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It has been rumored for some time and now, thanks to a press release from Iberia, we know that the British Airways Executive Club will take its first step towards being a revenue-based program at some point in 2023.
Iberia Plus took time out yesterday to inform us that starting this month, it will begin awarding Avios based on the net cost of a fare (i.e. the price paid less any taxes and fees) rather than on the distance being flown, but as no one outside of Spain really cares what Iberia Plus does with its Avios earnings formula, that wasn’t particularly interesting news.
Far more interesting was the fact that at the same time that it was suggesting that its own members are stupid – Iberia claims that its decision to offer most Iberia Plus members fewer Avios when they fly has been led by member demand – Iberia’s press release also let slip the fact that British Airways will be following suit.
Ian Romanis, Head of Retail and Customer Relationship Management at British Airways, said: “We congratulate our colleagues at Iberia for introducing this change and we look forward to joining them in 2023. More announcements will follow about what this change will mean for our Executive Club programme, which will unlock even more opportunities for our Members to earn Avios when they fly.”
Clearly, there will be absolutely no new opportunities unlocked when British Airways moves to a revenue-based Avios earnings model but as this is the kind of garbage that we have become used to listening to from loyalty program executives, there’s not much point in dwelling on that. Instead, let’s focus on what’s probably on the way.
What Iberia Plus has announced
To see what British Airways may be introducing in 2023, the best place to start is with what Iberia Plus says that it will be doing this month and as I’ll show a little later on, for the overwhelming majority of flyers, what follows isn’t good news.
“Very shortly”, Iberia Plus will start awarding Avios based on a member’s elite status and the net cost of a member’s fare using this model:
So, effectively, the formula for earning Avios via Iberia Plus will look like this:
(Cost of Fare – taxes – fees) x Elite Status multiplier = Number of Avios Earned
Crucially, (and this is the one small silver lining here), the way Iberia and British Airways award elite status (i.e. via Tier Points) will not be changing. Tier Point earnings will continue to be based on the distance flown and for the time being, will not be linked to the cost of a member’s fare.
As things stand, there’s no reason to think that British Airways will come up with anything more complicated or generous than what Iberia Plus has come up with so it’s probably safe to expect the same model when the British Airways Executive Club moves to a revenue-based Avios earnings model*.
*British Airways may, however, choose to base its model on GBP instead of Euros.
What this will mean for earnings
Put simply, the more a traveler pays for their fare the more Avios they will earn so what we’re seeing here is Iberia and British Airways moving to an earnings model that’s very similar to the models used by the major US carriers.
The best way to show the effect that this will have is with an example using a discounted Economy Class fare for travel between London and Los Angeles (I’m going to assume that BA will price its model in GBP).
On a randomly selected set of dates next year, a discounted Economy Class fare between London and Los Angeles on British Airways will cost £466.76 and this is how the cost of that fare is broken down:
The fare books into “O” class in both directions so by using the British Airways Avios Calculator, we can see that under the current earnings system, this is what BAEC members booking this fare will earn:
- Blue status – 2,728 Avios
- Bronze status – 5,456 Avios
- Silver status – 8,184 Avios
- Gold status – 13,640 Avios
Under the new revenue-based Avios earnings model, the net fare for this booking would be £266 (that’s £466.67 less all the taxes and fees with the exception of the carrier-imposed surcharge) and if we assume that BA will use elite status multipliers of between 5 and 8, that would leave British Airways Executive Club members earning the following:
- Blue status (using a x5 multiplier) – 1,330 Avios
- Bronze status (using a x6 multiplier) – 1,596 Avios
- Silver status (using a x7 multiplier) – 1,862 Avios
- Gold status (using a x8 multiplier) – 2,128 Avios
The irony that the supposedly most “loyal” members of the British Airways Executive Club will be hit the hardest isn’t lost on this Gold Elite member!
Further key information
Because British Airways can almost certainly not see the base fare a member has paid when they credit flights booked through most partner airlines (e.g. Cathay Pacific, Qantas, and JAL) to the Executive Club, it’s likely that such bookings will continue to earn Avios based on the distance flown rather than the net cost of a booking.
That’s the good news.
The bad news is that because BA is part of a transatlantic joint venture that includes American Airlines, Iberia, Finnair, and Aer Lingus, it’s likely that it will have full access to any transatlantic fares booked through those airlines and so those bookings will probably earn Avios based on the new revenue-based model.
Non-transatlantic bookings made through these partners will probably continue to earn Avios based on the current (distance traveled) system.
As far as Qatar Airways bookings go, things are a bit less clear.
BA isn’t part of a joint venture with Qatar Airways so that would suggest that it won’t have sight of the base fare paid for Qatar Airways bookings credited to the BAEC but because BA is very closely tied in with the Middle Eastern carrier (Qatar Airways owns a significant stake in BA’s parent – IAG), this is far from a certainty so we will probably have to wait for further announcements before we know (for sure) how Qatar Airways bookings will be treated.
Quick thoughts
It’s tempting to go on a rant about how appalling this change will be and what a colossal devaluation to the British Airways Executive Club this change will represent but, frankly, there’s not much point. What’s done is done and we’ve seen enough other programs follow this exact same path to know that there’s not much point in getting annoyed or angry.
This is a change that has been in the works for some time and I suspect that it was only the pandemic that prevented this move to a revenue-based earnings system from appearing much sooner. This isn’t really a change that has come out of nowhere and it’s not really a surprise.
What this means for most of us is that the days of picking up a significant number of Avios from flying are behind us and we’ll have to concentrate our efforts on credit card sign-ups, credit card spending, and shopping portal bonuses to keep our Avios balances heading in the right direction.
I guess we should be thankful that, for the time being, elite status credits are not being tied into the cost of airfares but if we’re being realistic, it’s only a matter of time before that’s the next devaluation that we will be facing.
Right now, the thing that interests me most is how BA will implement this change. Will we get an announcement that says that from a given date all flights flown will earn Avios based on the fare paid or will BA show a little bit of common sense and say that only bookings made after a certain date will suffer the new system?
As someone who has been expecting to earn over 120,000 Avios from the flights that I have booked for next year I’m hoping that BA shows common sense, but as expecting BA to show common sense is as pointless as expecting humility from Kanye, I’m not optimistic.
Bottom line
Iberia Plus is moving to a revenue-based earnings model at some point this month and we’re told that the British Airways Executive Club will be following suit in 2023. For most BAEC members this will mean that the number of Avios that they earn from flying will drop dramatically so those who still want to collect the currency will have to look more closely at all the other options still open to them.
American here – at least over here, with our revenue-based earning models, almost all of the JV partners continue be excluded from revenue based earning unless you ticket with the American carrier.
So LH-operated ticket issued by UA earns based on $, while LH-operated ticket issued by LH earns based on distance x fare. UA-operated, LH-ticketed fares also earn by $, but based on whatever UA believes you actually paid for that part of the fare.
The only exception to this so far is the AA/B6 partnership: that’s the first example I’ve seen where they are sharing the fare data for earnings.