British Airways Realigns Its Program to Make Big Spenders With Large Point Balances Happier (And the Rest, Not So Happy)

British Airways, Frequent Flier Programs

On Monday, British Airways reached out to me seeing if I’d like to get a briefing on something big coming up. I was secretly hoping it was going to be about the Aer Lingus takeover effort, but instead it turned out to be a talk with James Hillier from the Executive Club about changes to the frequent flier program. Those changes were officially announced yesterday and you can read details here. In short, if you spend a lot of money and don’t care how many points you use for redemptions, then you’ll be happy because more seats will be available for redemption. Otherwise, well, you won’t feel the same way.

What’s most interesting here is to look at how these changes are building to an overall strategy of incorporating revenue further into the program. Unlike Delta’s switch to a revenue program (and United copying), British Airways is trying to balance mileage and revenue in a way that should make it easier for people to understand and track. Of course, if people do understand it, they probably won’t be thrilled.

For those who do pay a lot of money for tickets, they don’t really lose here. They earn more but they have to spend more in premium cabins. For those who don’t pay a lot of money for tickets, they’ll earn fewer points in the new program and then, as mentioned, have to spend more. That being said, availability is going to be increased for award seats in a novel way: there’s now a guarantee of a certain number of seats on each flight in coach and business.

Earning Avios
Let’s start on the earning side. Before this change, everyone earned 100 percent of miles flown in coach with a 500 Avios minimum. Premium economy earned 125 percent while business earned 150 percent and first class earned 200 percent. It’s being broken down further now. Here’s a mostly-accurate chart (you’ll see where it’s not) showing the earnings changes.

New BA Avios Earning

Elite qualifying points (or Tier points, as BA calls them) will also change. Coach tickets in the lowest classes will only earn 25 percent for qualifying purposes as opposed to 50 percent today. That’s no surprise. But Silver members will also see their mileage bonuses cut from 100 percent to 50 percent. (Bronze at 25 percent and Gold at 100 percent both stay the same.)

The end result is that instead of going with a true revenue-based program, BA is doing a hybrid where you still earn a currency based on miles, but you earn a lot more when you pay more. I like that idea, though I really wish these were put into fare families instead of just being based on basic fare buckets. Those don’t make sense to most travelers.

People who buy cheap tickets and Silver elite members will find they earn a lot less than they did before. But will their Avios buy them less too? Only where it matters.

Redeeming Avios
You might hear a lot about how BA is lowering redemption rates and increasing availability. That is partially true. But the awards you really want to redeem are going up in price, so it’s not as excellent as it initially sounds.

Regarding increasing availability, this is interesting. BA is now going to guarantee that there will be at least 4 coach and 2 business class seats made available on every flight. BA opens availability 355 days in advance, and James Hillier explained to me that each flight will have at least that number of seats available even during peak times. The expectation is that this will mean a half million more seats are made available this year. Great, right? Well, you have to pay for that somehow.

BA does redemptions differently than many in that it simply looks at the number of miles on each flight segment and charges a certain amount of mileage for each flight taken. That has historically made shorter nonstop flights a fantastic redemption value. (You may have noticed I’ve flown American a lot lately. Much of that is because I can use BA Avios to fly up to 500 miles for only 4,500 miles each way.) If you connect or if you fly long distances, then the value goes down as you go.

BA is keeping this structure, but it is introducing peak and off-peak award pricing. It should be noted that this doesn’t apply to partner travel. All partner travel will be at the higher peak level. On short haul coach flights like the ones I like, the pricing doesn’t change. But it’s going to go up, up, up for others.

What is peak? Well, first off, every Tuesday and Wednesday is off-peak regardless of the time of year. Then, it’s pretty much what you’d expect. Here’s the calendar for this year.

In coach, the good news is that the existing pricing becomes peak pricing and then off-peak pricing is on average a 26 percent discount off peak. That’s great for coach, but BA has such high fuel surcharges on longer haul flights that it rarely makes a ton of sense to redeem for coach travel. (Remember, this doesn’t apply to partners anyway.) In premium economy, it’s a mixed bag. Peak award rates will go up but off-peak award rates will go down. But then the blood-letting occurs.

Off-peak awards in business go up 25 percent. Peak awards go up 50 percent. In First, it’s 13 percent and 33 percent respectively. That is downright brutal. Since fuel surcharges are so high, these are the only long haul awards that really make a ton of sense. And now the Avios requirements are going through the roof.

For example, going from LA to London requires 50,000 Avios to fly nonstop in business today. That’s going to go up to 62,500 during off-peak times and up to 75,000 during peak times. Ouch.

Of course, you have to remember that those who fly on expensive tickets will also be earning more now. So they won’t be impacted. But those who fly on cheaper tickets or use non-air partners like the credit card (where nothing changes), then it’s going to be costly. Then again, at least there will now be more seats available, I suppose.

With all these increases, it made me wonder if the fuel surcharge would be changing. I tried that line of questioning but got nowhere. I was told that I had to talk to parent company IAG about any fuel surcharge-related questions. There was nothing else to be said on that subject at all. How unfortunate.

In the end, I like the idea behind the changes. Reward the most valuable travelers better than others. But then again, this really does make it difficult for those who aren’t paying big bucks to fly. At least there was advance notice on this change. It applies on bookings made starting April 28, 2015.

Get Cranky in Your Inbox!

The airline industry moves fast. Sign up and get every Cranky post in your inbox for free.

24 comments on “British Airways Realigns Its Program to Make Big Spenders With Large Point Balances Happier (And the Rest, Not So Happy)

  1. The guarantee is next to meaningless. Two business class award seats per flight when the schedule opens. So these big spenders that are supposed to be happy can stay up till the schedule loads to plan their travel a year in advance.

    AND THE GUARANTEE IS ONLY FOR A YEAR. The devaluation isn’t.

    These guarantees are quickly forgotten. Remember when United guaranteed award seats on every flight concomitant with their announcement of a devaluation?

    (BA also guarantees some coach seats as well, but those are almost always available, BA fuel surcharges often make up the bulk of the cost of a ticket so you’re using miles and still paying much of the cost of a coach fare so this costs them little.)

    1. Gary – Right, well for those who pay big money, it’s not really much of an
      impact at all, so with the guarantee of more seats, it’s at least something
      for them even if it doesn’t last all that long.

  2. The partner awards in business and first, you know the ones without the crazy fuel surcharges, are always “peak”, and those go up by 50%, which is even more brutal than you detail. So you are left with the economy class awards, which have fuel surcharges that can approach the cost of the ticket itself!

    Thankfully, the short haul economy awards on AA, US, and Alaska are untouched, but the rest is pretty aggravating stuff, no matter how they spin it. Too bad they didn’t use this chance to look at fuel surcharges, like Qantas, ANA, JAL, Air Asia, etc.

      1. Fair enough, but the whole peak/off peak thing really disguises the big headline for most award travelers: “50% hike in premium partner awards” Really, who saves hundreds of thousands of points for the dream of flying overseas in economy, and paying fuel surcharges to do so? I hope you were able to communicate that to their PR.

        Another big blow is the fact that BA is one of the few airlines that mercifully only charges 10% of the miles for infant awards, while most charge 10% of the dollars of a full fare business/first class seat. That policy remains, but nearly all the value of using their miles for these flights is gone.

        1. Hang on, but earning rates are increasing by 50% or more for travel on premium fares, so this is excellent news!

          This means more award availability will be available to people who actually pay money to BA, rather than people who fly at the cheapest fares or open credit cards and have no intention of flying BA

          Well, I for one am pleased :-)

  3. LOL, what I’d give to book an FU fare bucket!

    Jason Steele beat me to it, but this really is even worse than it looks, since all partner awards price at the peak levels. In your example, that’s a 50% devaluation to fly AA business class LHR-LAX to avoid the fuel surcharge. Quite possibly even more irritating than AAdvantage instituting those insane “Level 3” prices and effectively blacking out pretty much all summer weekends to/from Europe…

  4. We can now make book on when AA will announce their switch to a rev-based system for 2016, and how badly that will screw fliers.

    Just one thought. The airlines ought to tread a bit lightly here. They are protected from strikes because they are “necessary for the economy”. They have other protections too. However, the average traveler is becoming more and more aggravated, as comforts dwindle and it becomes more unpleasant to be on an airplane…all while airlines are making gigantic profits. And fares haven’t dropped at all, despite the bonus of low fuel prices.

    The fact that BA still charges “fuel surcharges” when fuel costs are half of what they were when the surcharges were announced is extremely telling.

    The airlines keep this up, and there will start to be an outcry to rein them in, put more regulation on them. They do NOT want that.

    1. I think you’re overestimating the “average traveller”. If these kinds of changes moved their dial you wouldn’t see airlines like Spirit, Allegient, EasyJet and Ryanair thriving. This affects the middling traveller loyal to BA who buys cheap tickets and credit card holders. If I’m BA I’m probably only real concerned about the latter depending on how profitable their FF program is.

  5. Even big spenders will likely take a hit with the program changes given that redemption cost increases outpace earning rate increases. The best news about the new program is that cheap partner flights in economy remain cheap. And that’s not saying much.

  6. “But the awards you really want to redeem are going up in price” — isn’t this the whole idea? Every miles/points system has some sweet spots where awards are relatively cheap, and those are the ones that people want to book; and because they are cheap and popular, they end up costing a disporoportionate amount to the program. So when a program changes its redemption structure, pretending (for marketing purposes) that the change is balanced (some prices go up while others go down), it is the cheap sweet spots that tend to disappear. I think this is the way it has always been, and that’s what we’re seeing with this change as well.

    It doesn’t matter much to me, because the awards I use are US domestic short hops and those aren’t changing. Which is somewhat surprising given what I said in the paragraph above, since these represent great value to the customer. Perhaps the US customer base for Avios is just not big enough to worry about? I wonder if the concept of loss leader is applicable to frequent flier programs.

    Also, I spotted a small error — I believe the 4,500 Avios Zone 1 redemptions are actually up to 650 miles, not 500 as stated in the article. I haven’t seen a precise definition of the zones on the BA web site, but the award calculator prices LAX–SLC (590 miles) at 4,500 Avios.

  7. Completely off-topic: Have you noticed how the blogging platform messes with the quotation marks? If I type “level three” it gets typeset with proper opening and closing quotes, but if I type “level 3” then the closing quotes get typeset with a double-prime character (as you would want if your intention was to write 3 inches). I don’t know what happens if a number has both opening and closing quotes, but let’s try it out: “123”

  8. Who really cares about redeeming miles/points/whatever? Most of the biggest travelers I know hoard their miles like they are priceless. Serious, I know million miler types that will pay cash for personal trips so they maintain their mileage balance. I don’t get it but apparently it’s not an uncommon phenomena.

    Me…I burn them as quick as I can for fear the airline will devalue them more.

  9. Personally I’ve always liked their upgrades. I could upgrade a Premium economy ticket to business from the West Coast to the UK, round trip for 25K miles about what I’d earn back for the travel @ silver level. They just broke that .. I thought it was an ok deal … mmm — AA looks more attractive every day.

  10. Makes you really want to line that jerks pocket (World cup Willie), gave up with British Airways years ago, every other airline flies to all the places I need, I wouldn’t fly with them ever …

  11. Question to CF:

    In this article you hoped to be meeting about the Aer Lingus Deal. IAG said Aer a lingus would join their transatlantic JV… Why isn’t airBerlin apart of the transatlantic Joint Venture.

    Lufthansa is in uniteds, so Germany isnt out of the way.

    1. RZNSE – Well, every airline is going to have to evaluate whether a JV makes
      sense or not. Air Berlin may or may not have even had the opportunity to
      join, but if it did, it’s entirely possible it didn’t like the terms. Air
      Berlin is a hybrid kind of airline that might not work as well in a joint

  12. Several Points. First is a point that most FF programs miss. You want your program to encourage the behaviors that are the most profitable for the Carrier. Rationally that means somewhere in the process, the price of the ticket needs to count for something. The problem with purely mileage based programs is that is easy to ‘game’ the system, and gain substantial benefits without ever paying a fare that was higher than the ASM cost for the carrier. From my perspective, that is pure insanity on the part of the carrier.

    As for availability, to some destinations that has long been a problem with BA. While BA has always claimed there were no black out dates, the reality was that to certain destinations, seat available with ZERO either all of the time, or for long intervals.. How you can get away with saying there were no black out dates is beyond me. Some years ago I tried to get a F or J class award seat from Los Angeles into the Persian Gulf (and was a Gold member of the Executive Club). I kept asking for dates, and the agent kept saying seats weren’t available. Fortunately I had some flexibility, so I finally asked the agent when seats were available. She checked for availability over the next 11 months for DXB,BAH and MCT for me. There were ZERO available seats in the inventory. (and I had a hard imagining that seats into the Persian Gulf for award travel were in high demand) I had some choice words, and agent agreed to request availability from London. They ended up providing an F seat into BAH, and I paid BA for a ticket from BAH to DXB on another carrier (which was dishonored by the other carrier, leading to some REALLY choice words with BA). So guaranteeing the availability of at least some seats in the premium cabin is a significant change.

  13. Regarding Avios for BA transatlantic flights, I’ve noticed that in some instances, the cash portion of an award ticket is MORE than an identical flight booked using cash. Example: 20000 avios + appx 1020 vs 1000 for the flight purchased outright.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Cranky Flier