An upcoming policy change at the American Airlines Group Inc. (NASDAQ:AAL) means elite status may no longer guarantee a direct upgrade to business class.
On Thursday, American Airlines announced that starting August 25, it will no longer offer complimentary business class upgrades to elite frequent flyers on select transcontinental and Hawaii routes, instead placing them on the premium economy upgrade list.
The affected routes include New York–Los Angeles, Boston–San Francisco, Dallas–Honolulu, Kona and Maui, Phoenix–Honolulu, and Chicago–Honolulu and Maui, where eligible passengers will now be upgraded to premium economy instead of business class.
American Airlines said elite members who book premium economy or purchase a premium economy upgrade after buying a coach ticket will remain eligible for complimentary upgrades.
The airlines said it would try to honor passengers’ seating preferences, but seat assignments depend on aircraft type and availability, and Premium Economy travelers may be assigned middle seats if no other options are available.
American Faces Fuel Cost Surge
Last month, American Airlines reported better-than-expected second-quarter 2026 results, with record revenue and adjusted earnings beating analyst estimates, driven by strong premium, corporate, and international travel demand. However, the carrier lowered its full-year earnings outlook despite operational improvements.
CFO Devon May said American Airlines’ projected fuel costs have surged by more than $700 million for the third quarter and nearly $1.6 billion for the rest of 2026 since early July, with management warning that fuel prices are expected to remain volatile despite strong travel demand.
Airlines Double Down on Revenue
The move reflects a broader airline strategy to protect premium seats and boost revenue, as more travelers pay for higher-fare cabins, making complimentary upgrades increasingly difficult to obtain.
The policy change is also part of a broader trend in 2026, with major U.S. airlines also raising checked baggage fees earlier this year to offset higher operating costs. American Airlines also updated its basic economy policy to charge passengers who purchased tickets on or after May 18 for seat selection, while also making them ineligible for upgrades, regardless of elite status.
Rising oil prices due to the Iran conflict have increased airlines’ costs, but baggage fees are unlikely to fall even if fuel prices decline, said experts. Airlines are raising baggage fees instead of ticket prices to boost revenue because travelers focus more on airfare than the total trip cost. Experts say airlines also use economic pressures, such as higher fuel costs, to justify fee increases with less customer backlash.
Columbia Business School marketing professor Vicki Morwitz told USA Today that airlines raise baggage fees instead of ticket prices because travelers focus on airfare rather than the total trip cost. She added that airlines also use economic pressures, such as higher fuel costs, to justify fee increases with less customer backlash.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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