Will British Airways move its “Executive Club” frequent flyer programme from a mileage to a revenue based model?

We’ve seen speculation online recently (much of it completely unfounded it has to be said) regarding whether British Airways will follow other airlines (such as Delta) in changing its frequent flyer programme whereby points/miles are awarded solely by reference to the absolute amount of money spent with the airline, rather than the distance flown on eligible flights.

Currently, “Avios” (formerly BA miles) are awarded by reference to the distance flown on BA and eligible partner airline flights, with bonus Avios awarded depending on the cabin travelled in and the level or “tier” of the frequent flyer programme of the passenger.

Unlike other airline frequent flyer programmes, Avios/miles alone do not entitle a member to reach certain “tiers” in the programme whereby certain benefits (such as lounge access) are awarded and reciprocated by fellow Oneworld alliance frequent flyer programmes.

As members will know, Bronze, Silver and Gold status in the Executive Club can only be earned from tier points which are awarded according to the class of travel flown, and the tariff of tier points is heavily geared towards the premium economy and business and first class cabins.

We consider that BA will not move to a revenue based frequent flyer programme for the following reasons:

1. The programme already has an in-built mechanism whereby frequent flyer benefits are geared towards recognise those who travel in premium cabins and, ergo, spend more money with the airline.

2. “Avios” is now a common currency across other frequent flyer programmes such as the Iberia Plus programme and the former airmiles programme and Avios can be freely transferred between these programmes. BA moving to a pure revenue based model would mean many would simply accrue Avios through an alternative frequent flyer programme.

3. International Airlines Group Chief Executive Willie Walsh was asked about a potential move to a revenue based model at a recent analyst update. Whilst there was no emphatic denial, we infer from the answer that IAG and BA are satisfied as to how the current programme works for them.

Q: We’ve seen other parts of Oneworld hint at and make changes to their frequent flyer schemes, one would assume to potentially reduce the long-dated balance sheet liability and move them more towards a revenue based model. Is there any discussion underway at IAG or its airlines to look at something similar?

A: in relation to frequent flyer program, yes, we’ve got an Avios program, as you know, a single brand that we use for our loyalty schemes. It’s working very well. We’re managing that with a new management team and a real key focus. And I think the simple message there is there is a lot that we can do to manage our liability, while at the same time ensuring that we have a product that is attractive to our frequent flyers and attractive to partners who want to work with us. And we do have some excellent partners there and we see that we can expand that, which generates additional revenues for the Group.

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