The False Narrative of Rewarding Expensive Fare Customers

by Gary Leff

In offering commentary on the major changes coming to the British Airways program, Lucky concludes,

This change is pretty in line with what I expect from airlines in 2015:

  • British Airways is being less rewarding to those on lower fares
  • British Airways is being more rewarding to those on expensive fares

“British Airways is being more rewarding to those on expensive fares” is what they want the narrative to be But I don’t think it’s quite accurate:

  • Discount business fares earn less starting April 28
  • Silver elites earn less
  • Premium cabin redemptions cost more

So it’s not at all obvious that expensive fares come out ahead. For many it’ll be a wash (flexible business and first class fares earn more, but then redeeming for the same costs more) and for some (discount business fares, and silvers) it’ll be negative because they’ll earn less and it’ll take more miles to redeem.

I don’t see this as especially generous for premium cabin travelers at all. Instead, premium cabin travelers don’t get devalued more or less, while lower fare travelers receive less.

That may be all well and good, but it’s a different narrative.

When Delta announced their revenue-based frequent flyer program, they wanted the same narrative – rewarding the customers who spend the most. But the details didn’t really bear out the way they were telling the story.

  • Customers had minimum spend requirements at the time for elite status of 10 cents per mile, while having to spend an average of 20 cents per mile on tickets just to break even on mileage-earning.
  • Maximum points earning was capped so the highest fares wouldn’t actually earn more than merely high international business fares.

And at the time that was even before sharing a thing about the redemption side of the program.

Airlines are getting less generous in rewarding flying with planes full, they don’t need to spend marketing dollars to fill last seats on the plane so those low fare seats aren’t getting the frequent flyer investment. That’s a reasonable business strategy, but it’s a different story entirely from increasing rewards to premium passengers.

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. Gary,

    I’m surprised you were able to say nothing, yet write so much in this post. I’m honestly kind of impressed.

  3. @LR I thought it was a good dissection of a disingenuous marketing effort to put lipstick on a pig.

  4. Actually, these new program benefits do, ultimately, benefit the large majority of higher revenue passengers–in the short term a bit, and in the long term quite a lot. The lower revenue passengers get less chance for status, which over time will benefit higher revenue/more frequent passengers with higher chances for upgrades, better flight availability, and more amenities. The fact that mileage earning has diminished for everyone, but mostly for the budget/leisure and award system gaming passengers, means that those who fly more benefit slightly by virtue of the cumulative effect.

    But the real mileage earning change is for those who earn via credit card spend–who now will have far more opportunity to use increased miles for upgrades and award flights with less competition relative to the non-revenue based era. If we assume that higher revenue passengers most likely have co-branded credit cards, and higher revenue passengers typically spend more than the average passenger, then higher spending on co-branded credit cards has less competition from mileage run types or those mostly earning miles from flying.

    In the end, those who spend more (on flights and co-branded credit cards) are the winners…because everyone else loses far more than them.

  5. For the longest time i had to fly the cheapest flights and i fiercely was loyal to my airline because of the perks like free upgrades. (previous AA EP, current Delta DM)
    My financial situation has changed slightly and now that i control my flights i am still price sensitive, but i buy the cheapest First class in any airline. I am no longer loyal to any airline. Being a delta diamond medallion means little when i am buying what i used to crave in perks. I think i am the type of flier delta wants, but their premium cabin sucks compared to Mint on jet blue and first on Virgin.

  6. @Bill while it’s true that people that earn Avios from credit cards and higher revenue flying will now have less competition for award seats, we’re still worse off for premium cabin seats using Avios. As an example I had an insane amount of Amex MR and needed two round trip transcon PHL-SFO tickets in F. I transferred 300k MR to book on US Airways with Avios. (Yes I realize this is a poor redemption rate but like I said I had a ton of MR and no trips coming up in the foreseeable future where I would benefit transferring them to another parter so I decided to save my US and AA miles and use Avios from MR) Those same tickets would now cost me 400k Avios after April 28th. The same goes for people with actual BA co-branded CCs (which is used to be one of). I’d rather duke it out for premium cabin award space at a substantially lower redemption rate then have the ease of mind knowing I’ll now be able to get premium cabin award seats at the last minute because of less competition for that award space.

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