Originally Posted by
crazy8534
My experience is that there are 3 types of GGL:
1. Hard core TP runners / pure leisure, strongly represented on FT. I am not sure what the annual spend is but I would guess £10-20k. These are the folks flying LHR-OTP/SOF return etc., love flying/planes/travel. Never met one I didn't like. BA have said they aren't interested anymore, which is of course their prerogative, but my concern is they are ejecting a 100% discretionary spend. Most of these people will find other ways to keep their OWE status, even if not at the level of GGL, so they will still be drinking champagne in the lounges. Good on them.
2. High spending corporate customers, never even heard of FT. This is the demographic BA are targeting. Most of them have no idea how much their ticket costs. […] It seems odd that BA thinks the new Club will persuade people like him to fly more often with them. Annual spend is £50k+, not based on frequent flying but on last-minute expensive flying.
3. Independent contractors/also including road warriors. Professionals (IT/engineering/consulting esp.) who have a portfolio career or work in multiple countries spending a considerable number of nights of the year in hotels. Also well represented on FT. They may book their own tickets but much of the travel will be as a business expense (i.e. pre-tax). Well engaged with hotel and airline loyalty programmes (think George Clooney in Up in the Air) and with a good understanding of the optimum way to book, pay for and experience flights. Annual spend probably £30k+ but less likely to TP optimise routes and less able to book Saturday night stays, particularly if have a long-suffering partner/family at home. It isn't clear to me whether BA are trying to persuade these people to spend a bit more to secure GGL (or do more spending specifically with BA to meet the 80% requirement), or trying to put the boundary out of reach so that they are back in GF instead of the CCR. Whatever their plan is I assume there is some data to back-up the £65k qualification / £40k retention figures.
I certainly believe the 3000 figure I was given. Older conversation on here suggested pre-covid 5000-7000 with only 500 with a CCR card and this would make sense given that all GGLs now have CCR access, albeit with significantly reduced numbers of F seats across the network. I note that if the numbers of GGLs drop to say 500, when I was GGL with a CCR card and supposedly in that more exclusive group I didn't notice any significant difference in my ground experience compared to now.
Since we’re discussing this on FT, I’d say a % of people in 3 also have the mindset of those in 1 and do optimize their necessary travel expenses to maximize the return in the value they’re getting (e.g. TP and Avios, hotel points + CC points etc). Earned Avios/hotel points and CC points are just like $ one can spend on non-business travels.
Based on a simple ratio of — spending A $ : traveling B distance : getting C value returns, the resources in this community help many of us minimize A and maximize C. This is possible in many existing distance-based FFP because airlines do not price revenue tickets based purely on distance but many demand distance-based redemption when you pay with miles/Avios etc (there’re programs that operate like CC travel portals where each mile is worth a fixed value). This means B travel distance (adjusted for varying levels of A $ spend) correlates directly with C value returns.
Since IAG has been listed within the top 5 most profitable airlines in recent years, despite Covid, I guess the old BAEC can’t be something that threatened their business model?
By moving to a US-style spend-based program for both TP and Avios with the new BAC, they’re forcing a 1 : 1 ratio between spending A $ : getting C value returns. So the only way to maximize C value returns is by spending more A $! It’s not optimizable for the flying consumers if optimization means maximizing returns while minimizing $ spent.
For those that can spend more or hoping to generate more TP and Avios via CC, the earning potentials are capped at 1:1.
In the old system, you can earn TP and Avios simply from the fare and distance you fly and can still earn even more values from the same A $ spent by purchasing your fares with a CC that gives you 3-10x/$ spent. Many of these can then be converted for points/Avios at 1:1.
Since airlines do make money selling miles to banks and when they issue co-branded CC, they get a share of the fees/transaction etc., this is probably where IAG wants to maximize their earnings based on the success of the US programs that have gone this route. Why wouldn’t they want to as it involves less cost than increasing flight-related services?
Even those that are willing to spend more $ to earn more TP (and Avios) to get the status and other return value, the 1:1 TP earning ratio (1: 6-9 for Avios based on status) is abysmal. Combined with a distance-based redemption program (and the ever increasing costs associated with redemptions), IAG has set up a program that almost always guarantees that the $ value spent to earn TP/Avios will be more than the status-related $ value and/or the $ value of redeemed Avios. I.e. a terrible program for frequent flyers.