I Wonder If Current Mileage Sales From US Airways and American Airlines Tell Us Anything About The Future?

First, the mileage sales:

US Airways is back with a 100% bonus on purchased miles.

US Airways and American Airlines

On its face, I wouldn’t consider this a big surprise.  They’ve run this promo plenty of times and I’ve covered it plenty of times.  And, there are certainly good reasons to purchase the miles, especially if you have a trip overseas planned that you can ticket now on a Star Alliance carrier (like United, before their prices for award goes up next year).

But, American Airlines and US Airways have “officially” merged.  And, while there are lots more pieces to integrate, it would seem at this point that it’s clear to everyone with half a brain that buying US Airways miles right now at 1.8 cents certainly means you can hold onto them and turn them into AAdvantage miles when the two carriers allow redemption on each other’s flights, likely to happen in 2014.

American Airlines has something of a new offer in the market, and a lower price.

US Airways and American Airlines

 

Working backwards through your “bonus choices”, I certainly don’t think that 3 500-mile upgrades is a good value if you’re buying 60,000 miles.  Those upgrades will set you back about $100.  A 5,000-mile discount on award travel for 3 passengers nets you a 15,000 mile savings, or about $300 in value.  But, it’s only valuable from February 18th to May 18th, though you could likely use it for Spring Break planning if you haven’t booked already (like me!).

The 10% code is interesting. It’s valid for the same time period as the award discount (February 18th to May 18th).  And, it’s valid for up to 4 passengers on one record.  This could certainly earn you more than $300 if you had an overseas flight you were planning to purchase in that time period for the family.

For me, the safest bet would be to take the 20% bonus miles to give me a blended price of 2 cents per mile.  But, I’m likely not a buyer at that price because I have a big AAdvantage balance.  Certainly, if I needed the miles for something immediately it’s a solid price.  But, US Airways is clearly cheaper at 1.8 cents for something more mid-range or long-term.

What do these sales tell us about the future of a New American as it relates to how they value their currency?

I don’t recall a time in recent memory where American Airlines sold AAdvantage miles for less than 2 cents, and they’re usually 2.3 cent per mile and above range.  The AAdvantage sale is certainly a departure from previous thinking both on price and structure.  This, combined with the US Airways sales could be a clearer indication that the two airlines certainly aren’t going to pull the plug on any and all promos in the pipeline right now, and may still continue to sell miles and status cheaply, allowing folks to accrue miles at status more cheaply in the AAdvantage program temporarily.  These certainly both strike me as “in the hopper before the DOJ decision” type promos.

I wouldn’t call this a clear signal that the New American is going to discount the sale of their miles significantly.  The two airlines really are two different products, with US Airways functioning much more as a hybrid of full-service airline and low-cost airline whereas American has been more successful marketing to high revenue customers.  But, it is interesting that this most recent AAdvantage sale is lower than normal.

I don’t want to fly US Airways.  That’s why I don’t.  I also don’t want American to turn into US Airways.  Maybe this is just a remnant of something already planned by US Airways and it’s the last time we’ll see it.  Maybe Doug Parker will see areas to affect profitability that don’t involve selling miles cheaply.  While these prices are good for mileage junkies in the short term, I also think they lower the “glass floor” supporting the redemption prices in US Airways mileage chart and could do the same to the AAdvantage chart.

Remnant or a sign of things to come?  What’s your opinion?

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