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.
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.
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.
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.