British Airways has today, 28 January 2015, announced major changes to the way members of the British Airways Executive Club can earn and redeem Avios on BA and partner airline flights.
BA’s International Airlines Group sibling Iberia has also announced changes to its Iberia Plus programme that take effect from 1 March 2015.
The changes are quite significant and will impact on members depending what level they are in the Executive Club, what cabins they fly on BA and, for the first time, what type of ticket is purchased.
There are some definite negatives and some positives may emerge in time. It is also important to emphasise that they only apply to bookings made after 28 April 2015, so there is a three month window to make bookings in advance of the changes.
Here’s a summary of the key changes and our take on them:
1. The most significant part of today’s announcement is wasn’t hasn’t changed
Last year, we commented on whether BA may move to a pure revenue based frequent flyer model where Avios is earned purely by reference to money spent on flights.
BA has clearly undertaken a fundamental review of its programme, and decided against a pure revenue based model, as per Delta and other carriers.
2. The most significant change impacts Silver Executive Club cardholders
Currently, Silver Executive Club cardholders earn 100% bonus Avios of miles flown on flights. This will reduce to 50%. Gold and Bronze Executive Club cardholders will continue to earn 100% and 25% bonus Avios respectively.
This is undoubtedly a very negative change for Silver Executive Club cardholders. However, there are still some advantages over Bronze membership such as seat selection at the time of booking and lounge access that make Silver worthwhile.
There are no changes that specifically impact, Blue, Bronze, Gold, Gold Guest List and Premier members of the Executive Club.
3. Avios earned when flying EuroTraveller & World Traveller will reduce from 100% to 25% of miles flown in the cheapest fare classes
This is a significant reduction and will hit regular economy class travellers hard.
This is not the first time BA has only offered 25% of miles flown. It is effectively a re-introduction of change introduced in 2003 which was reversed around 2009, a time when there was a significant downturn in business and first class travel.
Other economy class fares will attract either 50% or 100% of miles flown, depending on the fare class.
4. BA is introducing a new basis on which Avios can be earned
Currently Avios is earned by reference to the cabin flown and Executive Club membership tier.
Flexible tickets will now earn additional bonus Avios. So a flexible Club World business class will earn Avios by reference to 250% of miles flown compared to 150% at present. A flexible first class ticket will earn Avios by reference to 300% of miles flown compared to 200% at present.
A flexible premium economy ticket will earn Avios by reference to 150% of miles flown, compared to 125% at present.
This is a genuine improvement but we would surmise that those who travel on fully flexible tickets are relatively few.
5. Flights on BA’s Club World London City service will no longer earn tier points as though it was a first class flight
Since the launch of the all business class London City – New York JFK service in 2009 passengers have earned tier points as though this was a first class cabin.
This will change for bookings made after 28 April 2015 and flights will earn tier points as a normal Club World flight.
This is not unexpected. We had always thought this was an introductory promotional offer.
6. BA is introducing peak and off peak pricing for Avios redemption flights
BA is introducing variable peak and off-peak redemption levels for flights.
Those who redeem Avios for flights in peak periods (eg summer) will need to pay more Avios.
For example, a return flight in Club World to New York (Zone 5 for Avios purposes) will cost 100,000 Avios off peak (currently 80,000 Avios) and 120,000 in peak times.
A frequent complaint about the Executive Club is the lack of redemption flights during school holidays. Although there is a price to pay, if it improves availability during holidays this may work for Avios rich members who are constrained by school holidays.
7. BA has attempted to take the sting out of the changes
BA has also tried to take the sting out of the changes by claiming that 9 million seats will be available for Avios redemptions every year.
There will also be a minimum of two business class and four economy class seats on every flight (but only up to 45 days before departure – if not used they will be released for paying passengers),
As the number of Avios redemption seats available on flights has been hitherto commercially sensitive information we have no basis for comparing this to the past.
However, there has been a lot of anecdotal evidence of difficulty in finding redemption seats on flights over the past couple of years. So, this may be a genuine improvement.
8. What’s our take on the changes?
Periodic changes to the terms and conditions of frequent flyer programmes are to be expected and are often a reflection of the current state of the market.
The last major changes to the Executive Club were approximately five years ago when demand for premium air travel had experienced a significant drop.
These changes are clearly a reflection of the fact that demand for air travel is buoyant and has recovered from the post-Lehman Brothers downturn.
It does reinforce our view that frequent flyer programmes work best for those who can be flexible about when and where they redeem miles and can also earn a sufficient number of miles for a redemption flight over a relatively short period of time.
Whilst a mini-industry has developed in recent years in attempting to maximise accrual of miles in frequent flyer programmes by various means and some frequent flyers will go to the most extraordinary means to earn miles, in our view the frequent flyer programme is only one reason to choose an airline. Route network, schedule, ground facilities and cabin comfort are also important.
It is also worth adding that whilst frequent flyer miles has often the only means by which business and first class travel can be accessible to some, in other respects it has become more accessible. Airlines have adopted more sophisticated revenue management techniques aimed at primarily at leisure travel. For example, a number of airlines (BA, Air France, KLM) had flash sales offering business class fares for £1,000 for Christmas and New Year travel.
Those hit hardest by the changes may wish to consider earning miles on BA flights through an alternative Oneworld frequent flyer programme, such as Anerican Airlines AAdvantage.
It is important to note that the changes only apply to bookings made after 28 April 2015. Existing bookings and bookings made before 28 April 2015 are not affected.