British Airways is moving to revenue-based points-earning starting October 18. This applies to their own flights credited to the Executive Club program.

What British Airways Revenue-Based Earning Will Look Like

British Airways will award Avios for travel on its own flights (and codeshares) based on the cost of the ticket – fare plus carrier-imposed surcharges, but not taxes – at the following rates starting October 18, 2023:

• Blue member: 6 Avios per £1
  
• Bronze member: 7 Avios per £1
  
• Silver member: 8 Avios per £1
  
• Gold member and above: 9 Avios per £1

Since 1 British pound is currently worth US$1.31, that equates to 4.58 Avios per dollar spent. I have inquired whether U.S. members will earn at a different rate, or whether ticket cost will be converted to British pounds to calculate earning.

Note that BA Golds and above in this scheme earn less than 7 Avios per dollar, compared to 11 AAdvantage miles per dollar earned by American Airlines Executive Platinum members and above. Considering that British Airways also adds surcharges to its redemptions, this seems especially ungenerous.

Tickets purchased prior to October 18 will earn at current rates.

Revenue-Based Earning Is A Bad Move – But An Inevitable One

U.S. airlines outside of Alaska have gone revenue-based earning for flights on their own planes. This was led here by Delta nearly a decade ago, though Delta wasn’t first to do this – Air New Zealand moved to a revenue-based program 18 years ago, America West once had a revenue-based program, and Independence Air did as well.

Delta popularized it, moved Air France KLM Flying Blue in that direction, and United copied Delta and then American copied Delta as well (over objections from the AAdvantage team at the time!). Scott Kirby, then at American, had been ready to pull the trigger at US Airways if the acquisition of American hadn’t gotten in the way first, and insisted on American making the move.

Distance flown may not be a perfect proxy for value a program wants to reward, but fare isn’t either.

• Fare isn’t the same as profitability (the customer who buys the last seat on the plane that would have been taken by someone else doesn’t produce economic profit, and fare doesn’t account for cost either, a $500 ticket on a short hop earns the same as a $500 transoceanic trip).

• A flyer may buy one expensive ticket with you because you are the only airline who flies non-stop on the route. Does it make sense to reward them? You’re essentially just lighting money on fire if they’re going to pick your airline anyway.

• A low fare passenger may fill empty seats and be pure profit.

• Meanwhile a passenger buying a $500 ticket from London to Paris earns the same as one buying a $500 ticket from London to Los Angeles. Since the current system accounts for both distance and fare class, this new system may be worse at approximating value of the customer to the airline when awarding points.

A loyalty program needs to try to influence incremental business. You may reward a high spend customer but not get additional business from them than you would have gotten otherwise. But you might be able to move the needle with some of your other customer segments.

In the U.S. it hardly matters, airlines make less flying planes than selling miles to banks. Not so in the U.K. or Europe.

British Airways has been talking about making the move since 2018 and in 2022 said it would happen this year. So there’s no real surprise here.

How This Compares To Other European Programs

Lufthansa moved to revenue-based earning in 2018 and so did Air France KLM. Both Miles & More and Flying Blue earn at a rate of 4 to 8 points per euro.

The Iberia program will offer earning of 5 to 8 points per €1 which is roughly equivalent, a little bit better than competitors for non-status members and a little less so for top elites

How U.K. Members Should Play This

Now that both Iberia Plus and British Airways Executive Club will both be revenue-based for flight earning, crediting Iberia or British Airways flights to a frequent flyer partner may begin to make more sense on inexpensive tickets.

• Partner programs will generally award miles based on distance and fare class, as BA is shifting from.
  
• Check WhereToCredit.com to easily see earning options.

Of course if you’re striving for status in the Iberia or BA programs, you’ll need to credit to that program, and may be willing to accept the tradeoff.

Customers buying more expensive tickets may come out ahead. Still, shifting away from the currency as a reward to one that’s a simple commercial rebate degrades the loyalty a currency can engender especially among less frequent customers who don’t have the status component of the program to drive them.

What U.S. Members Should Know

British Airways offers a useful program for Americans because they have a U.S.-based credit card (with Chase) and because they’re a transfer partner of several bank card programs. They give access to oneworld awards, and offer competitive flight pricing on short distance trips, especially in economy, and for travel on Qatar Airways.

Meanwhile, BA often has good award availability on its own flights. They have committed to making coach, premium economy, and business class award space available on every flight when loading their schedules. They add fuel surcharges onto awards, which makes redemptions often not so good a deal, but even this can work out well sometimes. (And programs like Cathay Pacific Asia Miles offer BA flights with lower surcharges).

It’s unlikely most Americans will credit flights on British Airways to BA, unless they’ve decided to go for lifetime elite status, since BA’s lifetime program is more generous than American’s.

Put another way, most U.S. members will use the British Airways Executive Club as a points-transfer partner and for earning activities other than flying. So the median U.S. frequent flyer shouldn’t be affected by this change.