Are Airlines About To Copy Hotels With New Restrictions On Earning Points?

It’s a really, really interesting day in the world of travel rewards.

For the first time in more than a decade, an airline is threatening not to award points or credit toward earning elite perks if you book through the wrong channels. In fact, it’s not a threat — it’s a promise. American Airlines will impose these changes from April 21st for new bookings.

This sort of practice has existed with hotels for a while now, but airlines haven’t been as picky about who you book with and have been happy to award points and perks on virtually all bookings. Today’s news is the first trickle in a potentially fascinating slide.

Hotels Demand “Loyalty” For Points And Rewards

If you want to earn points and perks from Marriott, Hilton, Hyatt and the rest of the big hotel groups, you’ll need to book directly with them, or through a preferred travel agent that has a relationship with their program.

Booking through Hotels.com, Expedia, Booking.com or any of the other most common ways to book may earn you things from the company you booked with, but not points and elite status perks with the hotel group you’re staying with.

The reason is simple on the hotel side: booking with other parties requires the hotel to pay commission to the site you booked with, which eats away into their economics on giving out rewards.

If the commission for your stay is going to Expedia, its hard to give out rewards to you on top of that, too. If the hotel doesn’t have to award another booking platform all the commission, they can spend what would’ve gone there on reward points and perks for you.

American Airlines Just Brought This Concept To Airlines

Airlines historically haven’t cared where you booked — at least not enough to take things away from you. Recently they started to care what fare you booked, but only if you were booking the ultra-cheapest deals.

American Airlines has announced that from April 21st, travel agencies which don’t meet certain criteria for the airline, such as the adoption of newer booking platforms, won’t have their customers receive the American Airlines AAdvantage Miles or Loyalty Points they’d expect for the bookings.

Per View From The Wing, the following tickets will be eligible for miles

• book directly with American and eligible partner airlines
• or book non-basic economy fares through preferred travel agencies, a list of which will be shared in late April

Customers who book directly through American Airlines or through one of their Oneworld airline partners will still always receive their miles and loyalty points.

This Isn’t As Much About Commission But Control

Unlike hotels, where they choose not to give points on stays booked by third parties because of commission woes, American is simply making a fair play for control.

Newer generation travel agencies have adopted ‘NDC’, or new distribution capability and this allows airlines to show, display and sell important content extras for the trip.

This capability allows the airline to sell these extras — aka “ancillaries” — directly in the booking flow, with rich content and visuals. This is helpful for getting people to pick the right fare for them and also helps the airline make some of those extras in the process.

When travel was down and out no airline dared to try, but American is pursuing this aggressively now. Ultimately, most travel agencies, even including the likes of Expedia will likely have no issue continuing to have their tickets be eligible for status and miles earning by adopting more of the distribution and sales capabilities American would like.

Copycat Behavior Is Par For The Course

US airlines do rank among the best globally in many metrics, like app functionality and on time performance and they’ve succeeded there largely by copying each other. It’s not always a bad thing!

If American can manage to stay level on bookings, not completely alienate the travel booking community and win greater share for direct bookings, other airlines will totally follow suit and introduce similar, or even further restrictions to how they award miles.

I could quickly see this spiraling to the hotel status quo where you only get the full suite of elite status credit and miles or points earned if you book direct, through a partner airline or through a specific list of travel sellers.

My Two Cents: A Big Maybe Brilliant Bet

With a moving target on which agencies and sites will qualify for their customers to earn points — which will change every 6 months — many people may actually just move to booking direct to save on the hassle of “what if” and that alone is gold.

Even if American only moves 1% of bookings to direct bookings, it’s a meaningful number. Uncertainty is not fun and I think if anything they probably have left this just a bit confusing for travelers, perhaps intentionally.

The problem is: a vast majority of passengers are agnostic to which airline they fly with and use third party sites like Kayak to compare prices.

If American wages “war” with some third parties, it’s possible they’ll miss out on considerably more leisure travel than they’d expect. That’s leisure travelers they’d hope to convert into loyalists and eventually into those who also think to book direct.

How do you retain that new customer funnel online travel agencies provide while still moving the needle toward direct bookings being more rewarding? This is harder than it sounds because if you don’t award the elite status credit or miles, people who discover the airline via one of these channels is arguably less likely to participate even if they do get on a plane.

I could imagine a flood of emails from customers about miles not crediting, totally unaware they’re ineligible because of how they booked. In fairness, I could also see the perfect reply being “you’ll always earn miles when you book direct” and maybe that’s the point.