British Airways Will Go Revenue-Based, Introduce Redemptions for All Charges at Low Value

Head for Points runs an interview with British Airways CEO Alex Cruz that was given to the South China Morning Post.

In it he says that British Airways Executive Club will go more revenue-based for mileage-earning and redemption. Here they’ll copy Lufthansa, Alitalia, and Air France.

On the earning side that’s almost meaningless, it’s already one of the original mostly-revenue based programs with both miles earned based on fare class and elite tier points based on fare as well. This would just tie revenue and miles more directly, a change in technology.

On the redemption side though this is bad for members. They talk about every seat being available every day on points, and even that the number of points can go down (when ticket prices go down). But that spells the end of value. Points prices fall when you might as well use cash. Points prices rise when miles would have gotten you a good rate of return.

There’s no timing for all of this though. It takes IT work and British Airways IT is poor, and it’s gotten worse since they’ve cut costs and outsourced in the area. In fact we were supposed to see major changes a year ago.

What we will see first is just an expansion of ‘pay with points’ using cash and points towards redemption tickets,

One of the key instruments which I hope we will completely redevelop by the end of the year is the “Pay with Avios” concept. I got a short-haul ticket for my son the day before yesterday and I used 2,500 Avios to discount it by £20. As a consumer, I was looking at it and I wasn’t given an option to buy the whole ticket or pay half of the price. What I really wanted was a slider. I am willing to pay £30, “how many points will you take?”. So moving it up and down. That is the direction we are heading in.

I’m skeptical that the CEO of British Airways actually redeemed points for his son to travel on the airline. And if his story is somehow true, it points to the low value of British Airways points to that CEO when he redeems them at 1.1 cents apiece.

In late 2018 or early 2019 he expects to offer points redemptions for all British Airways charges (no doubt at a low fixed value, as he’s already preparing you for), “every single payment that is made in BA through every channel – baggage, seats, upgrades, tickets themselves – can be paid with Avios.”

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 InsideFlyer.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 can see him now. Some IT person sits him down and shows him how awesome the IT department is and how they have made it so simple for customers to have this great experience redeeming Avios on the website. “Here let’s enter a make believe trip for your son and here is how you can pay for part of this. Look at the awesome value that can be had for 2500 avios. The peasants will love it. Oh I know your family doesn’t actually pay for travel”.

  2. As long as they leave the award chart for short haul AA/CX flights alone, that is all I use Avios for anymore anyway.

  3. Why would they leave that alone?

    Gary, I just took out the IB card. Will both organizations change?

  4. I’m so glad I stopped accumulating BA miles the day they switched to Avios. If only I could burn my remaining points faster, but I can’t seem to find any AAvailability.

  5. @Beachfan it’s all IT-dependent, isn’t it? Revenue-based redemptions could just be an add-on. Ultimately all of the Avios currencies are supposed to move to the same platform, but that was supposed to happen LAST year..

  6. yeah, that Avios.com thing. About that.

    Right now there’s a way (cumbersome but sometimes works) to transfer Avios BA/IB. But to transfer to Aer Lingus you are told you have to go through Avios.com. hahahahaha Has anyone figured out Avios.com yet? It’s as complicated as Iberia is primitive. But Aer Lingus is tied to Avios.com in some way that maybe Einstein could understand but he’s gone. I’d like to transfer BA/AL.

    And if Avios are changed to 1.1 cents value like the example…….Damn!

  7. Nothing on their industry leading carrier imposed charges? With these anticipated changes, lots of Avios redemptions would have negative value.
    Definitely not a program to be focusing on.

  8. Wow- horrible news for those of us who were planning future use of Chase 2-for-1 certs for TATL business class.
    I guess I will need to expedite that plan so that I can zero out my account before the changes are implemented.
    Has BA traditional provided advance notice of changes, or do they simply lie like DL?

  9. BA is the US3’s dumb but puzzlingly endearing cousin.

    Flying BA doesn’t earn you much except for the right to sit in subpar lounges and dodge fees you shouldn’t have been charged in the first place. The Avios that you do earn are only valuable for redemptions on other airlines. The hard product lags behind peers’. The soft product lags behind peers’. Workers are squeezed on pay and schedule and then blamed for management failures.

    Is there an Anglophone country that can run an airline?

  10. This is the result of Chase UR becoming the industry leader. Executives are told that ‘chase has a points slider’ so they say, ‘we need a points slider’. They really don’t have any serious grasp of their value proposition or how to position their points in relationship to these other options.

  11. Do you the redemption of avios for hotel stay or car rental also be affected? I was looking at hotel booking the other day (Seattle, San Francisco, Vancouver, Manila, and a bunch of other cities) and there was one hotel – I can’t remember – where the redemption was 1.33 cents per point, which is not bad.

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