kanderson1965

Simple, make FFPs a taxable perk (yes I know you are going to argue about separating what is earnt through paid for work related travel and what through personal travel).

Ancient Observer

One of the big consultancies did some work a few years ago on the known liabilities of FF schemes.
On their sums, all the US airlines were technically bankrupt due to the outstanding FF schemes, although the airlines did not book them as outstanding liabilities.

If you add together BA's pension liabilities, and its outstanding FF liabilities, I suspect it would also be technically bankrupt.
Good. That should release a few LHR slots for Ezy et al.

Crampedin13A

Probably wouldn't make a differnce for me personally as far as making Gold because ex-Canada fares tend to be high on BA (not just BA to be clear) compared to other markets due to lack of real competition. That being said BAEC is in it's present form is a very good FFP and the one thing that has kept me loyal as a customer despite M+M making far more sense with my flying pattern.

dougzz

But influencing the purchasing decision is exactly why they do care about where the money comes from. Understanding the business/leisure mix is essential in pitching the right offers at the right time. As always C-W-S explains this a lot better in post #30

orbitmic

Exactly. ^ I think that before further deteriorating BAEC, Cruz and co would be well inspired to look at what happened to competitors which transformed generous FFPs into poor ones such as AF. As you very rightly point out, BAEC has helped BA do so much better than them at times of economic crises in the past, and from that point of view, the storm brewing on the horizon is still so hard to evaluate that it would seem extremely arrogant to assume that it will be quickly and easily over with any certainty.

CD747

I think translating Avios to a fixed cash value would be a bit of a poisoned chalice for BA - without that arbitrage, there would be no motivation for anyone not to use them, and so BA would see a short term sharp decrease in revenue as customers expend their balances to discount their (otherwise revenue) travel. I suspect in practice it will all be a bit more subtle than that...

Calchas

Did it escape their notice that the effective monetary value of the points can be decreased at will?

Land-of-Miles

I would have thought that redemptions are revenue positive within BAEC not really liabilities at all.

srbrenna

Easy - just flog off Avios/BAEC. Problem solved. No liability and cash in the bank.

FrancisA

I think BA would be well advised to consider the purpose of BAEC and the members that it attracts.

I presume the main reason for BAEC is to instil loyalty, or at least incentivise BA purchases above competitors.

Looking at the BAEC membership, since TP earning in discounted Y was reduced back to previous levels, most who retain membership will be flying on flexible tickets and/or in premium cabins. Two groups come to mind - business travellers and premium leisure travellers. In other words discounted leisure travellers are effectively excluded.

Of these two categories, premium leisure travellers are highly likely to have total control over their airline choice and are quite likely to be price/benefit sensitive.

For business travellers on the other hand only a limited number will have total discretion over airline without consideration of price. Many will have to operate within corporate travel policies and be restricted in terms of price and cabin. Some may have no choice at all.

A logical conclusion to that is that BAEC is more likely to be a factor in leisure traveller decisions than business traveller decisions.

So why move to a revenue model? This would worsen the offer to many leisure travellers, while not introduce any extra freedom to act amongst business travellers. And what pray does revenue mean? Face value of ticket or price paid? Thus, is a full J fare paid for under a corporate contract for less cash than a discounted I fare worth more in revenue and therefore TPs?

I can see a bit of a problem creeping into this argument. BA would be rewarding its captive business travellers who are compelled to fly with it through a corporate deal, whilst losing those who genuinely have a choice of carrier.

This is not a new topic and the arguments remain the same. If you look logically at BAEC, where it is pitched at the moment makes most sense. The move to widen its appeal backfired and has now been reversed. If I were BA I would just stick to things as they are (and which are known to work).

lost_in_translation

Not necessarily a bad idea if implemented correctly IMO, the idea is to do a better job of attracting those who currently pay through the nose for last minute flexible tickets but receive relatively little back from BA, whilst not totally alienating the 'average' traveller. I see no reason why someone who flies to HNL a couple of times a year on cheap tickets thinks BA should value them the same as the above traveller.

Rubecula

The current Avios redemption routine works well for BA. The carrier charges we have to pay cover (or at worst nearly cover) the marginal cost of providing the seat so the outstanding stock of Avios is not a hidden liability for BA.

The aim of the BAEC is to encourage people to fly BA. If you have no say in what airline and/or cabin you travel in then the terms of the BAEC are irrelevant. As others have said, the premium leisure market is one where the purchaser has full choice over carrier. A non revenue system is likely to be more attractive for this market.

Practicality rather than theoretical purity suggests BA would be unwise to tamper too much with the BAEC.

However, airlines do make odd decisions. AA downgrading domestic first to business for Avios and TPs is a case in point. The first TPs currently awarded are almost exclusively a matter for BA but encourage BAEC members to fly AA domestic first. That demand will decrease following the change and redemptions will be cheaper.

neuromancer

From what I've seen in Brazilian FFPs (all revenue-based redemptions), you never know in advance how much a flight will cost. An 1 hour flight may be anything between 5000 to 60000 points, depending on cash prices (but not only that, sometimes the award price changes even when the cash price does not).
The positive note is that there are always available redemption seats, at enormous prices of course.

CrazyJ82

Based on scattered reading over the years, I get the sense the feeling in the industry is that if you had it to do over again, you would never design airline loyalty schemes the way they have come to be. They do a poor job at the margins of rewarding big spenders versus merely good planners, and via alliances often incentivize consumers to buy a competitor's product when they're in direct competition (ie CX vs BA on the LHR-HKG route). Most other loyalty schemes I know of are based on spending rebates and not primarily volume rewards. So I've resigned myself to the fact that airlines will eventually go the same way.

Flip42

Because those who fly to HNL a couple of times a year have the choice to fly there with several carriers.