For those of my readers that aren’t also aware of Head for Points, it’s an excellent UK centric blog focusing on the value of points and miles. One of their articles today is about an interview that the South China Morning Post had with Alex Cruz, the CEO of British Airways, talking about some of the changes that they’ve made to the use of Avios, and what is still to come.
I’m not going to reproduce the article, but do recommend heading over to have a read.
The potted summary is that Alex recounted some of the tweaks they made to the programme last year and that coming later this year will be the ability to part pay with Avios, for anything and everything on BA.com. Their rate limiting factor here is they need to upgrade their IT infrastructure in order to enable these changes, and that’s taking some time.
On the face of it, this is good news and nothing particularly revolutionary. Lufthansa has had this functionality on their website for a while now, and there’s been no particular outcry from their frequent fliers about this change in particular. What’s interesting, is that Lufthansa’s solution for this is provided by Amadeus, one of the largest airline-focused IT providers around. Amadeus also provide a large number of services to British Airways, so I would assume that the miles and cash slider is a reasonably “off the shelf” product that they have developed.
Three really interesting stats came out of the Lufthansa experience:
- €20 higher average ticket revenue with Miles & Cash bookings vs usual bookings
- 70% of Miles & Cash bookings are paid with more than 80% of customers’ total mileage
- 30% of customers say they would not have bought the ticket without Miles & Cash
The middle statistic is fascinating – it implies that this is mainly being used by people with small mileage balances in order to use them up. To that end, for the serious Avios collector, I don’t think there’s much to fear.
If we look at where British Airways have been focusing their efforts over the past five years, including the introduction of the Bronze tier, it’s about driving engagement from the less frequent traveller; this is a very smart strategy as their overall product differentiation diminishes as a result of their cost cuts.
However, the proposed changes to the Avios programme had to be approved by the IAG board. To my mind, that means that something far more significant is coming along the line, rather than a simple slider and the ability to pay for services on BA.com such as extra bags using Avios.
In the interview, there was no mention of changes to the executive club tiers, to tier points, or to benefits at various status levels. There was no mention of changes to award levels or award charts. In fact it’s interesting when the question was asked, Alex completely dodged it.
The market leader in this space (from an airline executive’s perspective) is very much Delta.
- They have removed award charts entirely
- Implemented married segments (availability is different from A to B, than A to B to C)
- Charge different prices for close in redemptions
- Charge different prices for partners
- Link earning miles to money
- Have minimum spend ceilings for various status levels
I would suggest that implementing all of these are on BA’s wish-list, however clearly IT appears to be holding them back.
So we know that changes are coming, however what exactly they are, and when they will be implemented is clearly a closely guarded commercial secret. Historically, when tweaks like this have been introduced, they’ve never been good news. For those of you with large Avios balances, perhaps the time has now come to slowly start running them down?