So is British Airways Going to Devalue their Program in a Big Way, or Not?

Last night I wrote that Iberia made major changes to its award chart.

They created a separate award chart for partner airlines, such as oneworld members (and joint venture partners) American and US Airways.

That’s a big deal because their program used to be more aligned with British Airways’, a way to buy cheap non-stop short haul flights. Iberia and British Airways are jointly owned by the same company (IAG).

You can even transfer points between British Airways and Iberia accounts, provided the accounts have been open 90 days and have both had points activity in them. That means if you don’t like one award chart, you can move points over to the other program.

And it led to speculation, could British Airways be poised to make similar moves?

Both Dan’s Deals and Matthew Klint aren’t especially concerned.

Dan’s title suggests the Iberia changes are ‘Much Ado About Nothing’ and I disagree.

That said, Dan offers a conclusion that I do agree with.

I don’t think that the Iberia changes prove that imminent changes are inevitable, nor am I running to burn my stash of 500K

I don’t think that the Iberia changes prove that imminent changes at BA are inevitable either.

As I wrote,

If Iberia is going this route, is co-owned British Airways likely to follow? I do not know the answer to this. I have decent contacts with several airlines — British Airways isn’t one of them.

I certainly do not think it is inevitable.

But the change at Iberia is suggestive of concern for British Airways.

  • I wouldn’t be making speculative bookings with British Airways points (especially since they’ve imposed tougher change fees than in the past)
  • I would, however, make any bookings one has intended but perhaps been putting off.

I’m also a little less bullish on British Airways points than before.

In general the best values are unsustainable over time. If something is order of magnitude better than what other programs offer, you can expect it to go away.

Will this one go away now? Who knows. But the big deal here is that Iberia, jointly owned with British Airways by IAG, made this huge change without notice and there’s no doubt consideration and discussions over at BA about how they’ll go forward as well.

Dan says he thinks I should have been clearer in my post — and so I’m posting this followup.

I’m not persuaded by his arguments like,

Nor does Iberia try to foster point selling relationships with Chase and SPG like British Airways has done to create a program that more Americans earn and burn in.

After all, Iberia is an American Express Membership Rewards points transfer partner.

But in general neither Iberia nor British Airways are primarily catering to the US market and aren’t trying to retain value for US consumers.

When British Airways devalued their program in November 2011 they did so without advance notice of the details of their new award chart. They promised that 98% of awards would either get less expensive or stay the same. What they meant was for members residing in the U.K..

The two programs are run separately, but they began with nearly identical structures in November 2011. They’ve made their own tweaks since then, nothing as big as what Iberia did this month. And the ability to transfer points is an ‘out’ that makes it hard to sustain the changes for folks ‘in the know’.

Either the bet is that too few folks can actually learn about the ability to transfer points. Or that British Airways will have to follow. Or the ability to transfer points at will ends. We don’t know which of course.

What we know is that Iberia gutted its program for booking short haul partner awards.

What we don’t know is what jointly-owned points transfer program, British Airways, which has a similar structure will do. Iberia’s change raises questions, it does not give us answers.

My bet is that the 4500 point award for flights under 650 miles won’t be sustainable. I use it frequently for $650 roundtrips. That’s too good a deal to last, and history shows good deals don’t. Although that doesn’t mean it’ll go away now.

For what it’s worth, here’s what British Airways tweeted.

That strikes me as a ‘non-denial denial’ — I read nothing into it, either way. Some see this as saying there will be no change. But I see it as referring to (a) the present tense (we know no change has been made yet!) and (b) a statement of the current knowledge of the twitter team, which is hardly confidence-inspiring.

I am less bullish on the accrual side of British Airways points than I was. But I am not claiming I have special knowledge of what will happen — although I am flagging a data point suggesting what could happen.

Sorry I don’t have anything more satisfying, one way or the other!


About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel a topic he has covered since 2002. Co-founder of frequent flyer community Milepoint.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. I was less concerned about this before I saw the denial. The way it is written makes me feel that something is on the horizon. I think that if there was nothing, the denial would have been more forceful.

  2. You may want to stop boasting about your “frequent” $650 fares for 9000 Avios. That is not going to help the cause.

  3. “I wouldn’t be making speculative bookings with British Airways points (especially since they’ve imposed tougher change fees than in the past)”

    Do they still allow you to cancel and lose only the taxes? Is this a reference to TSA fees increasing to $5.60 per one-way vs. $2.50 per segment, or something else?

  4. My main issues that caused me the write the post I did were:

    1. The sensationalist headlines across the blogosphere that made it sound like something is about to happen imminently.

    2. The implication that arbitrage opportunities can’t be allowed to continue when there’s a transfer option.
    The problem with that is that have been major differences between BA and IB as I noted in my post (namely lower YQ on IB metal with IB Avios, non-refundable/non-changeable partner travel with IB, elimination of reward saver award with IB) and those arbitrage opportunities continued despite the well-buried transfer option that continues to live on.

    The elimination of the transfer option seems more likely than the harmonization of those and other differences.

    Of course mileage devaluations are always inevitable. I just don’t see IB changes as doomsday for BA.

  5. Gary, are you certain IB Plus changed its tariffs? I am not an IB+ Plus member so am unable to confirm but someone who is posted this on FlyerTalk, “I don’t know what the fuss is all about. These have been the same Avios amounts for Oneworld redemptions through IB Plus since 2011.”

  6. Gary You do not mention what was the award chart for flights on partners prior to this devaluation as to my knowledge there was never a 4,500 redemption rate for AA flights Issued on Iberia so the devaluation might not be that significant according to the old chart

  7. I think your reporting is spot on and it is “reasonable” to be worried about this change…..but BA can probably absorb more 625 flights with the hope of those “huge” surcharges on their over the pond flights……..and you have to wonder if Iberia’s decision is in someway tied to a troubled Spanish bank where BA doesn’t have that issue……….same owners different creditors?

  8. Gary, as far as I’m concerned, I’ve yet to see one piece of evidence that IB __actually__ devaluated its chart.

  9. Gary,

    I appreciate your heads up, and think that you are correct to raise awareness. Dan doesn’t want to stir the pot because he wants to continue to get his BA credit card referrals. He won’t stop pushing BA even if/ when they do devalue the program! Heck, right now he’s pushing Delta SkyPesos.

    Thank you for taking a straightforward approach, always posting the best offer even when it’s not yours, and not being afraid to say what needs to be said.

  10. I have two Spanish friends, each with just over 25k Iberia Avios. They were planning to use these points for a 25k rt redemption from SCL to IPC. Is it possible for them to transfer their Iberia Avios to BA?

  11. Yes, the devaluation previously hit Americans quite hard (although as you point out some of the short haul redemptions are pretty good value!), but remember your earning rates are orders of magnitude better than UK members have access to – both by way of sign up bonuses and ongoing earning on spend, which more than makes up for it! The only thing that makes it less appealing compared to US programmes is the high YQ, but unfortunately that affects all BAEC members!

  12. The Blogosphere is pretty good at pointing out the value spots in frequent flier programs these days. 9000 RT avios awards won’t last. I think we will see a dual chart; BA metal vs One World etc, expect to pay 50% to 70% more points.

  13. Mark The Shark, you are slow! You don’t remember United’s devaluation? Dan was one of the first bloggers to bash them even though he is getting referrals on the Chase United CC. You are nuts.

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