After World War I, America was moving quickly into modernity with factories expanding, cities growing, and new technologies becoming part of daily life. Aviation was still in its infancy. Surplus warplanes and “barnstormers” (stunt pilots offering rides and exhibitions) filled the skies.¹

But things changed when the Air Mail Act of 1925 was established.² It was a law that let private airlines carry mail under government contracts.³

These contracts provided steady income for small airlines, and many began combining routes, creating the foundation for larger networks.⁴

Several airlines began to take shape in that period. Among them were United and Delta, carriers which remain successful today.⁵

United traced its roots to Varney Air Lines, founded in 1926 by Walter Varney, a pioneer in U.S. airmail service.⁶ A few years later, Varney’s company was merged with others under United Aircraft and Transport Corporation, creating United Air Lines.⁷

Delta began in 1924 as Huff-Daland Dusters, the first aerial crop-dusting company using planes to spray farms with pesticides before shifting to passenger flights in 1929 and building routes across the South.⁸

Also in this environment, American Airlines was formed when more than eighty small carriers were merged under the Aviation Corporation as American Airways in 1930.⁹

Then in 1934, E. L. Cord, a savvy entrepreneur experienced in building car and transportation businesses, acquired the company.¹⁰ He renamed it American Air Lines Inc., and appointed Cyrus Rowlett Smith as president.¹¹

C. R. Smith was a Texan businessman and banker with a strong reputation for financial skill and innovation. He standardized the fleet, improved operational efficiency, and transformed the airline beyond mail service into a stronger commercial carrier.¹²

In 1939, Smith also introduced the Admirals Club at New York’s LaGuardia Airport. Initially created as an exclusive lounge for VIPs and loyal travelers, it was the first of its kind in the industry.

Long before points or miles, it set the precedent for rewarding and retaining valued customers and later expanded into a global network of lounges.¹³

Technology became American’s edge

By the 1950s the airline and the industry were well established, but Smith thought the reservation process was still slow, messy, and prone to errors.

In 1953, flying from Los Angeles to New York, he met an IBM executive, and their conversation sparked the idea of applying computers to manage the airline’s entire booking process.¹⁴

American and IBM worked together over the following years to develop SABRE, the first real-time reservation system, which went live in 1960.¹⁵

This breakthrough set American Airlines apart, delivering faster service to passengers and giving the airline an advantage no rival could match.¹⁶ SABRE was capable of processing vast amounts of passenger and flight information. It could track seat inventory, confirm reservations instantly, and store detailed records for every transaction.¹⁷

It was the only system in the industry with that level of data depth.¹⁸

SABRE also made it possible to track miles for millions of customers at scale. And in 1981, Robert L. Crandall, then president of American Airlines, launched AAdvantage.¹⁹

What now feels almost obvious to loyalty professionals was, at the time, a game-changing concept.

In fact, a smaller carrier, Texas International Airlines, had introduced a simpler version in 1979. It rewarded passengers based on the number of flights taken rather than miles.²⁰ 

Though, it wasn’t sophisticated. Tickets with your name were enough to be rewarded. Someone flying lots of short hops could earn rewards faster than someone taking long trips.

Other airlines had occasional “flight coupon books” or promotional offers in the 1970s, but they weren’t systematic or scalable.²¹

AAdvantage launches the modern loyalty era

What made AAdvantage revolutionary was the switch from counting flights to tracking miles flownWhat made AAdvantage revolutionary was the switch from counting flights to tracking miles flown, enabled by SABRE’s data system.²², enabled by SABRE’s data system.

Unlike earlier attempts, it could also be expanded globally, managed seamlessly, and sustained long term. This combination is why AAdvantage is widely remembered as the first “modern” loyalty program.²³

Within its first year, AAdvantage had already enrolled hundreds of thousands of members, and the number kept climbing rapidly. The year after launch, it expanded to hotels and car rentals, showing loyalty could extend beyond aviation.²⁴

American’s unprecedented visibility into its operations and customers allowed for precise accounting across millions of passengers and gave long-haul travelers more incentive to stay loyal.

This edge gave American Airlines a powerful lead in the market, prompting rivals to follow quickly. United launched MileagePlus and Delta introduced the Delta Frequent Flyer program in 1981 (renamed SkyMiles in 1995).²⁵

The trend soon spread internationally as well. For example, British Airways launched its Executive Club in 1982, and Qantas introduced its Frequent Flyer program in 1987.²⁶

By the mid-1980s, SABRE had also become the backbone for revenue management, allowing the airline to adjust fares and seat availability based on demand.²⁷

Later known as dynamic pricing, it provided a powerful tool to maximize revenue and offered American another way to strengthen customer loyalty while optimizing ticket yield.²⁸

Just as other airlines had copied AAdvantage, they also adopted dynamic pricing, which eventually became standard practice across the industry.²⁹

American Airlines AAdvantage secured its place as the first modern loyalty program. It stood apart because it was the first to harness new technology to track and reward customers at scale.³⁰

It used mileage as the common currency of value and gave airlines a structured system of tiers and benefits, rewarding members according to their spend and commitment³¹

Just as important, it opened the door to data-driven marketing that changed how companies understood and retained their best customers.

AAdvantage reshaped loyalty across industries

Its influence soon reached far beyond aviation. Holiday Inn introduced Priority Club in 1983 (today IHG One Rewards), Marriott launched Marriott Rewards that same year, and Hilton followed with HHonors in 1987.³²

Banks moved in as well. Diners Club was first with its Club Rewards program in 1984. American Express expanded the concept with Membership Miles that same year and later with Membership Rewards in 1991.³³ Citibank partnered with American in 1987 to issue the first co-branded airline credit card.³⁴

The model spread widely across sectors, inspiring businesses of every kind to reward loyalty with points, and turning it from a perk into a business model.

With more than 115 million members, AAdvantage has grown into one of the largest loyalty programs in the world.³⁵

AAdvantage remains strong, driving American Airlines’ growth

Today the American Airlines program is a vast ecosystem where members earn miles not only from flying but also from credit card spending, shopping, dining, hotels, and car rentals across an enormous partner network.³⁶

Through the AAdvantage eShopping portal³⁷, members collect miles on everyday purchases with hundreds of retailers, while the AAdvantage Dining program rewards meals at participating restaurants simply by paying with an enrolled card.³⁸

AAdvantage miles are the rewards members redeem for flights, upgrades, hotels, and more. Loyalty Points determine elite status and progression through tiers (Gold, Platinum, Platinum Pro, and Executive Platinum), bringing benefits like upgrades, free checked bags, priority boarding, and bonus earning rates.³⁹

At the very top, ConciergeKey offers invitation-only recognition.⁴⁰ For the most loyal, there is even a Million Miler program, conferring lifetime status after crossing major milestones.⁴¹

One major shift, and a first among U.S. carriers, was the move from distance-based qualification to the Loyalty Points system, which rewards members for their total engagement, whether in the air or on the ground.⁴²

Another was the move to dynamic award pricing, where redemption rates reflect market demand rather than rigid mileage charts.⁴³ Together, these changes have kept the program relevant in a world where loyalty extends far beyond flying.

The program’s financial weight has become increasingly evident. Loyalty revenues surged 14% year over year in 2024, with members accounting for about 75% of premium cabin revenue. That same year, the program generated more than $6 billion through its co-branded credit cards and partner sales of miles.⁴⁴

The growth hasn’t slowed. By mid-2025, active AAdvantage accounts were up 7% year over year, while spending on co-branded credit cards climbed another 6%.⁴⁵

High-margin, recurring, and less vulnerable to swings in fuel prices or flight demand, this revenue stream gives American a stability few airlines can match.

For some investors, AAdvantage is often viewed as the crown jewel of the company, so strong that many analysts believe the program, on its own, could be valued higher than the airline itself.⁴⁶

What the future may hold for AAdvantage is exciting

American still relies on Sabre today, using SabreSonic as its passenger service system under a renewed multi-year partnership.⁴⁷ This foundation gives the airline vast data and operational visibility, the same advantage it leveraged when AAdvantage was first launched.

The question now is how boldly it can build on that base to lead loyalty into its next era.

Here, three areas where American Airlines may go next come to mind, and once again redefine loyalty.

1. Personalize the mechanics of loyalty

Artificial intelligence is already helping airlines tailor communications, offers, promotions, and even rewards at an individual level.⁴⁸

But the technology exists today to go further, shaping the mechanics of loyalty themselves around each member.

Instead of everyone facing the same thresholds and earning structures, the rules could adapt to individual behavior.

Alaska Airlines has taken a step in this direction by letting customers choose how they qualify for elite status.⁴⁹

A fully dynamic model where earning, progress, and redemption evolve based on personal engagement has not yet been realized anywhere in the world.

With decades of technological innovation and long integration with SABRE (now expanding into AI through agentic APIs and generative tools), American has the experience and capacity to make loyalty truly personal.⁵⁰

2. Embed AAdvantage into everyday spend

For decades, co-branded credit cards have been the main bridge from flying to everyday engagement.⁵¹ But some airlines have gone further by partnering with supermarkets.

Qantas partnered with Woolworths in Australia⁵² and Virgin with Tesco in the UK, the largest supermarket chains in their respective countries.⁵³ That integration makes earning points part of weekly grocery shopping and places loyalty at the center of everyday life.

No American carrier has built such a deep connection with retailers, telecommunications, or utilities. The scale and market differences may help explain why it has worked in Australia and the United Kingdom, but the contrast also highlights the untapped potential in the United States.

AAdvantage already reaches into dining, online shopping, hotels, car rentals, and more.⁵⁴ Yet the opportunity is to take the next step by creating partnerships that capture household spend beyond travel and banking.

With its massive member base and brand strength, American could be the first U.S. airline to truly embed loyalty into daily life outside the card.

3. Build a retail media powerhouse

Retail media is becoming one of the fastest-growing areas of marketing, yet in U.S. aviation it is still nascent.⁵⁵

United has launched Kinective Media, positioning it as the first airline media network in the country. It offers targeted advertising across the airline’s app, seatback screens, and other channels.⁵⁶

That is a start, but it remains far from the depth of what a well-established retail media network can achieve.

United may have the head start, yet the race is still open and American Airlines has the chance to move decisively.

The potential goes much further. Airlines sit on one of the richest pools of data of any industry, combining travel behavior, lifestyle choices, financial activity, and loyalty engagement. And AAdvantage has long shown how to turn that data into value.⁵⁷

A fully developed American Airlines retail media network would transform its data insights into precision marketing across channels.

It would also enable closed-loop measurement of partner campaigns and create a powerful new revenue stream that builds on the foundation of loyalty.⁵⁸

Just as important, it could become a source of market intelligence, helping partners understand customer behavior across categories and optimize how they engage with members.⁵⁹

American already has a history in media through American Way, although it is no longer in circulation, the inflight magazine carried advertising for decades.⁶⁰ And could revive through a robust network of media services.

The next step is to plan and connect every communications channel including digital (app and website), inflight (screens and printed material), and in-airport (designated terminals through third party media agreements) with AAdvantage, so that partners can not only advertise but also bundle campaigns with miles and points and target members with precision.

With its scale, current media assets, wide partner network and digital infrastructure, American has the chance to evolve AAdvantage into a true retail media powerhouse.

In that role, the program would not only deliver value to members but also create new revenues and intelligence for partners, positioning American at the center of an ecosystem where loyalty, commerce, and marketing converge.

Arguably AAdvantage began as American Airlines’ bold experiment, but it defined the modern loyalty program and reshaped how to engage with clients. The challenge and opportunity now is for American Airlines to build on that legacy and once again set the standard for the future of loyalty.

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29. Idem ↩︎
30. Simple Flying — How American Airlines’ AAdvantage Program Became The World’s First Frequent Flyer Scheme. https://simpleflying.com/american-airlines-aadvantage-origin-story/ ↩︎
31. Idem ↩︎
32. IHG — Our History (Priority Club launched 1983; now IHG One Rewards). https://www.ihg.com/onerewards/content/us/en/about/history and Marriott Newsroom — Celebrating 40 Years of Loyalty (Marriott Rewards launched 1983). https://news.marriott.com/news/2021/01/celebrating-40-years-of-loyalty-marriott-rewards-to-bonvoy and Hilton Newsroom — Hilton Honors History (HHonors launched 1987). https://newsroom.hilton.com/corporate/news/hilton-honors-history ↩︎
33. American Express — Membership Rewards Program Timeline (Membership Miles 1984, Membership Rewards 1991). https://about.americanexpress.com/newsroom/news-releases/1991/american-express-introduces-membership-rewards Diners Club — Rewards (Club Rewards launched 1984). https://www.dinersclub.com/rewards ↩︎
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37. AAdvantage eShopping official site. https://www.aadvantageeshopping.com ↩︎
38. AAdvantage Dining official site. https://www.aa.com/aadvantage/dining ↩︎
39. The Points Guy — American Airlines Loyalty Points Explained (miles vs. Loyalty Points, elite tiers). https://thepointsguy.com/guide/american-airlines-loyalty-points-explained/
    ↩︎
40. Executive Traveller — ConciergeKey Status (invitation-only recognition). https://www.executivetraveller.com/american-airlines-conciergekey-status ↩︎
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43. The Points Guy — Dynamic Award Pricing at AA (redemption tied to demand instead of fixed charts). https://thepointsguy.com/news/american-airlines-dynamic-award-pricing/ ↩︎
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53. Virgin — Tesco Clubcard and Flying Club Extend Partnership. https://www.virgin.com/about-virgin/latest/clubcard-and-flying-club-extend-partnership ↩︎
54. American Airlines — How to Earn AAdvantage Miles (dining, shopping, hotels, car rentals). https://www.aa.com/aadvantage/earn ↩︎
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60. Saying Goodbye to American Way Thursday, June 10, 2021 https://news.aa.com/news/news-details/2021/Saying-Goodbye-to-American-Way-MKG-OB-06/default.aspx ↩︎