What to make of yesterday’s about-face by American Airlines (AA)? The carrier said it will allow third-parties to access its frequent flier account data on a contractual basis, starting with AwardWallet, a US company that operates loyalty-rewards-tracking tools for consumers.
As you’ll recall, in February 2012, AA filed an injunction request in Texas state court against some startups, including AwardWallet, which enable frequent fliers to compare side-by-side their mileage balances across airline programs. AA accused the startups of imperiling the security of its customers’ data, violating its trademark, and trespassing on its Internet turf.
The startups had been screen-scraping data from AA and other airline sites, and the legal threats stopped them from doing that. Delta Air Lines and United Airlines followed suit, and the startups removed data from those programs, too—significantly damaging the startups’ value proposition for consumers.
But this summer, AA has been approaching a few of the startups with an olive branch, offering to enter commercial relationships with them. The airline is essentially saying, you can use our data only if you use our application programming interface (API) and you pay us a fee — which is about $5,000 a year, according to one source who spoke to Tnooz on the condition of anonymity.
A figure like $5,000 a year can’t be important to AA’s top-line growth. However the revenue might be used internally to justify the IT work required to support servicing the third-parties. The fee could also act as a barrier to entry for startups wishing to access the airline’s data, scaring off tiny firms that might be either too careless or too unsophisticated to protect customers’ loyalty data.
AwardWallet is the first startup to accept AA’s offer. Alexi Vereschaga, founder of the company, told Tnooz:
I think a big part of it is they care about the user experience and want their frequent flyers to have easy access to this data, but in a way they can still control.
The terms of the deal allow AwardWallet to resell AA’s data through its own API if certain conditions are met, such data security. Adds Jeff Bianco, president of AwardWallet:
There are a couple of factors that make it worthwhile for us to pay American Airlines. First of all, we are an "official vendor" and that has a value to us. It has vetted us and that gives comfort to travelers as well as other potential partners.
If AA is willing to work with us, then others may as well. In fact, AA will refer to us other companies that are interested in accessing American's data.
Secondly, AA will promote us to its user base. They have tens of millions of AAdvantage members, and AwardWallet could grow significantly due to our partnership.
If other airlines were willing to make us official and promote us to their user bases, we would be willing to discuss payment with them as well.
Why did AA decide that these startups weren’t evil after all? One possible reason: AwardWallet didn’t go away. Its position only became stronger.
Since February 2012, the number of consumer startups in the loyalty-tracking game has narrowed. Earlier this year Yahoo bought and shuttered MileWise. UsingMiles, founded in 2011, seems to have all but given up, with barely a tweet or a press release out of it in ages.Superflypivoted away from loyalty into potentially more lucrative and sophisticated services, such as travel management emails and mobile hotel booking.
Meanwhile Mint, owned by Quicken, and CheckMe (formerly PageOnce), began a bill-management fight with each other and neglected to invest in their loyalty tracking functions, abandoning the advantage to AwardWallet. Mileport appears to be on life-support.
GoMiles flew its last mile, with Traxo acquiring its assets in September 2012. That leaves Traxo and TripIt, which have some integration of services, still in the fight. (Traxo’s chief executive Andres Fabris couldn’t be reached by publication time for comment.)
Points.com licenses the AwardWallet API for its mileage tracking service. (Points' contractual business relationship with AAdvantage for 12 years enabled the company to present loyalty membership content throughout the AA/AwardAwallet stand-off.) Points says it has more than 3.8 million users and manages nearly 106 billion miles/points. It's primarily about transactions through exchanging and redeeming miles and points, while AwardWallet is primarily about tracking miles and rewards.
AwardWallet's triumph, for now
In short, AwardWallet stands nearly atop the heap, besides Points.com. Its loyalty rewards service is used more by consumers than any of its competitors’ products. It has enjoyed strong growth. Between March and July of this year, its base of total active users grew from 144,268 to 169,297.
Today, about 14,642 of AwardWallet’s current users, or about 8.6%, pay fees to receive premium services—a remarkably high rate for a “freemium” consumer product. In comparison, Evernote, the note-taking software that’s an oft-cited example of the “freemium” model, has a 2% conversion rate to its paid product.
Founded in 2004, AwardWallet has been more determined and more focused on product execution than any of its rivals. Its free tool covers every large national travel company, from Amtrak to American Express to Diners Club, except for Delta, United, and Southwest Airlines.
Its little innovations that led to a loyal fan base. Its user interface for its website and apps stands out from rivals by displaying any elite status a user has earned. Its email alerts to users reporting when their miles and points will expire offer especially actionable advice on how to keep those miles and points active. It uniquely lets users manage accounts for multiple family members. It captures even small awards, such as 500 mile upgrades, something competitor services overlook.
AwardWallet’s executives say they “didn't actively encourage people to complain to AA”. But Tnooz notes that the company did post messages on its website complaining about AA's cutoff and hosted user forums in which members rallied to contact the airline to request that the connection be re-instated. (Relatedly, Tnooz reported on AwardWallet’s campaign to get Southwest back on board).
An official at AA did admit to Tnooz off the record that the airline received “thousands” of requests from AwardWallet users to change its mind.
AwardWallet also put pressure on AA (and Delta and United and Southwest) by finding a manual workaround; users could have their mileage statements emailed to an account at AwardWallet, which would scrape the relevant balance updates and add them to user accounts.
It’s funny how much can change in little more than a year. AA once called AwardWallet a data thief, an irresponsible interloper, and a trademark infringer. Now the airline says that the same startup, providing the same service, is “making it easier and more convenient for AAdvantage members to track their mileage balances.”
NB: Photo of Brian, a blogger called ThePointsGuy, using AwardWallet.com with his dog, whose name is "Miles".