Frequent Miler on the Air - Will AA devalue now that Citi transfers to AA? | Coffee Break Ep66 | 8-5-25

Episode Date: August 5, 2025

Citi now offers a way to transfer points 1 to 1 to American Airlines, which has many predicting an AA devaluation is on the horizon. In this podcast episode, we'll discuss this concern.(00:44) - Why are we so excited about transfers to American Airlines?(04:06) - A devaluation assumes a flood of AA miles, but... Citi points are not that easy to get in bulk, but even if there are many more AA miles out there, is that reason for devaluation?(04:56) - Here's what we think...(15:35) - But wait...did AA devalue already?Read One Mile at a Time's post here: American AAdvantage Business Class Award Devaluation? Sort Of…: (16:24) - More than two years ago, AA published "starting at" prices for its own flights. Mostly, though, the starting at prices stayed as they were with previous saver award pricing.(17:15) - Now, though, "starting at" seems to be closer to American Airlines' published intentions from a few years ago...(18:29) - BUT... mix in another carrier to get the partner award chartRead more about this hereVisit https://frequentmiler.com/subscribe to get updated on in-depth points and miles content like this, and don’t forget to like and follow us on social media.Music Credit – Beach Walk by Unicorn Heads

This is a Voyescape podcast. You can find all of our travel podcasts from around the world at voyescape.com. Welcome to Coffee Break, where we focus on a single topic related to miles and points. And each coffee break is limited to 20 minutes or less for your money back. On today's coffee break, will American Airlines devalue now that city points transfer one-to-one to American Airlines. Yeah, so now that there's the ability to earn transferable points that transfer to American airlines, the fear is that there's this huge pot of transferable points that can now all

move over to American. And, you know, if you flood the market full of new American Airlines miles, is American just going to jack up the price of everything in order to kind of compensate for that? So let's get into that in a second. But let's first start by talking about why is that? this exciting or interesting? Why are we even worried that we're going to flood the market with American Airlines miles? After all, City has a whole bunch of different airline and hotel partners. This is just another airline partner, right? Yeah, in a way, except American Airlines, I think,

is special. So there's a number of things that I just absolutely love about American Airlines miles as they stand today. Free cancellations on all award flights, free changes to both American Airlines and partner awards. There's what I call American Airlines Roulette, which you could love this or hate this, but the fact is that when you're trying to use miles for American Airlines own flights, sometimes you'll get excellent pricing. Now, if you try again five minutes later, you might get bad pricing. And that's why I call it roulette. But the point is that I frequently find great pricing randomly on American Airlines own flights, but where I'm really in love with American Airlines Miles is their partner

award pricing. While all the other major airline programs abandoned award charts a while ago, American Airlines abandoned award charts only for their own flights. They kept their partner award charts. So if you want to use American Airlines Miles to fly Japan Airlines, for example, you know exactly how much it'll cost if the award is available. And that partner award chart is actually really, really good, especially for international business class. You have some amazing deals, some amazing first class deals as well. They also have some great partners.

Like, you know, if you like to fly Cathay Pacific, Eddie Hod, Japan Airlines, Qantas, Qatar, These are all like airlines that can be really luxurious to fly, especially in business or first class, and American Airlines has access to those. Most partner awards are available to book online, so you don't have to call in to book them. That's not true with all programs. And you have low fuel surcharges with most partner awards. A big exception, British Airways. If you try to use American Airlines to book British Airways, forget it.

The surcharges are going to be extreme, but with most other airlines, you have very low or no surcharges. And you can even use American Airline miles to fly domestically, like on other airlines, Alaska and Hawaiian now are partners with American Airlines. So you could use your miles to fly them. Yeah. So there are a bunch of great uses of American Airlines miles. And anecdotally, domestically, I've been lately planning a lot of domestic travel and looking for positioning flights, I am just frequently finding that American Airlines has better award pricing. And again, that's anecdotal based on the city pairs I've been looking at and whatnot.

But very often, I find they do have good domestic award pricing. So, you know, on top of the great partner awards, that's certainly another big advantage. But the partner awards are certainly what we get most excited about. And so speaking of the partner awards, there's a big fear, like we said at the beginning, that there's going to be a devaluation because all of a sudden, people have access to more miles. Now, in the past, you needed to get an American Airlines credit card. That was the most effective way to earn American Airlines miles. You could also earn them through the shopping portal and other partnerships.

But there wasn't a way to take transferable points from any of the major transferable currencies and move them directly to American Airlines. Now there is. Some people out there probably have hundreds of thousands, maybe millions of city thank you points. So is that flood going to make American Airlines have to devalue and increase their award pricing? Yeah. And a lot of people are predicting that, but I think we should take a step back and say, are there really going to be floods? So if the transfer was from American Express or even Chase, where both of those programs, there are tons of ways to earn points in bulk, like through lots of welcome offers, there's portals, there's refer-a-friend offers.

But City doesn't have much of that going on. So City, yes, you can earn a lot of points from spend. You've got cards that earn 2x everywhere. You've got cards with great 3x categories, and you've got category bonuses all the way up to 6x now. But there's not much going on in terms of welcome offers. There's a couple cards with good welcome offers, but that's it. And they're tough on approvals. So people who like to serially apply for lots of cards,

they're especially tough on people where they could see. They've signed up for a lot of cards across issuers over time. And, you know, there are no portals or card-linked offers that give you. you thank you points. City does have portals and does have card-linked offers, but those give you cash back, not thank-you points. And there's no refer-a-friend bonuses. So there's all kinds of reasons why city points are actually, you know, not easy to earn in huge numbers. Like, so they're probably the easiest to earn in medium numbers for spend because of the multiples, as I talked about earlier. But among the harder currencies to earn in great big piles all at once. Right. I mean,

because you look at it, and even if you were able to average 3x on all your spend, which would be pretty tough to do if you're doing a lot of spend, you know, even if you average 3x on all your spend, the average person probably isn't spending six figures a year, right? So the number of potential thank you points, the average person is going to earn over the course of a year is just like, you said, not nearly as outsizes when you consider like MX, where a couple playing in two-player mode, player one could refer player two and earn 30,000 points, boom, right there potentially. And then player two earns the welcome bonus on that card and refers player one to another one. It's very easy to bulk up your MX membership rewards points quickly, but Greg's point is a good one here,

that it's much harder on the city thank you side. So there probably isn't the huge flood that some of us are concerned about anyway. And that's not to say there aren't some of you out there that have a ton of thank you points. I'm sure there are. But not nearly as many as there probably are people who have a ton of amex points or chase points or other types of transferable points. So I think that's an interesting perspective there. I mean, you're right. The flood is not as large as we fear probably, the potential flood. And then, of course, out of the people who have tons and tons of thank you points, not all of them need tons and tons of American Airlines miles, right? Some of them do, but not all of them. So I don't know if that's necessarily going to be it. However, I mean,

you have to admit there's obviously the potential for a lot more supply of American Airlines miles today than there was last week, right? All of a sudden, there's, there certainly are more American Airlines miles, probably even today just a couple of days into the ability to transfer to American Airlines miles. And they were a week ago. I'm sure there's been some amount of influx. So isn't that going to cause some devaluation? I mean, do you think that American isn't going to increase their prices when suddenly there's a lot more miles on the market? Yeah. Well, let's take these in pieces.

So there's the value of American Airlines miles for its own flights, and then there's the value of American Airlines miles for partner awards. For their own flights, they dynamically price those flights today. You know, and it's roughly correlated with the cash price, but not necessarily, I mean, who knows, what the magic algorithm is that they use. But the point is, if there's a lot more miles out there, if there's a lot more people looking to use American Airlines miles for American Airlines flights, then yes, I guess that's a devaluation

because what I expect would happen is the algorithm would price those awards higher because they're seeing more demand, just like they do with the cash prices, right? If you see more demand, you're gonna raise up the price until the man starts to drop. So yeah, I think if that happens, if there's a surge in American Airlines bookings

with American Airlines miles, then yeah, I think we'll see some, what you could call a devaluation in that situation. Partner awards though, you know, so they have this fixed award chart that I talked about earlier. I don't know why they would care. So let's say there's a flood of

demand for those elusive Japan Airlines business class flights. They're already hard to find. So let's say there's, you know, 10 times as many people looking for those flights. So what happens to American Airlines? You know, there are costs. Do they need to raise up price? I don't think it really changes their own costs. I think what it does is it makes it harder for all of us to find those awards.

And so if you want to call that a devaluation because there's less award availability, fine. But as far as the price is going up, I don't think this will be the cause for that. And I worded that specifically because I've been predicting for years that American Airlines would either eliminate their partner award chart or devaluate, raise the prices on those awards. And each year they, you know, joyfully prove me wrong by keeping that award chart the same. I hope that they continue to prove me wrong year after year. But it just, it does seem inevitable that they'll change it at some point. I just don't see why a flood of new American Airlines miles would be the thing that causes them to do that. I don't know.

Yeah, I mean, you make a really sound argument for that because, like you say, said, it's the partners that control that inventory. And so whether there's a lot more American Airlines miles in circulation to book those or not doesn't really matter. The majority of that partner award space probably gets booked one way or another. I mean, we know that because it's hard to find on some of those partners. Most of it probably does get booked. So it probably doesn't make a difference immediately. So I could see your argument there. And you might very well be right. I think the flip side of that, though, is that if you've got tons and tons of customers with a lot of miles and they want to use them for these partner redemptions that you say exist, but they can never

find them, customers are going to get frustrated. And so I imagine that that frustration with the inability to book partner awards might contribute to American increasing the price in order to essentially make more of them available at a higher price. And I don't like that. I don't want that, but that at least probably provides some proof of the value of the Miles saying, well, look, you actually can book these awards. They're not just these unicorn things. So I don't know that it won't contribute at all. I think it might. I also think, unfortunately, I think that the whole Miles broker game is going to make this get messy quickly because of the ability to transfer city points to other card holders.

And so I have a feeling that Miles brokers are going to be on this. And unfortunately, I think it's going to make it a lot harder for all of us to book awards. And so I wouldn't be shocked if that contributes to increasing the price. But like you said, it's kind of hard to peg it just to that. For years, we've said, oh, man, these great prices aren't going to keep up forever. So it'll be really hard to make a correlation one way or another, even when the price goes up because at this point it's been a lot of time. The flip side, though, that of course is that the

vast majority of miles are redeemed for economy class awards. And Americans economy class award chart on partners is good or fine, but not like amazing, not hugely outsized compared to other program, economy class awards. It's really the business and first class awards that provide the most value. And most people probably ignore those, right? I mean, most people probably don't even look at the business and first class price because they're not intending to book those. So I think there's probably less attention on those than people like us might think that there is because that's all we want to look for, right? But that's just not something on the radar for most folks that aren't aware of how close in price those things can be. So I don't know, maybe you're right.

It won't cause it. It won't cause the devaluation, but I still, like you, won't be surprised if the partner award chart gets devalued next week, next month, next year, because we've thought that that would happen at some point regardless. So, yeah, I mean, I think you're probably right. This won't be the main factor that causes the partner award chart to be devalued. I think it's going to be, though, the main factor increasing competition for all American Airlines awards, which probably will make the domestic ones cost a bit more in the long run. Yeah, because of demand on those flights.

Yeah, no, that totally makes sense. So it looks like we agree. I thought you brought up a great point, Nick, about the mileage brokers. American Airlines is particularly a great program for them to use because of the free changes in cancellations. And I almost feel like if and when that becomes a bigger problem than it already is, that I'm less worried about a devaluation

and more worried about unfriendly program changes, like starting to charge for changes and cancellations. and things like that. Because, you know, my understanding is brokers, because you have free changes, can, like, snap up awards as soon as they're available and then later, you know, cancel them in the hopes of freeing up awards space to book

in someone else's name, that sort of thing. And that would be really unfortunate if those mileage brokers ruin this good thing. Yeah, I agree. Okay, this just in. We recorded this podcast. break last Monday, because I'm on vacation right now. And two days after we recorded the podcast, one mile at a time posted about American Airlines devaluation. Sort of. In fact, sort of was in the

title. It was called American Advantage Business Class Award Devaluation question mark. And the answer, sort of. So we wanted to just take a minute to explain. what that all means. I don't think it's a, I don't think it invalidates anything that we just talked about, but it's definitely worth an explanation of what's going on. So here's the background. When American Airlines first ditch their award charts, they published starting at prices. Now, this is just for their own flights, not for partner awards. They published starting at, prices instead of fixed prices. And there were things on there like business class to Europe was starting at 75,000 points. Well, that turned out to not be true. That over the last couple

years, since they published that, we were able to find business class award prices to Europe on American Airlines itself for less than 70,000. Usually, we would see as low. was the partner award price, which is 57,500 miles. So what has happened now, though, and I'm not sure how recently exactly, but it would be hard to blame it on the city transfer since I think this has been going on at least weeks, if not longer, is that the starting at prices

that we're actually seeing in the wild now are really close to whatever. American Airlines published a couple years ago. They're still not exactly. Like, so for example, as I said, business class to Europe, the starting at said 75,000 miles, but I'm finding business class to Europe on American Airlines itself for as low as 70,000. So it's a little bit less. Same, similar thing.

Bigger description to see, though, business class to South America, it said starting at 90,000. and I'm seeing some as low as $75,000. Business class to Asia, though, which it said $95,000. Yeah, that's the lowest I'm seeing as $95,000. So that one, flights to Asia, are right on with what that says. So good news is that you can get the partner award pricing just by tacking on a partner award to one of your flights. So let me give an example. Chicago to London flying American Airlines in business class, you'll see American Airlines

wants to charge 75,000 miles. Add on London to Munich on British Airways and the price drops to 57,500, which is the partner award price. So anyway, you know, it's all consistent with what we talked about that you don't know what you're going to get with American Airlines own flights. when you're booking. It's the partner award chart that we're worried about might devalue, but it hasn't yet. Yeah, and that's good news, that it hasn't yet. And not only that it hasn't yet, but the fact that mixing one of those partner flights and an American Airlines flight

results in the partner award pricing that you would expect. So like you said, this really isn't a devaluation in the sense that I think people mean it when they talk about worrying that American LD value because of transfers from city thank you points. Really what people are concerned about is that partner award chart because it's already a game of roulette when it comes to looking at American Airlines pricing for their own flights. Yes, this is more than it used to be, but probably, like Greg said, not a direct result of transfers from city thank you points. Don't forget, if you've enjoyed this and you'd like to get on our email list, you want to go to Frequentmiler.com slash subscribe to join our email list. Follow us on all the various social media and check out our frequent mile around the air episodes dropping every Friday.

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