Lucky lets loose the dogs of war over impending changes to the British Airways Executive Club which are coming in November, dubbing them a “huge devaluation.” I meant to write about this last night but was still digging around for more facts, and truth is we don’t know very much yet about what changes they’re planning to make, but since I’ve been predicting a significant devaluation since May I guess you can count me in the camp of those who think the changes are going to be pretty darned bad.
The Milepoint discussion of what’s going on is here.
But basically all we know is that they’re renaming their miles “Avios points.” I almost typed out ‘Avis’ and of course I’m going to have to train my spell checker (not that I use it often, as regular readers frequently remind me). Avios doesn’t actually mean anything, it was adopted because it’s meaningless and vague, sort of evoking ‘aviation’.
They’re introducing hotel and car redemption options, those will be useless, so let’s ignore them. They’re redefining their award zones, and one minor positive is that their ‘reward flight saver’ chart is going to offer fixed fees for flights within Europe.
British Airways, like most European and Asian programs generally, charges very high ‘fuel surcharges’ on top of taxes when using miles. That makes most coach redemptions exorbitantly expensive, you still pay much of the cost of a paid ticket even though you’re using your miles. Of course premium cabin flights are expensive too, but at least you’re getting the premium cabin for your money and paying only a small portion of the comparable paid fare. Intra-European flights can be even more egregious, lowest fares often have lower fuel surcharges than what are charged to award customers. It can wind up being more expensive to buy a coach ticket inside Europe with points than with cash!
So they’re bringing down the cost of these surcharges and even charging a flat fee which includes all taxes on “zone 1, 2, and 3” redemptions. That’s great as far as it goes, Europeans in the program who use their miles within Europe will benefit. But that’s hardly the best use of the program anyway, and if it becomes one of the better uses of the program then the program itself has lost much of its value.
It’s been inevitable since British Airways started offering full mileage earning on discount fares that they compensate for the additional miles on the redemption side. As they begin rewarding lower fares more, they’re looking as though they’re shifting the value propostion to offer less value in their rewards… hotels, car rentals, intra-European flights rather than long haul premium cabins.
We don’t yet know all of the countries that are in which zones, and we don’t have a full picture of the award chart. But we know that they are apparently going to have only one award chart for one partner flights, British Airways flights, and British Airways plus one partner. The only separate chart is their very expensive distance-based chart, that they force you onto once you combine more than one partner in an award.
Currently flying via London to destinations beyond on British Airways prices order of magnitude like two separate awards. Fly US to Asia via London on British Airways and you’ve got an expensive award, fly US to Asia via Hong Kong on Cathay Pacific and you’ve got a much cheaper one. That discrepancy will no longer exist. Now it’s possible that we don’t just get across the board the expensive BA metal redemption pricing. But I think it’s safe to say that values like 100,000 miles roundtrip on Cathay Pacific from Chicago to Bali via Hong Kong in business class are not long for this world. Come November, it’ll be gone, along with 80,000 miles roundtrip for LAN business class from New York to Easter Island with South America stopovers in each direction.
Sure, New York to London goes from 50,000 in coach roundtrip to 40,000 and the lower pricing extends across the better cabins — 80,000 in business and 120,000 in first is better than 100,000 and 150,000 respectively. Of course that pricing is for New York and Chicago… and doesn’t include the West Coast, what they call simpler is odd from the perspective of a US-based member where they’re breaking up the US into different zones.
A lot of folks thought that the huge Amex Membership Rewards transfer bonuses and the Chase 100,000 mile Visa signup bonuses were driving BA towards having to increase their award pricing. But those offers were limited to the US market (there were other European Amex transfer bonuses, of course.) It’s not the North American market that’s driving this. It’s printing more miles for lower fares, it’s that it’s been several years since the last round of devaluations, when you haven’t seen award price increases in awhile you can assume they’re coming. Though the last round was so brutal, where it’s possible to spend over 400,000 miles to Australia if you actually fly British Airways in first to get there (and those are capacity controlled awards!) that it was non-obvious that even higher pricing overall would be necessary.
We don’t have all of the details yet, there will be some customers who will benefit from the changes but it appears most likely that those will be folks looking to redeem for lower-value rewards and that the higher-value rewards on the whole will get more expensive, at least for travel on partners rather than via London. It may be more of a mixed back for UK-based members, the jury is still out. But it’s sure looking like a combination of negative changes for US-based members for sure, with a branding and marketing firm run amok across the organization intent on selling everyone that their made up name Avios means the world is a wonderful place, even when it isn’t always so.
Of course, Jared Blank thinks Chase will bring back their 100,000 mile signup bonus offer soon. If I were them I would try to acquire as many customers for their card as I could, before this change (on the other hand, I might not want to spend a lot to acquire those customers who may quickly be disappointed). If the 100,000 mile signup bonus offer does come back, I’ll certainly recommend that folks who haven’t had it before sign up for the card. After all, I even jumped on the 100,000 mile signup bonus from Capital One. But it’ll make my British Airways stash far less valuable than it was, sadly.
I’m curious to see if the miles required for DFW/ORD to Asia on BA only flights will be less than currently required. If less miles are required, it might not be to bad of a devaluation for two travelers if a Chase 2 for 1 cert is used.
will this affect using the miles to fly on AA in the u.s.?
thanks
Looks like time to pull out the vacation accrual spreadsheet and look into booking that BA award sooner rather than later.
The only real hope at this point is that they have separate award prices for US-Asia via the Atlantic and US-Asia via the Pacific.
The merger of the charts can’t possibly mean that North America to Asia will be anything near the current rate of the BA-only chart. I doubt SFO-HKG in C will remain 75K each way but I also don’t think it’s going to hit 160K or more.
Just the same, I just booked myself a jaunt to HKG. 🙂 I had been holding out for a South American adventure for the wife and I, and truth be told I still have enough for that at current rates. Fingers crossed they truly mean 97% of all routes won’t see an increase.
West Coast is to remain at current levels, 50k for Economy. What they have announced so far is largely aimed at UK/EU members and on the whole good.
Redemptions to East Coast North America drop by 20% and to Asia by 25% so no complaints. As you point out, they have also made Europe far better value for money, particularly for those living in the ‘regions’ (GLA/EDI/NCL/MAN).
The chart appears to all be going ‘distance’ based so whilst nothing has been announced about JFK-HKG and JFK-EZE, etc, based on current distances it likely that these are likely to increase.
Redemptions to Asia from EU have always been far higher priced than from North America. LHR-HKG is a short flight (over 2,000 miles!) than JFK-HKG yet first class redemption is only 240k compared to 150k. Doesn’t seem fair to UK members of a UK airline. However, if going distance based it would also be fair to assume that LAX-HKG would not be as expensive as going from JFK.
@ Be – it’s likey there will be some change if booking AA to Australia with BA Miles as redemptions are going to distance based. What the change will be no-one knows.
Let’s not forget that BA is an airline based in Europe and not the United States…makes sense to me that members based on another continent might be at a disadvantage when redeeming miles.
I posted this elsewhere, but as @arizonaguy points out I simply cannot imagine that to fly on a partner, to Australia from west coast in F is going to cost 420K miles. That is what it is on BA, but that is via LHR, etc. It would truly make no sense to make a NA west bound partner ticket equal in MILES PRICE to a totally EAST direction, BA stopover via LHR, etc.
People are thinking about this incorrectly.
BA has charged so much on its metal to go North America to Asia/Oceana due to the fact that they don’t fly across the Pacific – and they’ve reasonably priced in that you need to fly on two long haul flights to get to Asia on BA (or three to Australia). Concurring with tivoboy, they’re not going to 420,000 for F from LAX to MEL for partner travel.
While the 100k J JFK-HKG on a partner will undoubtedly go up, note that JFK-NRT is 125k in F on AA already. BA will likely equalize with that, or move a bit higher. I don’t see it going to 240k, as some fearmongers are speculating.
Finally, what is some of the most remarkable news is that BA is LOWERING JFK-LHR by 20% in all classes. When was the last time a top tier carrier made such a significant reduction in TATL award travel? Never? That is what to me is truly remarkable and should get at least half of the attention.
Not unlike the way the corporate for-profit media reports on things, the blogger community is not offering a balanced take on this. Headlines like “major devaluation” paint one aspect of the picture, but should be balanced against “significant reduction in points needed for popular f/j TATL travel” would be nice to see, too.
Re breaking the US into zones, that also seems reasonable. While it may be new to many here, it’s been long accepted in Europe and Asia. Sorry if we’ve been too protected here.
Break up Canada into zones, too!
@NYBanker I actually think I presented the improvements and fairly — reduction in surcharges for intra-European travel, reduction in miles for shorter-haul transatlantic travel. But in all cases it appears that they are improving the lower value awards (JFK-London, but not LAX-London) and likely to reduce value of the higher-end awards. Now, this all may work out for you, you are NEW YORK Banker after all. I note that it works out for some people. But not those looking for the greatest value out of the program overall.
@Gary – they are improving the higher value awards – LHR-HKG/NRT/BKK, etc- they drop by 25%.
@Andrew with regard to your comment “makes sense to me that members based on another continent might be at a disadvantage when redeeming miles.”… for the last however many years a First class redemption from JFK-HKG (8,000 miles) has been 150,000 whilst from LHR-HKG (6,000 miles) a First class redemption has been 240,000 miles. I wouldn’t say that members based on another continent are disadvantage!
LHR-HKG has been confirmed as reducing by 25% to 160,000 for a First class redemption and they have said their new award chart will be based on distance.
So…at the end of the day, if we book before Nov 15 we can use the old award charts?
Any downside on combining two accounts into a household account? I am thinking burning every single BA mile and never fly (not like I did) or earn another mile again from them? Most importantly, never consider flying them British high fuel charging avios enhancementsmyass folks:-)
Really….what did everyone expect with these 100k mega credit card offers?
Loyalty programs are on a long slow path to oblivion and will all go rev based like UA in the near future….wearing my futurist hat:-)
Not a bad problem to have all these miles when you think about it:-)
An update from the BAEC representatives on FT…
“With regards to the pricing queries you have, we are working towards sharing the detail with you in a more structured manner as soon as possible. I’m sorry that we cannot publish the full details at the moment. We will be communicating more detail in the lead up to the changes actually happening. Can I please ask that you do not send me individual pricing queries by route via PM as I cannot answer these due to a rapid increase in queries and while I appreciate everyone has personal concerns, the wider community share some of these too as well as the general day to day account concerns. What I will say is that the general consensus concerns have been noted.”
@ Euan, that’s not what I was saying. I meant going forward, if folks based in the US have to spend more miles for some flights than folks based in the UK/Europe, that is what would “make sense to me for some members based on another continent (the US) might be at a disadvantage…”
This doesn’t seem to be the case now, where US based fliers can get that 150,000 JFK-HKG while UK based fliers are paying 240,000.
@ Andrew, apologies misunderstood you.
Yes, at the moment UK members pay 240,000 miles first class to HKG against 150,000 miles.
UK members will pay 160,000 miles but given the award charts are all going ‘distance’ based and JFK-HKG is 2,000 miles further I would expect US members to pay at least the same, if not marginally more.
@gpapadop only downside to combining as household account is that you can then only redeem for members of the combined household.
Being a newbie, wanted to know that since it’s a BA Chase card and supposing the 100k was re-offered, could I combine points to other Chase cards like Sapphire?
Thanks
@Cheaplee, Sapphire transfers to BA, BA does not transfer to Sapphire.
Any thoughts on whether the cost of economy flight from East Coast US on partner AA will increase from the current 35K mile level? This being one of the current benefits of booking using BA miles when traveling during “peak” season as compared to cost of 45K AA miles.
Question above was regarding travel from East Coast US to Hawaii on AA using BA miles. Currently only 35K miles regardless of when you travel. Any thoughts on whether that will increase?
Household status: I become head of household and add wife to the household. Can we get award tickets for the 2 kids who do not have BA accounts or am I stuck in redeeming awards for just me and wifey?
I am sick of airlines announcing only the good news (97%, etc.) and then keeping us on hold for “months” until final details come out! Decide ALL the changes and announce them AT ONCE…& give us plenty of notice to deal with them. The airline that does this WILL gain lots of respect (and likely business!). These ridiculous high fuelcharging Brits say 97% of awards will go down on a news release & then say “oh, the one partner award chart will go the way of dodo to” and we will announce all the details over the coming MONTHS when the date cutoff is in just a few months….BA insulted my intelligence so looking to burn them all and be done with them FOR EVER. My problem is by the time I decide where to go you guys may have claimed all the award seats:-)
@gpapadop get the kids accounts, add them to the household (the household can have 4 members) and then redeem the tickets for them.
Thanks Gary for the right on tips…On to ponder whether to make a move to Australia now:-)
Gary –
100k in business on Cathay ORD-HKG: It sounds like Cathay allows you to go ORD-DPS for the same price, do they allow stopovers?
Also, does that work for ORD-BKK as well?
Points / miles for hotels should not be criticised too soon – it all depends on the value allocated to each point. If the points were transferred from AMEX then they are worth about £.005 (0.5 penny)or <1 cent each (about half of one percent of the original goods cost). Calculations on the value of Avios points vary enormously but if you buy 10000 from BA it costs £175 or 1.75 UK pence each. But soon we will know what exchange rate will be offered for hotels and perhaps more importantly we will know if the hotel range is as wide as the excellent list from UA.
Regarding reward flights to the USA from the UK, the situation is dismal if you want to go the West coast where flights one year ahead in the spring, summer, autumn periods are virtually non existant.
On hotels I hope to be pleasantly surprised but I expect to find a limited number of hotels and points worth less than a UK penny (probably a half penny) – if the value is set at 1.75 pence per point then this would be good.
Mike