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.
[…] Next month British Airways is expected to announce some pretty brutal changes to its Executive Club program. […]