Earlier this month, British Airways introduced Avios, a new name for miles. Now if you’re a member of the BA Executive Club or Iberia Plus, you will earn Avios when you fly, use a credit card, etc. In other words, it’s a shared currency that can be used across airlines under the same ownership. There has been a lot of criticism about redemption levels, but on the bright side, a new elite tier was introduced. I spoke with Simon Talling-Smith, Executive Vice-President, The Americas at British Airways to talk about this and more, including the dreaded fuel surcharge.
Cranky: Let’s talk about some of the changes. It looks like on the elite side, it’s the new tier?
Simon Talling-Smith: Exactly right. We’ve launched a new Bronze tier. Really, a lot of the 
benefits customers accrued started at our Silver level. We knew there was a big segment of active customers who were not making that Silver level but we still wanted to have a more engaged relationship. So we’ve introduced this Bronze tier. It allows people to enter at half the points of the Silver tier. It gives them substantial benefits like First Class check-in, a better chance to do seat selection, and a 25 percent uplift on Avios when they fly.
Cranky: Can you explain how the tier points work? I see for Bronze, it’s 300 tier points to qualify.
Simon: We distinguish between qualifying points and earn and burn mileage. The qualifying points are our tier points and those are earned by flying, pretty much only by flying. And they accrue over a period of a year and that qualifies you for a level in the Executive Club. Then the following year you need to attain a certain amount of miles to retain that level, but it’s easier for retention than to initially earn it.
Cranky: If I’m new to BA, what kind of flying do I need to do to get 300 tier points?
Simon: A lot of ways to do that.
Cranky: Ok, so I’m in the US and I’ll likely be going over to the UK.
Simon: It’s probably only a couple of Business Class flights per year that will get you into Bronze.
Cranky: I assume part of the motivation for creating this tier was to help align better with American?
Simon: Yeah, both American and Iberia both offer that extra tier. And of course oneworld as a whole has a name for it; it’s Ruby.
Cranky: Beyond elite, earning has not changed, is that correct? If I fly from LA to London I still earn the same?
Simon: Yes.
Cranky: But redemption has changed fairly dramatically.
Simon: Redemption has changed in terms of redeeming your Avios points. Instead of having quite crude and large zones that we carved the network up into, there’s a finer level of segmentation now so different flights may have different redemption levels. It’s not as granular as mileage pricing, but there are are a number of different levels. We have quite a cool map-based calculator to help people.
Cranky: There’s no award chart, right? It’s more opaque than that. You have to put in where you want to go and it’ll spit out how many points.
Simon: Yeah, what we’ve done is basically create nine zones in the world.
Cranky: So why isn’t there an award chart? I was thinking it was much more complex than that.
Simon: The problem is that it’s fairly easy to do that when you’re just flying BA, but as soon as you start to include partners, it starts to get a bit more complicated. So when we wrestled with doing a straightforward redemption table, it became quite unwieldly.
Cranky: If it’s BA, you get up to one connection and it’s journey based, but on partners, it’s leg by leg.
Simon: Exactly.
Cranky: There’s been a fair bit of criticism about what’s being considered a devaluation. I think the claim was that the cost of redemption would go down on most itineraries, but that was really just online BA itineraries to and from London. How much attention do you pay to the criticism, and are you looking at making tweaks?
Simon: I’ve read some of the same feedback on FlyerTalk and we’ve been quite active in that space in responding to questions in there. And to some extent, communicating in the world of frequent fliers is a bit complicated with all the rules. When you communicate change, it’s important to stay close to the customer. In particular we did clarify that statement. It’s something like 97% of online journeys with BA are the same or better.
Cranky: Yeah, that’s what it was.
Simon: And then once you start to add partners it gets more complicated. But of course because some of the online journeys are better, you can get situations where online plus partner is still better than it was before. It’s pretty complex, but yes, we are getting a lot of feedback especially from specific groups of people who are focused on partner jounreys and we’re doing our best to follow up with them.
Cranky: So have you identified areas where you said, “maybe we should make a little change”?
Simon: I haven’t done that yet. It’s a little bit early. With a change of this scale, you need to find out what turns out to be frequent significant issues and then start working on them. But at the moment, it’s so early into the change that I think it would be just a little bit too soon to start making the tweaks. We may well make some tweaks, but it’ll be further down the road.
Cranky: But you are paying attention.
Simon: Yeah, we watch FlyerTalk, we’re completely on top of the tweets, we have an active presence on FlyerTalk where people are engaged. So we take all of that, that whole space of blogs and more generic social media very seriously because that’s where people are talking about our brand and we need to be very responsive.
Cranky: Can you talk about what spurred the change to the redemption scheme? I mean, I understand the change to Avios to try to get a shared currency, but in terms of changing the way the redemptions work. What was the thought process?
Simon: I think again sort of opportunity to react to a bit of feedback that we’ve been accruing over years since we last made a change. Customers had been saying “the scheme you’ve got is a bit unwieldy.” Of course a lot of people’s feedback and critique comes down to whether they perceive the number of miles they pay on a journey to be fair or not. And if you have a more granular level of charges, then you’re always going to have a more fair selection. That’s because you have very big regions and the shortest in the region and longest in the region are the same price and people ask why. That’s a big driver.
Cranky: The differentiation between partner awards and BA awards, was that an issue of aligning your incurred costs with mileage spend?
Simon: That was very simple. We have individual exchange arrangements with all those partners, so to some extent when people start flying on partner networks we have to recognize the rules and structure of that partner’s program as well.
Cranky: But you’re not differentiating redemption values by partner at this point, right?
Simon: That’s right.
Cranky: I think that’s all I have, but if you do start looking at changes, I’d love to see the fuel surcharge dropped.
Simon: Yeah, if you could just lean on those guys at OPEC to reduce the barrel price, we’ll be dropping the fuel surcharge quickly.
Cranky: I’m sure that’s something you hear a lot of.
Simon: All I can tell you is that not only does the fuel surchrge not cover the cost of fuel but it doesn’t cover the increase in the cost of fuel.
Cranky: Right, but if it’s a redemption ticket, it’s a question of whether people earned the right to not pay that. We could probably discuss this as a scholarly level.
Simon: The basic math is that if the fuel price goes up so that we end up paying $100 more to carry someone across the Atlantic, the surcharge allows us to recover some of that but it’s not $100. We have to recover that from somewhere else. We don’t want to take that out of any part of the customer experience. We don’t have to have lower quality food or anything else. So that leaves us in the uncomfortable position of having to surcharge while the fuel prices are so high.
Cranky: Did I miss anything?
Simon: I guess the other thing to say is that the relaunch is part of a much bigger program of investment. We’ve said it’s about 5 billion pounds including everything from lounges to service experience to the aircraft themselves to technology. We’re into a very big investment at BA and we see that going on for a number of years.
To learn more about Avios, visit British Airways online.
27 comments on “Talking to British Airways About Elite Status, Avios, and the Dreaded Fuel Surcharge (Across the Aisle)”
“Simon: It’s probably only a couple of Business Class flights per year that will get you into Bronze.”
Gotta love BA and it’s ability to engage with the normal guy on the street.
Only a couple of Business Class flights per year…………..
@Bobber But that’s who BA’s bread and butter is: the J class seats to and from North America.
That too if its paid by your company, than those are the kinds of people going for elite status anyway. Otherwise why would any US based travellers bother with BA?
I know, Sanjeev – which is why, despite being notionally patriotic, I won’t fly them:)
LOL :) However, I will say that BA feels slightly more welcoming than the German-efficient Lufthansa, particularly when travelling to India.
Cranky: Ok, so I’m in the US and I’ll likely be going over to the UK.
Simon: It’s probably only a couple of Business Class flights per year that will get you into Bronze.
—-He doesn’t exactly know?
Well, it depends on where in the US you are flying from and probably fare class as well, so the exact number of trips varies.
Actually 2 premium economy tickets from US-UK give you exactly 300 tier points, and your bronze card!
An ever more marginal program from an ever more marginal player and partners on the Atlantic, despite what may fall out of the bmi transaction.
Let me be the 1st to call BS on their claims about the fuel surcharge. The fuel surcharge can easily exceed the total fuel cost per seat.
Sample: YUL-LHR-YUL
Fuel cost to BA per ASK (€cents) 2.34 http://www.iairgroup.com/phoenix.zhtml?c=240949&p=irol-newsArticle&ID=1626283&highlight=
Distance: 10459 km http://www.gcmap.com/mapui?P=YUL-LHR-YUL&MS=wls&DU=km
Fuel Cost: €244.74 per seat
Fuel Surcharge: €264.12 (C$364)
Fual paid by BA: NONE: BA pocket €19.38 pure profit
**FUEL SURCHARGE EXCEED’S BA FUEL COST**
Sample: YVR-LHR-YVR
Fuel cost to BA per ASK (€cents) 2.34 http://www.iairgroup.com/phoenix.zhtml?c=240949&p=irol-newsArticle&ID=1626283&highlight=
Distance: 15202 km http://www.gcmap.com/mapui?P=YVR-LHR-YVR&MS=wls&DU=km
Fuel Cost: €355.73 per seat
Fuel Surcharge: €264.12 (C$364)
Fual paid by BA: €91.61
Fuel Surcharge of 288%
This claim is wrong:
“Cranky: If it’s BA, you get up to one connection and it’s journey based, but on partners, it’s leg by leg.
Simon: Exactly”
The pricing engine only throws in an intra-UK connection for free, any other connection the pricing is additive leg by leg.
Any idea how partners like Alaska will be affected? Avios seems to be a BA only thing, but will the pricing changes trickle down to non-alliance partners?
No partners are impacted. They set their own mileage redemption rates, so if BA tries to jack the costs up, then the partners might have to follow. But that would be a separate decision by Alaska.
Simon: The basic math is that if the fuel price goes up so that we end up paying $100 more to carry someone across the Atlantic, the surcharge allows us to recover some of that but it’s not $100. We have to recover that from somewhere else. We don’t want to take that out of any part of the customer experience. We don’t have to have lower quality food or anything else. So that leaves us in the uncomfortable position of having to surcharge while the fuel prices are so high.
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Let’s see today JFK-LHR-JFK in business the fuel surcharge is $572.00 roundtrip and if someone is doing JFK-DEL-JFK via LHR it’s $1022.00 roundtrip. So exactly how much in fuel does it cost to fly say 160 pound person in business that they need to ad so much YQ charges?
Funny but if Aer Lingus is used JFK-DUB-JFK the fuel surcharge is $26.57 roundtrip in business, and if EI JFK-LHR-JFK via DUB it’s only $40.40 roundtrip. Hard to believe that giant BA can’t get fuel rates as low as EI can. Or are they maybe over charging just to make extra money and a carrier like EI is being truthful? It’s not even close to say EI is just charging a lower amount to try and get business. And if anyone is wondering BA JFK-DUB-JFK via LHR in business the fuel surcharge today is $520.00.
The answer is €0.0234/seat/km (from their own financials).
If the fuel surcharge exceeds this number multiplied by the distance, you’re paying more in fuel surcharge than BA/IB pay in total fuel.
BA could be just using it to cover insanely high UK Air Passenger Duty. Aer Lingus shows a lower fuel cost cause taxes are lower in Ireland (even with the new DUB T2).
Basically what it does is screw people on award redemption who pay so many miles only to pay an additional $400 in “fuel surcharge”. However, BA do offer some significant mileage offers on things like credit cards to offset it. So in the end, I don’t care how the fare is broken up, I just care about the final price (whether it be money, miles, or both).
That fuel cost isn’t really very accurate when looking at specific routes – it’s just an average across the system. Shorter haul flights will burn more fuel per mile/km than longer haul flights. Also, a biz class seat will have a larger footprint in fuel burn than a coach seat. So it’s hard to get an exact metric on a seat by seat basis, let alone a flight by flight basis.
To address your two comments;
1) yes, shorter flights burn more per seat/km; which makes my comment about the fuel surcharge exceeding total fuel cost even more offensive on a long-haul route
2) seat-mile costs are amortized across all seats; plus a number of airlines charge double fuel surcharges on J seats (AC, BA just to name two)
Lufthansa pulls this same surcharge scam on retail tickets, advertising a one-way price without fuel (where “surcharge” exceeds calculated cost of burn), taxes and fees. How DOT allows that is unimaginable.
The DOT doesn’t allow this. Airlines cannot advertise prices before surcharges in the US, and I doubt Lufthansa is doing it. If you see it, then you should send to the DOT because it’s illegal.
to everyone who has BA miles, book before Dec 15th over the phone and you can use the old redemption rates. once you book date changes can be made for up to a year from booking. book now, change later!
I’m planning a trip to asia using BA miles right now. the cost of 50k miles in Business now easily gets over 120k when they are Avios.
Where did you get this Dec 15th deadline info from? I thought the old redemption rates are dead for good.
CF, BA also has operated a separate scheme in the UK that was called Airmiles, which is also being merged into Avios. There has been a lot of criticism about the transition which included charging taxes and surchages. Previously with Airmiles a free flight was a free flight, whereas now BA charges full taxes and fees on long haul and a flat rate of around £27 for short haul. I can understand the reason for the change (I’m sure they were hurting financially) but a lot of former Airmiles collectors are clearly unhappy. Personally I’m happy as I’m a collector of both BA miles and Airmiles and I will be able to switch Avios from the two accounts.
I mostly will use Avious for upgrades which will still be advantageous. Regarding the new tier, as mentioned above, with two return premium economy flights to the east coast you can earn 300 points which will earn the new bronze level. I should be there after a trip to the US at Christmas so I welcome the change.
The “tier points” is pretty much similar to how Qantas works their program (but they call them “Status Credits” to avoid confusion with points).
Status Credits determine your “tier” in the “ranking” system (For QF it’s Platium One, Platinum, Gold and Silver, everone else being Bronze. Or for Global Oneworld Emerald, Sapphire or Ruby (Bronze in QF dont get a Oneworld rank).
Points (typically called “Miles” in the US-based airlines programs) are used to redeem flights / rewards (virtually anything via their online shop).
It’s a bit different from some of the other US and EU airlines as “Status Credits” can essentailly only be earnt by flying, not credit cards etc.
I feel like a big fool. I signed up for the BA credit card and started collecting points for free tickets for me and my wife. It turns out that 100,000 points will only save me $400 on 2 tickets. It was just a marketing trick.
Yes, Sam. I’m in the same boat. M7 120,000 points are next to worthless. That BA credit card offer was a huge scam as far as I’m concerned.
I’ve stopped using the card and am back to my old reliable CapitolOne. I guess I’ll use those next to worthless BA points to book a couple of hotel nights.
Same exact situation…I got the promo 100k, spent about 10k and have 110,000 useless miles w/nice heft fuel surcharges over 600$ alone from California to Thailand. BIG HUGE SCAM – they need to be reported to DOT. What a joke.
British Air is a master of consumer loyaly. They now score close to a Zero on a 100 point scale.
There is no point in using Avios on Internation Flights BUT using AMERICAN DOMESTICALLY everything should be OK with NO FUEL SURCHARGES AND 25,OOO RT’S.