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Yesterday morning, there was an article quoting an interview Alex Cruz (BA’s CEO) had with the South China Morning Post in Hong Kong. In the interview Cruz gave the SCMP an insight into how he sees the airline’s loyalty program evolving and what we changes we can expect to start seeing later this year (or possibly in 2019). The changes Alex Cruz is describing are not in the slightest bit surprising but how they’re perceived will depend on what group of flyer someone falls into and how the implementation actually works.
Changes Coming To British Airways Avios
In a nutshell this is what Alex Cruz said we can expect:
- The number of Avios earned by flyers will be directly linked to the price of the fare purchased
- The number of Avios needed to redeem awards will be directly linked to the cash cost of a fare on the flight you’re looking to book.
- Flyers will be able to use Avios to pay for everything BA sells – seat allocations, extra baggage, upgrades etc…
- If a seat is available to purchase with cash it will be available as an award redemption too (bear in mind the award cost will be linked to the cash price)
Some things Alex Cruz didn’t address:
- Will the changes be a replacement for what we have now or will they be additions to the current system?
- Will the changes to how Avios are redeemed mean that we may actually see some routes costing fewer Avios than they do now (during times of sales, low demand etc…)?
- What changes (if any) will BA introduce to how Avios are awarded for flights taken with partner airlines?
- Will there be changes to how tier points are earned when the changes to earning & burning Avios are introduced?
- Will a minimum spend requirement be brought in for elite status?
Thoughts
Earning Avios
British Airways appears to be moving to a revenue based system (just like Flying Blue) and has decided that a halfway house solution (like the one American Airlines currently runs) isn’t the direction in which it wants to go.
For Economy Class flyers this will probably make little difference as the British Airways Executive Club already essentially factors in the cost of a fare when it awards Avios – that’s why the cheaper Economy Class tickets only earn Avios based on 25% of the distance traveled.
Out of the flyers booking into premium cabins the ones who’ll be hit hardest will be those booking the good fares that we see appearing from time to time (the $700 premium Economy fares between Copenhagen and LA will probably earn a lot less Avios than they do now).
British Airways will not want to alienate corporate passengers any more than they have already so I can’t see the airline introducing a system that penalizes the more expensive fares.
Spending Avios
Based on Alex Cruz’s comments it would appear that the number of Avios needed for a given flight will be directly linked to the cost of a cash fare on the same flight. What’s not clear is if this will be in addition to the system in place now or if it will be introduced in place of the current award chart.
Linking all Avios redemptions to the cost of the cash fare would automatically remove any feeling that an educated passenger would have of getting a good deal – passengers would be getting the same value out of every Avios they use so there wouldn’t be any way of getting outsize value.
That’s not good for maintaining anyone’s excitement for a program but, if we’re being honest, it’s only really on short-haul routes where there has been value to be had for quite some time.
For flyers based outside of the UK long-haul redemptions have been a pretty poor use of Avios for years (generally speaking) so I’m not sure BA can (or wants to) introduce anything much worse than they already offer.
UK readers, on the other hand, are almost certainly Avios captives (they find it hard to earn other airline’s points/miles outside of flying) so they’re forced to use Avios for long-haul and really only have 2-4-1 vouchers issued by Alex to help make the deal a little more palatable.
If BA links the cost of a premium cabin fare to the number of Avios needed and doesn’t keep some sort of standard award redemption in place then I can see it being game over for a lot of UK-based Avios collectors – the value just won’t be there.
On short-haul flights there will be pain felt by all Avios collectors as it’s on short-haul where Avios can actually be a valuable currency. If BA starts linking the cost of flights to the number of Avios needed and doesn’t keep any kind of standard award in place the days of great redemptions on routes like NYC – Boston are over.
During high-season in Europe cash fares are often pretty expensive and this is where Avios comes into its own (I’ve booked $750 fares for 15,000 Avios before and 5 cents/Avios is very good value). If what Cruz is talking about is a full revenue-based redemption system we can kiss redemptions like these goodbye.
Having said all that there is a chance that BA won’t screw things up completely (stop laughing…I’m being serious!)
It’s possible that BA will keep the current Avios redemption rates and add a more expensive redemption rate (linked to the cash fare) for when standard Avios redemptions have sold out on a flight. The more expensive redemption rate could sit as an additional layer above the current award chart.
The clear winners here will be those who are so Avios rich that they don’t care about getting outsize value and those who are blissfully unaware of what Avios are actually worth.
Both of these groups will be able to spend their Avios balances on any flight they choose and, as neither cares about getting a certain value out of each Avios, both will simply see the changes as a way of keeping cash in their pockets.
Bottom Line
As this is BA we’re dealing with (truly incompetent when it comes to any kind of IT implementation) the IT implications of a change like this mean that it’s unlikely we’ll see anything happen before next year.
Alex Cruz mentioned that the end of 2018 may be a possibility but I’ll be shocked if BA gets anything in place before the middle of 2019. If the airline does get something introduced before then I’m prepared to bet that it won’t work.
I genuinely don’t think that we’re going to see any major difference in the number of Avios earned if BA moves to a more overt revenue based system as it’s a revenue based system that we essentially already have.
On the redemption front we’ll have to wait and see what BA implements and what value it places on an Avios before we have a real idea of how bad (or good) the changes are.
If all redemptions are linked to the cash fare all Avios collectors will take a hit on short-haul redemptions while educated UK-based flyers will probably wonder if its even worth collecting Avios once they see the number of Avios needed for long-haul fares.
If redemptions linked to the cash fares are only introduced in addition to the system in place right now then not much will really change. Avios collectors who know what they’re doing will carry on booking what they’ve always booked while others will use Avios to reduce their out of pocket spend with little regard for what value they’re actually getting out of the currency…..and that’s exactly what I suspect Alex Cruz would like to encourage.
