Mileage mall expansion poses promise and peril for frequent flyers

Last week, American rolled out a spiffed up and upgraded version of its AAdvantage eShopping mall where AAdvantage members can earn miles for shopping at more than 200 online retailers.

More important than the mileage mall's cleaner look and feel is its new functionality. Rather than a one-size-fits-all application, AAdvantage members can now set up personal accounts, designate "favorite" merchants, and review their previous shopping and award history. In addition, the search function—a key component of the shopping experience—can now display available products from multiple vendors.

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Even more significant than the site's specific enhancements is the very fact that American is investing substantial resources in the frequent buyer portion of AAdvantage.

The long-term evolution of airline loyalty schemes from frequent flyer to frequent buyer programs has been a double-edged sword for consumers. On the plus side, the addition of mileage malls alongside the ever-growing list of non-travel partners has enormously expanded the universe of mileage-earning opportunities.

But on the negative side of the equation, the airlines have not increased the supply of award seats to keep pace with the increase in frequent flyer miles. Inevitably, more miles contrasted by a stagnant supply of awards will lead to frustration and outrage on the part of program members unable to redeem their miles.

As airlines continue building out their partnership networks, the disconnect between supply and demand can only increase.

Anecdotal reports suggest American has done a better job than most airlines of making award seats available to members of its mileage program. So their mileage mall initiative is unlikely to measurably degrade the program's overall value.

But as American goes, so goes the rest of the industry. And as American's competitors expand their mileage malls, members of programs with less generous award seat allocations will find themselves earning more miles but enjoying them less.

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