Posted by: pizzainmotion | March 29, 2013

Update: American Airlines Variable Choice Plus Pricing A Feature, Not A Bug

I have to admit, I was pretty pleased with the original announcement that American Airlines was creating bundled pricing that included change fees at a lower apparent cost.  Things got a little better when American also announced they were expanding the timeframe you could request a same day change to your flight.

And, then things started to get a bit screwy.  It started with just one flight I couldn’t get to price right with Choice Plus as an add-on.  But, then I did a bit more digging and found out very few flights were pricing at the originally advertised price points.

Gary of View From The Wing took it upon himself to contact American about the apparent issue.  And, since he’s got a smidge more readership than I do he got a response from American on this issue.

The issue is actually a “feature”, in that while you might not know it when you book your round trip ticket from New York to Los Angeles with a connection at DFW American might actually price that as two roundtrips.  The pricing is a bit invisible to you as a buyer, but they see it as two fares.  So, they charge you two “Choice” add-ons.

It sounds like a straight forward answer from American, but there are a few things I would cry “foul” on here.

First, I found a few anomalies that don’t fit their explanation.  At first, I though it was just one.  I found one fare where the add-on was $440 for Choice Plus. This a 5x multiple of the $88 fee, so it suggests there were 5 individual fares on an itinerary that was IAD-DFW-DEN-LAX-IAD.  Since there are only 4 segments, I find that a bit hard to believe.  Not impossible, and I’m surely not a revenue management expert.

Second, one of the other anomalies I found was a Choice Plus fare of $233.  I’m not a math major, either.  But, there’s no way I can see to divide $88 equally into $233.

So, there’s two examples in an admittedly small sample size that don’t appear to conform.  Both could be mistakes, but that second one ($233) shows that American either has some ability to price this option variably built-in or their computer systems really are worse at math than me.

Finally, I’m not a big fan of how American positioned these fares.  I’m not saying they were deliberately misleading.  But, the general public really isn’t going to understand things like multiple round trips to make up one flight.  And, American wasn’t advertising these fares as “Choice Plus starting at $88….”.

As a very frequent traveler, I had no idea there was any variable in the pricing until I discovered what I thought were errors and chose to dig deeper.  Not a single agent I spoke with on the Executive Platinum desk could explain why the pricing was different, just that they had been told it could vary based on what cities I was flying to.  That’s correct, but again, not entirely forthcoming.

Moral of the story here is that for a frequent traveler, the Choice Essential and Choice Plus fares already include things you’ll get as an elite, like a free checked bag (note, the Choice add-ons give you a 3rd free bag if you already get two by virtue of your elite status).  That makes the change fees and same-day change the big values here, IMO.

Paying $176 to have the option to avoid a $150 change fee doesn’t sound like good math to me.  Paying $176 to get the same-day change fee of $75 waived is a worse idea.  I guess you could argue that some people might change a flight more than once, or that they might incur both the $150 and $76 fees on the same reservation.  But, I think that’s a pretty thin argument here.

And, I can’t say that 50% more miles or a premium beverage adds a ton of value to me, either.

I’m seeing less and less of these flights pricing at $88 for Choice Plus the more I look around.  If that’s the new normal, then a really good idea has turned into a pointless one for me.


Responses

  1. All I can say is, are you really surprised? I always expected AA to introduce variable pricing since it includes it in the fare and not as a separate add-on like baggage or early boarding. Some add-ons like United’s EconomyPlus can still be variable, but when things are priced individually people are more likely to complain when the price changes.

    (I ran into the same problem with my wedding caterer, who refused to break down prices and only issue “package quotes.” I eventually asked for 8 quotes covering every possible combination to see how each variable changed the final result.)

    • Scottrick, really? 8 quotes? I thought I was nuts. No, I’m not surprised it’s variable. I obviously also don’t believe them when they say everything is a multiple of $88 on Choice Plus. Might as well fiddle with the pricing to figure out what people will pay. And, like I’m sure there are people that consistently pay 13 cents for PQMs from United, there are surely people who will pay $250 for the option to change their flight and a few extra miles. I just think they’d pick up a lot more incremental revenue if they keep the number lower (think people on expense accounts or getting reimbursed).

      Oh, well. Maybe if they make more revenue on stuff like this they might actually improve some service I’ll actually use. 🙂

  2. Sounds nearly identical to the AC model of multiple levels of economy, with pricing for each level having nothing to do with the others.

    Now just wait for them to cut PQM earning rates on the ‘base’ fares to cut their cuts even more.

    • *Cut their costs

    • Ryan, bite your tongue!!!

      Regards, Edward Pizzarello

      Sent from my iPhone

    • Ryan, I really do think the cutting of EQMs is likely to be near the end of the road for US carriers, right before they move to revenue-based programs. Which might not be that much longer. 😀

      Regards, Edward Pizzarello

      Sent from my iPhone

      • I could see UA implementing it actually. A FF program is only an asset when it results in loyalty and in order to get that, you need to regularly deliver the expected benefits. UA’s program has so many elites that even many 1Ks have a terrible experience with the program these days. Not surprising given that you can get 1K for $3-4K if you were so inclined (and it appears many people are so inclined).

        They desperately need to thin the ranks, at least at the very top tier, so that the can get back to actually rewarding their best customers. Change K/L/T fares to earn 0 PQM, 25% RDM and you cut the ranks drastically, save a chunk of money in miles not accrued and earn extra revenue from your FFers who now have to buy S or higher to keep their status. You’ll lose some people of course, but Delta’s already put in a revenue component and AA would follow in some fashion eventually so I don’t think it’d hurt that bad in the end.

        Given that AC’s got the highest RASM on the continent, and got there by screwing FFers for 3 years straight, I think it’s a ‘when’ not ‘if’ the US carriers start following.

        • Ryan, I agree it’s when, not if. But, I still don’t see UA being first to enact this idea. I also agree their ranks of elites are bloated but I’m not sure THEY believe the ranks need to be thinned. I think they believe they can offer less in the way of benefits and are going to continue down that path. But, I still suspect Delta makes a move like this sooner than UA.

  3. Maybe this is a feature Doug will get rid of 😉

    • Susan, you never know. It’s definitely a much different strategy from the other legacy carriers.

      Regards, Edward Pizzarello

      Sent from my iPhone

  4. A free checked bag doesn’t interest me, nor does priority boarding or a free drink. Free flight changes can be handy when you need them, but honestly that’s infrequently unless you’re a road warrior…in which case there’s a good chance you get them anyway. This pretty much leaves the +50% redeemable miles.

    Choice Plus doesn’t seem to be available outside of domestic flights entirely within the lower 48. You pretty much need to receive more than 2,750 bonus miles to beat the price of simply buying them…which, in my experience, generally means one corner of the US to another with a connection in either ORD or DFW.

    So, I’m not buying the extras unless the bonus miles are worth it.

    • Archon, as a road warrior I do find value in the change fee waiver, though not at the prices being offered. I agree with you that it’s unlikely the 50% bonus in RDMs is going to make it worth it on most flights. A shame, as AA could have made a good chunk of incremental cash off me on something like this. I just can’t imagine who will find value here. But, as I said earlier, there are people buying PQMs from UA at 13 cents a piece.

  5. […] Update: American Airlines Variable Choice Plus Pricing A Feature, Not A Bug […]

  6. […] Some fellow members of the blogosphere are commenting that this change makes American Airlines’ Choice Essential and Choice Plus fares an even better deal at $68 and $88, respectively.  Buyer beware, as $68 isn’t really $68 as I outlined here a month or so ago. […]


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