Overreaction to changes?
Jan 30, 2015, 2:33 am
#106
Join Date: Dec 2009
Location: London
Programs: BA LTGold; LH Senator; HHGold; Bonvoy Plat
Posts: 1,370
Continuing the theme of over-reaction, apparently The Times has a leading article today bemoaning the BA changes and saying that the airline is guilty of class discrimination as it is making the richer richer and the poorer poorer.
Please!!! How about that for over-reacting, and what hypocrisy from a paper that has no issue with a government whose whole agenda seems geared to making the rich richer.
Let's face facts. BA is a commercial company.
A few years back it made a commercial decision to increase avios and TPs on deeply discounted Y fares (which used to earn 25% avios and no TPs). At the same time it gave a generous bonus rate to Silver card holds, which matched the previous (and unchanged) Gold rate. It also status matched ex-BMI customers and issued billions of avios by mainly US-based credit card promotions.
Presumably all of those decisions were based on a projection of the likely outcome, which must have been commercially beneficial to BA.
However, at present we have a situation where redemption availability is poor and to much of North America non-existent. Lounges are also crowded. At the same time BA are expanding routes both at LHR and (surprisingly for those who thought it was dead) at LGW.
We are not privy to the commercial data, but presumably BA now reason that the market is more willing to part with money (hence price increases and reduction in availability of POUGs and AUPs). I suspect BA also believe or know that the redemption position (and possibly the lounge overcrowding) is putting off its more lucrative and profitable customers. It has therefore decided to act.
It cannot tackle the ability of AA customers to redeem on TATL flights or withdrew the billions of avios given out with credit cards. It might change non-flying earning in the future - see thread on speculation of end of tie up with Tesco.
However. what BA can do is focus on its customer base. Clearly it has decided that there are a group of customers who scrap silver on the cheapest flights that probably cost more to service than any benefit from their seeming loyalty. Therefore it targets the less cost-effective part of its offer, reducing avios and TPs on discounted economy flights (ironically back to where they were before its last major change).
That alone will not solve the availability issue on redemptions, so BA increases redemption rates, cleverly introducing peak pricing to further address the bottleneck around UK school holidays. Logically, its most frequent premium filers are likely to have more avios and are therefore better positioned to weather this storm; indeed many will welcome it, if it genuinely means that they can now get the reward flights that they really want.
In doing this BA effectively reverts BAEC back to how it used to be, which in BA's mind is presumably a model that works.
It's speculation, but I believe that is what has happened. I know it is not a popular view, but BA is a business not a charity.
BA really does not want someone who just scrapes silver (for the lounge access), flies mainly in discounted Y (except their main holiday where they snap up F redemptions with their 2-4-1 when seats are released at 355 days), would never dream of setting foot in CE (unless they get a really cheap POUG, but even then they only did it for the TPs as they hate the product), talk endlessly about how if work offer them a trip in J they are going to try the competition as CW is so dated, and then reminisce on how good the BAEC was before the enhancements, although they only joined it themselves about three years ago.
Please!!! How about that for over-reacting, and what hypocrisy from a paper that has no issue with a government whose whole agenda seems geared to making the rich richer.
Let's face facts. BA is a commercial company.
A few years back it made a commercial decision to increase avios and TPs on deeply discounted Y fares (which used to earn 25% avios and no TPs). At the same time it gave a generous bonus rate to Silver card holds, which matched the previous (and unchanged) Gold rate. It also status matched ex-BMI customers and issued billions of avios by mainly US-based credit card promotions.
Presumably all of those decisions were based on a projection of the likely outcome, which must have been commercially beneficial to BA.
However, at present we have a situation where redemption availability is poor and to much of North America non-existent. Lounges are also crowded. At the same time BA are expanding routes both at LHR and (surprisingly for those who thought it was dead) at LGW.
We are not privy to the commercial data, but presumably BA now reason that the market is more willing to part with money (hence price increases and reduction in availability of POUGs and AUPs). I suspect BA also believe or know that the redemption position (and possibly the lounge overcrowding) is putting off its more lucrative and profitable customers. It has therefore decided to act.
It cannot tackle the ability of AA customers to redeem on TATL flights or withdrew the billions of avios given out with credit cards. It might change non-flying earning in the future - see thread on speculation of end of tie up with Tesco.
However. what BA can do is focus on its customer base. Clearly it has decided that there are a group of customers who scrap silver on the cheapest flights that probably cost more to service than any benefit from their seeming loyalty. Therefore it targets the less cost-effective part of its offer, reducing avios and TPs on discounted economy flights (ironically back to where they were before its last major change).
That alone will not solve the availability issue on redemptions, so BA increases redemption rates, cleverly introducing peak pricing to further address the bottleneck around UK school holidays. Logically, its most frequent premium filers are likely to have more avios and are therefore better positioned to weather this storm; indeed many will welcome it, if it genuinely means that they can now get the reward flights that they really want.
In doing this BA effectively reverts BAEC back to how it used to be, which in BA's mind is presumably a model that works.
It's speculation, but I believe that is what has happened. I know it is not a popular view, but BA is a business not a charity.
BA really does not want someone who just scrapes silver (for the lounge access), flies mainly in discounted Y (except their main holiday where they snap up F redemptions with their 2-4-1 when seats are released at 355 days), would never dream of setting foot in CE (unless they get a really cheap POUG, but even then they only did it for the TPs as they hate the product), talk endlessly about how if work offer them a trip in J they are going to try the competition as CW is so dated, and then reminisce on how good the BAEC was before the enhancements, although they only joined it themselves about three years ago.
Jan 30, 2015, 2:35 am
#107
Join Date: Jul 2009
Programs: BAEC Silver, IHG Diamond
Posts: 7,775
I don't know why BA don't just replace their transatlantic fleet with A319 / Babybuses as that way they can get rid of all the non J/F premium passengers who obviously don't make them any money and are better suited elsewhere....
Sure Galleries Club at T5 will eventually vanish to leave the Flounge /CCR.
Sure Galleries Club at T5 will eventually vanish to leave the Flounge /CCR.
Jan 30, 2015, 2:37 am
#108
Join Date: Dec 2006
Location: in a cabin
Posts: 6,522
The changes affect differently various types of travelers. Selfishly, let me take my example of a J pax traveling primarily between Asia and Europe (not UK). I believe that we are a significant number.
Many, many years ago I moved to BA because of its flat beds while competitors had angled seats that torture my back. That meant adding some four hours to my trip and a transfer at LHR, which is no fun when arriving from a 13 hours LH, despite the lovely F lounge (BAEC Gold). But the excellent product relative to competition made it worth it.
Progressively competition adapted its product and the quality difference became less obvious, but the EC program was clearly a great incentive. I could buy a return flight to HKG on CX nonstop for 120K in J or 180K in F, with an attractive avios+cash option.
By May 2015, the situation is radically different from ten years ago. BA J seat is below much of the competition (with the exception of AF and that should change in a few years). The 747 UD has been removed from my destinations and the 777/A380 seats are clearly inferior to my alternatives.
For an award in J, I will now need 180K, what I am currently paying for F or a 50% increase. Upgrading a paid ticket to J or F will apparently become more expensive too. There is no increase in miles earned or TP earned as I fly I bucket. I do understand that BA wished to align its FFP on other European or Asian FFPS (USA is another animal coz AA, but I don’t fly US), but the net result is that BAEC will not be very attractive compared to others. My major incentive to keep flying BA and suffer the increasingly-painful transfer in LHR will only be price. BA has shown in the recent past that it can be very aggressive in pricing. But they’d better continue now that the FFP is not an incentive anymore. That could turn out to be costly for them.
Finally a word about fairness. I understand that UK residents can earn a lot of avios through non-airline partners (Tesco, Amex241, etc..). If the same earning rates are kept on those partners, BAEC might remain quite attractive to UK residents. But the weight of changes is falling disproportionally on non-UK residents.
Many, many years ago I moved to BA because of its flat beds while competitors had angled seats that torture my back. That meant adding some four hours to my trip and a transfer at LHR, which is no fun when arriving from a 13 hours LH, despite the lovely F lounge (BAEC Gold). But the excellent product relative to competition made it worth it.
Progressively competition adapted its product and the quality difference became less obvious, but the EC program was clearly a great incentive. I could buy a return flight to HKG on CX nonstop for 120K in J or 180K in F, with an attractive avios+cash option.
By May 2015, the situation is radically different from ten years ago. BA J seat is below much of the competition (with the exception of AF and that should change in a few years). The 747 UD has been removed from my destinations and the 777/A380 seats are clearly inferior to my alternatives.
For an award in J, I will now need 180K, what I am currently paying for F or a 50% increase. Upgrading a paid ticket to J or F will apparently become more expensive too. There is no increase in miles earned or TP earned as I fly I bucket. I do understand that BA wished to align its FFP on other European or Asian FFPS (USA is another animal coz AA, but I don’t fly US), but the net result is that BAEC will not be very attractive compared to others. My major incentive to keep flying BA and suffer the increasingly-painful transfer in LHR will only be price. BA has shown in the recent past that it can be very aggressive in pricing. But they’d better continue now that the FFP is not an incentive anymore. That could turn out to be costly for them.
Finally a word about fairness. I understand that UK residents can earn a lot of avios through non-airline partners (Tesco, Amex241, etc..). If the same earning rates are kept on those partners, BAEC might remain quite attractive to UK residents. But the weight of changes is falling disproportionally on non-UK residents.
Jan 30, 2015, 2:40 am
#109
Join Date: Jun 2002
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Jan 30, 2015, 3:00 am
#110
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I would find it a little bit arrogant for anyone of us to decide that anyone else is "over reacting" to changes which are substantial and will make some people much worse off while others are only marginally affected.
I suspect that each and everyone of us have made their own calculation about how this will affect our earning, qualification, and redemption habits and in order to know whether a resulting complaint is an over-reaction or not, one would need to know what the situation of a given individual would be. In effect, some people will move from ggl to gold, gold to silver, or silver to bronze because of the changes. Some people who, based on their flight patterns, used to be able to redeem in F will not even be able to redeem in J any more. Some people will now pay double for their redemptions as they are affected by the changes that affected non-UK flyers two years ago. Indeed, for people based in the "rest of Europe", this is a second very significant worsening and as mentioned by brunos, people not based in the UK or the US do not have any significant non-flight product to lessen the blow.
All those are significant changes to individual circumstances, and as also mentioned by brunos, it comes against a background of general erosion of BA's former comparative advantage product quality wise.
I am very glad that some people live in hope and see the changes as positive to them even though in my personal opinion, some are falling for BA's spin on award space availability and are not sufficiently reading between the lines. However, even if they were completely right, this would only say something about their own cicumstances and makes any of us ill-placed to judge the effect on others.
I consider myself quite badly affected by the changes that I find very negative, but not nearly as badly affected as some others. I have every respect for the way some people worse off than me take BA's message as suggesting that the airline could not care less about their business as I think that it is a fairly accurate translation of the moves.
I suspect that each and everyone of us have made their own calculation about how this will affect our earning, qualification, and redemption habits and in order to know whether a resulting complaint is an over-reaction or not, one would need to know what the situation of a given individual would be. In effect, some people will move from ggl to gold, gold to silver, or silver to bronze because of the changes. Some people who, based on their flight patterns, used to be able to redeem in F will not even be able to redeem in J any more. Some people will now pay double for their redemptions as they are affected by the changes that affected non-UK flyers two years ago. Indeed, for people based in the "rest of Europe", this is a second very significant worsening and as mentioned by brunos, people not based in the UK or the US do not have any significant non-flight product to lessen the blow.
All those are significant changes to individual circumstances, and as also mentioned by brunos, it comes against a background of general erosion of BA's former comparative advantage product quality wise.
I am very glad that some people live in hope and see the changes as positive to them even though in my personal opinion, some are falling for BA's spin on award space availability and are not sufficiently reading between the lines. However, even if they were completely right, this would only say something about their own cicumstances and makes any of us ill-placed to judge the effect on others.
I consider myself quite badly affected by the changes that I find very negative, but not nearly as badly affected as some others. I have every respect for the way some people worse off than me take BA's message as suggesting that the airline could not care less about their business as I think that it is a fairly accurate translation of the moves.
Jan 30, 2015, 3:17 am
#111
Join Date: Jul 2009
Programs: BAEC Silver, IHG Diamond
Posts: 7,775
To me, without any discernible benefits from a frequent flyer scheme, BA has no real assets other than the name.
It's British, the flag carrier and has a presence in the country of London.
Easyjet and Ryanair, whilst popular, do have some stigma attached to their name which is possibly a reason a lot of people stay "loyal" to BA - they have the reputation of giving a middle finger to their customers, screwing them over whenever etc. and as with a lot of things in life, people see nothing but that and their opinions are firmly made up.
Most people out there just want, what practicably amounts to a cheap taxi service, from A to B. They know nothing about Avios, tier points, TP runs, lounge access, fast track, Tesco CC conversions etc. or probably care about it.
The majority of BA customers probably fit into this demographic so BA have looked at this and thought "why bother spending time and effort on people who may or may not fly with us".
I do, in the long run, see BA as putting too many eggs into one basket. There are only so many people out there with money and all it takes it another financial crisis or something, a bank goes bankrupt and a large source of income vanishes overnight.
Future flyers are less likely to want to be loyal if there's nothing to be loyal for.
I can see Galleries Club in T5 vanishing within a year or so. Less people able to access it and what's the point when anyone who can get into a lounge are the ones spending ££££ and will be in the Flounge at the very least? Saves money, staff etc. in the long run - probably a good place to stick a paid lounge.
It's British, the flag carrier and has a presence in the country of London.
Easyjet and Ryanair, whilst popular, do have some stigma attached to their name which is possibly a reason a lot of people stay "loyal" to BA - they have the reputation of giving a middle finger to their customers, screwing them over whenever etc. and as with a lot of things in life, people see nothing but that and their opinions are firmly made up.
Most people out there just want, what practicably amounts to a cheap taxi service, from A to B. They know nothing about Avios, tier points, TP runs, lounge access, fast track, Tesco CC conversions etc. or probably care about it.
The majority of BA customers probably fit into this demographic so BA have looked at this and thought "why bother spending time and effort on people who may or may not fly with us".
I do, in the long run, see BA as putting too many eggs into one basket. There are only so many people out there with money and all it takes it another financial crisis or something, a bank goes bankrupt and a large source of income vanishes overnight.
Future flyers are less likely to want to be loyal if there's nothing to be loyal for.
I can see Galleries Club in T5 vanishing within a year or so. Less people able to access it and what's the point when anyone who can get into a lounge are the ones spending ££££ and will be in the Flounge at the very least? Saves money, staff etc. in the long run - probably a good place to stick a paid lounge.
Jan 30, 2015, 3:35 am
#112
Join Date: Nov 2014
Posts: 935
Good post. To comment on the bold part BA do not focus on EU pax. I heard first hand at meetings at Waterside BAEC strategy is UK primarily. EU pax not a priority. This was several years ago mind, but the current state of the programme and future changes gives credibility to this statement.
Jan 30, 2015, 3:58 am
#113
FlyerTalk Evangelist
Join Date: Jul 2006
Location: Hong Kong, France
Programs: FB , BA Gold
Posts: 15,568
Good post. To comment on the bold part BA do not focus on EU pax. I heard first hand at meetings at Waterside BAEC strategy is UK primarily. EU pax not a priority. This was several years ago mind, but the current state of the programme and future changes gives credibility to this statement.
Frankly, I was not taking a EU perspective but rather an Asian one. I cannot talk from a US or non-London perspective as I am not knowledgeable. But there is a sizable number of BAEC members based in Asia and they travel a lot to Europe for business.
I agree that the recent changes give credibility to a UK-focus, but I doubt that BA can forget that a majority of its LH pax are transfer pax. With a now-average or inferior premium product and a less attractive FFP, how can BA expect HKG-FRA or SIN-ZRH pax to fly via LHR rather the nonstops on LH/CX/SQ/LX or the ME3?
My guess is that BA believes that those premium pax (or their companies) are increasingly price sensitive and rather than spending money on a FFP as incentive, they will fight on pricing. It is a bet and time will tell.
Jan 30, 2015, 4:18 am
#114
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I am getting fed up with this:
and then getting the calendar up for a date range which is not within a month either side of when I would like to fly.
So, I wonder if likeminded people are trying to burn as much as possible before 28/4 and there is just not that much available due to that, or BA is just throttling the availability.
210,000 to burn, I will find somewhere !
There is no availability on British Airways for the displayed date range. Your options are: Select an alternative date range
So, I wonder if likeminded people are trying to burn as much as possible before 28/4 and there is just not that much available due to that, or BA is just throttling the availability.
210,000 to burn, I will find somewhere !
Jan 30, 2015, 4:53 am
#115
Join Date: Dec 2014
Location: UK
Programs: BA, U2+, SK, AF/KL, IHG, Hilton, others gathering dust...
Posts: 2,552
BAEC has been a programme that was quite advantageous in a number of ways for the last few years. It was (in my eyes at least, and I'm sure many others on here) inevitable that they would make some of these changes, though I probably didn't expect all of them. It seems to be fairly widely accepted that BA was one of the easier airlines in Europe to achieve status with, and they've decided they don't need to be so "generous". Other airlines like LH already do this, regularly get pitiful award and status miles when flying discounted Y on LH/LX.
I guess BA are taking a bet that this will increase their margins by x%, with the risk being that they will be able to rely less on the FFP as a differentiator. They may or may not prove to be correct where travellers have a choice. I'm not particularly emotional about it, though I may fly them a bit less on Y short haul and I'm guessing that it's going to cost me more to redeem the Avios on some long haul J flights I'd planned with the family. I'll probably still have enough Avios to cover it, such is life. I earn a significant proportion of my Avios through business travel, so can't complain too much. There will be a new normal and people will adapt. I've at least got confidence that the experts on FT will find the best ways to exploit the new system
At the same time, I don't have any issue with people who are "devastated", "heartbroken" etc, especially if they had been saving Avios to get enough together for a special trip, or trying to get to Silver from leisure travel in Y etc. Nobody likes having the goalposts moved, even if it was always likely. After all, this is a place to vent as well, so let them have their say as long as they are not personally attacking anyone.
I guess BA are taking a bet that this will increase their margins by x%, with the risk being that they will be able to rely less on the FFP as a differentiator. They may or may not prove to be correct where travellers have a choice. I'm not particularly emotional about it, though I may fly them a bit less on Y short haul and I'm guessing that it's going to cost me more to redeem the Avios on some long haul J flights I'd planned with the family. I'll probably still have enough Avios to cover it, such is life. I earn a significant proportion of my Avios through business travel, so can't complain too much. There will be a new normal and people will adapt. I've at least got confidence that the experts on FT will find the best ways to exploit the new system
At the same time, I don't have any issue with people who are "devastated", "heartbroken" etc, especially if they had been saving Avios to get enough together for a special trip, or trying to get to Silver from leisure travel in Y etc. Nobody likes having the goalposts moved, even if it was always likely. After all, this is a place to vent as well, so let them have their say as long as they are not personally attacking anyone.
Jan 30, 2015, 5:14 am
#116
Join Date: Jan 2015
Location: Blighty
Programs: BAEC Bronzeish
Posts: 25
I was booking a flight last night. LCC was £100 (all in except food) and BA was £140 (not HBO) and CE was £200. Same destination, similar timings. Why will I book one over the other?
Last edited by Caronahill; Jan 30, 2015 at 5:23 am
Jan 30, 2015, 5:39 am
#117
Join Date: Oct 2006
Location: Brighton, UK
Programs: BA Gold, IC Ambassador, HH Gold, SPG Gold, Fairmont Platinum
Posts: 3,166
I am getting fed up with this:
Quote:There is no availability on British Airways for the displayed date range. Your options are: Select an alternative date range
and then getting the calendar up for a date range which is not within a month either side of when I would like to fly.
So, I wonder if likeminded people are trying to burn as much as possible before 28/4 and there is just not that much available due to that, or BA is just throttling the availability.
210,000 to burn, I will find somewhere !
Quote:There is no availability on British Airways for the displayed date range. Your options are: Select an alternative date range
and then getting the calendar up for a date range which is not within a month either side of when I would like to fly.
So, I wonder if likeminded people are trying to burn as much as possible before 28/4 and there is just not that much available due to that, or BA is just throttling the availability.
210,000 to burn, I will find somewhere !
Jan 30, 2015, 6:05 am
#118
FlyerTalk Evangelist
Join Date: Aug 2002
Location: London
Programs: Mucci. Nothing else matters.
Posts: 38,644
In addition, how do you get people who may be travelling in WT/ET to remain loyal to your brand? If the answer is, as seems to be, that BA doesn't really G.A.S., BA is missing a huge chance to encourage people away LCCs.
I was booking a flight last night. LCC was £100 (all in except food) and BA was £140 (not HBO) and CE was £200. Same destination, similar timings. Why will I book one over the other?
I was booking a flight last night. LCC was £100 (all in except food) and BA was £140 (not HBO) and CE was £200. Same destination, similar timings. Why will I book one over the other?
Jan 30, 2015, 7:51 am
#119
Join Date: Oct 2006
Location: Brighton, UK
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This is the crux of the matter. In addition, how do you get people who may be travelling in WT/ET to remain loyal to your brand? If the answer is, as seems to be, that BA doesn't really G.A.S., BA is missing a huge chance to encourage people away LCCs.
I was booking a flight last night. LCC was £100 (all in except food) and BA was £140 (not HBO) and CE was £200. Same destination, similar timings. Why will I book one over the other?
I was booking a flight last night. LCC was £100 (all in except food) and BA was £140 (not HBO) and CE was £200. Same destination, similar timings. Why will I book one over the other?
As for the choices in your question, I'd go for the CE option and be pleased that it was a low CE fare and good value in terms of TP per pound. But I am reading and contributing to FT
Jan 30, 2015, 9:55 am
#120
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Hi
Having read some of the comments on here, I can't help thinking that people are overreacting. Devastated, gutted, heartbroken I have read!? Is it really that bad?
Whilst there isn't an exact corelation between number of avios and wealth, it's equally true, that a well paid CEO is going to have more than a student barman, hence the value of your avios is less important.
Let's say you have 250k avios, and you now think they are devalued, to suggest a couple of numbers, you used to vale them at 2400 pounds, now 1800, so you have lost 600 quid. Your boiler could break tomorrow and you would lose that! And if you have 250k avios, I'm assuming you have spent cash on BA which implies you have cash.
Is it really impacting on anyone's lives so much that they need to be gutted or heartbroken? A bit cheesed off for 5 minutes, but then back to living life I would say.
Plus massive amount of comments on here saying lounges are busy and there is no redemption availability, this should make it both better. You can't have it both ways...
Having read some of the comments on here, I can't help thinking that people are overreacting. Devastated, gutted, heartbroken I have read!? Is it really that bad?
Whilst there isn't an exact corelation between number of avios and wealth, it's equally true, that a well paid CEO is going to have more than a student barman, hence the value of your avios is less important.
Let's say you have 250k avios, and you now think they are devalued, to suggest a couple of numbers, you used to vale them at 2400 pounds, now 1800, so you have lost 600 quid. Your boiler could break tomorrow and you would lose that! And if you have 250k avios, I'm assuming you have spent cash on BA which implies you have cash.
Is it really impacting on anyone's lives so much that they need to be gutted or heartbroken? A bit cheesed off for 5 minutes, but then back to living life I would say.
Plus massive amount of comments on here saying lounges are busy and there is no redemption availability, this should make it both better. You can't have it both ways...
As another example, I may have accepted the old exchange rate £1=240 Avios. The new redemption rates make this statement, for many, not true.
Further, it impacts those who are very close to an award.