Gary wrote an alarming post yesterday pointing out that Iberia, owned by the same parent company as British Airways, has obliterated its partner redemption chart for Avios redemptions. Shorthaul trips on American Airlines that are 4,500 Avios with BA are 19,500 Avios with IB! Although this is not a new chart, merely the first the time Iberia has published its current partner chart, many are rushing to redeem their remaining BA Avios in anticipation of a similar devaluation and moaning that the British Airways Executive Club program is now useless. While all hints of devaluations merit serious consideration, there is no need to act rashly – BA has not yet announced anything similar and there is reason to believe that even if they do adopt a similar change, there will be some notice.
I do anticipate BA will eventually match or devalue even further, but not just yet. While Iberia has devalued at several points in the past (such as the scrapping of Reward Flight Saver with no notice), BA gave us notice last time before the devaluation (not specific details of the new scheme, just notice). With the size and popularity of BA’s loyalty program, I would hope and except that BA would give some notice if a similar change will be introduced. This news reminds me that it has been almost three years since the devaluation: that means we are due for another one. I hope that BA has the courtesy to provide advance notice and I do believe it is a matter of when, not if. Then again, BA provided no notice before suddenly charging change fees for Gold status members in June.
British Airways and Iberia are two separate and competing divisions of IAG. While BA and IB and their respective loyalty programs are owned by one parent corporation, they have different call centers, corporate officers, and dramatically different policies. Iberia has always had a separate partner chart and charged a bit more for many oneworld partners. Once your award is booked with Iberia Avios, there are no changes or cancellations permitted (unlike BA, which charges a $55 change or cancel fee if made at least 24 hours prior to departure). Unlike BA, Iberia does not offer companion voucher offer for credit card holders, which drove many bookings away from its own metal and to partners.
BA has not followed Iberia’s last devaluation. I mentioned above that Iberia cut its Reward Flight Saver program about 18 months ago, a program BA also offers that makes redemptions within Europe very reasonable by charging a small flat fee instead of the government taxes and fuel surcharge which make up about 80-90% of the fare. BA never followed, despite the ability to freely transfer points between Iberia and BA. Let’s face it – the Iberia network is limited, so Iberia Avios were all about partner redmeptions, pushing costs higher for Iberia. BA, on the other hand, has a huge route network, more award availability, and companion certificates that push many award bookings to its own metal. The two carriers and their loyalty programs have difference considerations and the past has shown that BA does not mimic IB or vice versa.
Chase and American Express may temper any planned change by BA. British Airways Executive Club is both a Chase and American Express transfer partner. In the U.S., Chase issues the branded BA credit card. While credit card companies do not have veto power, I know (based on hundreds of my clients who hold it) there would be a mass cancellation of the card if BA matched Iberia’s latest change. Ultimately, it appears that Delta and United are getting away with their own mega devaluations but such devaluations look modest now compared to what Iberia Avios did. BA depends on selling points to credit card issuers to churn a profit and makes money off its Executive Club loyalty program. Certainly, number crunchers have already worked out the projections of what effect this change would have, but United is still recovering (and may never recover) from its two-front devaluation and loyalty does matter – if BA suddenly loses what is now a very competitive loyalty program (even despise the obscene fuel surcharges and high prices for longhaul premium travel), it will lose customers and profit.
If you have a definite trip planned out, book it now. There is no use gambling – BA could gut the cart overnight with no notice, so if you have solid travel plans through August 2015 and plan to use BA Avios, it makes sense to book flights, especially shorthaul flights, now. I intend to book an Aer Lingus trip between Boston and Dublin soon just to ensure I can cash in on the incredible 50K r/t rate in business class with no fuel surcharge.
If you do not have a trip planned out, don’t just book something to burn your miles. BA has a 24 hour “cool off period” in which you cancel award reservations without penalty and also charges a modest $55 for changes or cancellations, but there is no need to even throw away $55 if you have no idea what your travel plans will be next year. Start thinking about it, but don’t just book something today to burn your miles.
* * *
Certainly, the shorthaul flights in the USA, Canada, Mexico, and the Caribbean on American, Alaska, and US Airways that cost several hundred dollars if booked last-minute but now only cost 4,500-10,000 Avios and $5.60 in taxes are an incredible deal and likely costing BA a fair amount of change. But in most cases, the value of these shorthaul awards is not in booking 360 days in advance, but 1-2 days in advance where BA does not even charge a close-in processing fee like all U.S. loyalty programs, except Delta Air Lines, charge.
The news is concerning and I do know that the BA chart will eventually be devalued, but I hope the points above help you make a more reasoned decision over whether to burn your BA points now.
Well written and a lot more informative than the panic other bloggers are throwing out. Thank you.
Turned out the panic was all for not. Glad you were insightful enough to see through all the b.s.
James Dozer- I like the sentiment, but the bottom line is we don’t know when this will happen and if notice will be given. I agree it is a question of “when” and not “if” since everyone with IB avios can sidestep the IB devaluation by transferring to BA avios unless and until BA closes the “loophole.” Personally, I plan on booking as many speculative flights as I can, provided there are no/very low taxes. I can forfeit the taxes paid and recoup the avios later ( if they are still worth a darn) if I need to cancel anytime before 48 hours of the flight.
I don’t fault Gary at all for posting what he did, because I was not aware of that huge difference between IB and BA Avios either even though I book award travel full time. And it was news in the sense that it was published for the first time.
Wes makes a good point in that for domestic trip, your cancellation fee is only $5.60 as long as you cancel more than 24 hours in advance, so if you are even considering travel, just consider this a Fare Lock.
Matthew, isnt there a standard $55 cancellation fee per trip? Where do you see a cancelation fee of only $5.60? At that rate, I may book a bunch of NY outbound flights even if I ultimately need to cancel!
@Sam: The cancellation fee is no more than $55, but when you buy a ticket with taxes/fees less than the $55 cancellation fee [e.g. a domestic one-way ticket ($5.60 in taxes)], you only forfeit the charged amount to get the points back.