American Adds One Way Awards, Cuts Stopovers

(MoneyWatch)  The way American tells the story, they're adding all kinds of flexibility and benefits for their customers with one way awards, but of course, that is hardly the motivation. This is all part of a dance for the airline, which wants to do whatever it can to make sure people continue to accrue more and more miles.

Many media outlets picked up the story here as added flexibility with no downside. Bloggers quickly picked out that the free stopover that is allowed today would be eliminated. The more savvy media outlets out there, like the Washington Times, also saw through the veil but noted that it was still a net positive for customers. I tend to agree, and I think it's a net positive for both.

Yes, customers lose the ability to get a free stopover on a trip. For some, that's a big deal, but for others, it's not. In exchange, they can now use half the miles for a one way award (today they only have roundtrip ones), and they can mix awards in different classes of service.

So why is American adding more flexibility here? Isn't it the goal of every airline to make redemption impossible? No, not really. Airlines have made a ton of money by selling miles to their partners, who in turn award the miles to attract people to their businesses. The biggest cash cow of all is the branded credit card. So airlines love the idea of trying to give away more miles, because they make money on all of them that aren't earned from actual flying.

If a program like American's AAdvantage can innovate by making redemption easier, then they're banking they can bring more people in and consequently sell more miles. This also helps them to burn more miles on flights that won't be full anyway. How many people are going to use a full roundtrip award for a one way trip? Not many. Now they can open up that option, fill up the plane, and make some money on all the fees they'll charge.

It's a smart move by American, and those who want one way awards will be very happy, even with the loss of the free stopover.