British Airways Chairman & CEO Alex Cruz has laid out his vision and implementation plans for the British Airways Executive Club and Avios rewards program to the South China Morning Post. In the interview, Mr. Cruz discusses present changes, future goals and a general strategic vision for airline loyalty. Here’s our exclusive take on the interview transcript…
The British Airways Executive Club is the airline’s loyalty program, which awards frequent flyer perks based on paid airline tickets. The Avios program is the “redeemable” end of the Executive Club, where members can cash in Avios points earned from flying, credit card spending and other means for free flights, upgrades and more. Tier points is the system which calculates your level of frequent flying. The further you fly and the higher the cabin you fly, the more tier points you earn. A one way short haul economy flight on the lowest priced fare will earn 5 tier points, whereas a long flight in business class will earn 140. In a year, you need 300 tier points for Bronze, 600 for Silver or 1500 for Gold Executive Club status.
On Elite Executive Club Status
Mr. Cruz discussed a more customer friendly, adaptive approach toward the Executive Club loyalty program and earning perks. This is undeniably in line with actual recent moves. The airline has launched status “freezes” or extensions for parents of newborn babies and has also launched extra airport lounge guest allowances during peak family/leisure vacation times to help extend loyalty perks to personal and leisure travels. Mr. Cruz noted a desire to offer phone agents more flexibility in working with customers, if their elite status falls just a few points short of the mark. This is also accurate from personal experience, when two years back I missed a mark by a week, and was granted two extra weeks to complete my earning. I did, and my status was then granted. We’ve heard from hundreds of readers who have received similar gestures. Mr. Cruz also hinted at fine tuning fares to earn points based off money, rather than distance. The way British Airways presently awards points is largely already in line with this model, it would just take things a step further.
Our take
We see revenue based earning as a net negative. Corporate customers will benefit and deal hunters will not. Most customers will receive fewer points for the flights they take. As to elite status: ask what can be done within reason if you fall short of status or need to pause status. Politely of course. Also, be sure to offer feedback to the airline (positive and negative) regarding lounge guesting allowances. I like the idea of extra guests during the spring season, but would personally prefer perhaps (4) “guest vouchers” per year, in case I ever have more than one guest. If the “boss” is talking customer friendly, and you believe you’re a good customer there’s no harm in asking.
For years Mr. Cruz has laid groundwork for a “dynamic” system for spending points. We’ve discussed the issue at great length in previous articles (highly worth a read). The system is both the best friend and worst enemy of customer loyalty. The pros: you can use your points virtually any time, or can apply them towards the cost of a cash ticket. To a total novice, this makes things “easier”, especially for terrible ways to use points. The cons: you may never know exactly how many points you’ll require – and you’ll likely require more points for the most optimal travel dates. A first class ticket from London to New York presently costs 68,000 points off peak one way. It’s either available or not – and in favor of the argument for a future “dynamic” system, it’s more often “not” than actually available.
Under a dynamic system first class will almost always be available using points. It may be 68,000 points on roughly 10 dates a year, 95,000 points 50 days a year, 680,000 points for imminent travel tomorrow and any number in between on any other day – all based on demand, season, route and other factors. For those with extreme quantities of points, the flexibility can be a huge plus. But for those who struggle to ever reach enough points for a meaningful flight, it may pose a tremendous aspirational value roadblock. We must wait and see how implementation is laid out. Mr. Cruz also mentioned more flexibility with “part pay with Avios”. Presently the amount of points you can spend toward an elite status earning, cash based ticket is capped, but this may change according to subtext of the interview.
Our take
I hate the idea of a system taking away a definable end goal line for points earners. But there are undeniable potential positives. Flash sales lasting less than 24 hours are the new “it” thing. We cover them better than anyone else (you’re welcome). First class tickets are now sold under £1800 on occasion, and business class has often been sold for £1000 round trip to Asia and America in flash sales. We’ve seen great Premium Economy sales in the £400s round trip as well. Would spending 68,000 Avios to cover £680 of a £1000 ticket, while earning Avios points back AND earning elite Executive Club, Bronze, Silver or Gold status credit be better value than spending 68,000 points one way and earning nothing for the trip? I think so. The interesting space to watch will be how people value their Amex or Chase British Airways cards, if the value of the companion voucher becomes diminished. We always advocate for transferrable points cards over airline or hotel cards anyway.
Featured image courtesy of British Airways.
HT: HFP
Does not sound promising for the Exec Club. Predictability in pricing is definitely a positive for a redemption program.
your views are interesting.
I read the verbatim report on head for points. basically to summarise, this is moving to the AF, DL way. high costs to get miles that one would current earn and low avios value compared to today (as rates will most certainly go up the way you have described in your example above). no two ways about it. they will use selective ‘feedback’ from ‘frequent flyers’ and say this is ‘what the EC members want’.
anyway, what you have pointed out that I didn’t think of is offsetting an already cheap J fare using miles. Now that is a good point. but will they ever put a value of 1p per mile? No chance. I think they will base the discounting of the ticket dependent upon the travel date, load factor and price paid. The value of avios will also be variable. Otherwise they cant win. The thing is that all these airlines want to ‘win’ this game rather than making the consumers believe that the consumer is winning. This is their biggest mistake. but then there are the cheaper J fares that just keep on coming.
To quote your example, the J fare for 1000 GBP from LHR to BKK will maybe only get you 4k to 6k miles if you had no status (based upon other revenue based programs) whereas today, it would have got you over 15k miles. Now that is approx 100GBP of loss if you take the value at 1p as you have.
I maybe wrong but one can’t help be skeptical about all of these changes every airline is making. I have said it before and will say it again – those lucky enough to be able to afford to buy J if the price is right will be winners. I suppose thats what the airline wants. I think the market is headed in that direction – lower J fares as all airlines are competing. To offset that, they are going to clamp down on their miles redemptions. That way they can ‘balance’ things. If only all of them follow the Alaska model (but hey, who knows – alaska will be next in line for revenue and devalue JAL and CX like they did with EK).
Once I have exhausted my amex points (will mostly use on SQ or asiamiles) and BA 241 voucher, I shall forget being too bothered with the miles and points game. I will still retain cards and churn them (apparently that may stop as well in the UK?) until that is allowed for any incidental benefits that having 60 to 80k points will have. I see there maybe use for these on the SEA airlines and short haul EU may still remain useful on certain occasions. Or maybe to upgrade a J ticket to F. so I suppose its worth collecting points for that. At the end of the day, until all programs fail, something useful will continue to exist., but that end is coming near.