles at 1¢ to 2¢ per mile.


Jackson, Tyrone (2007). Personalisation and CRM. Database Marketing and Customer Strategy Management. Retrieved from EBSCOHOST on August 31, 2008.

Solheim, Mark (January 2008). What You Need to Know About Travel Reward Programs. Kiplinger Personal Finance. Retrieved from EBSCOHOST on August 31, 2008.

Thomaselli, Rich (June 20, 2005). Who really reaps mileage rewards? Advertising Age. Retrieved from EBSCOHOST on August 31, 2008.

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