Iberia has clearly been taking PR lessons from someone. At 2am in the morning on June 1st, it sent an innocuous newsletter out. It was only released in Spanish (“Coja aire, respire y vuele lejos estas vacaciones”). And, tucked away at the bottom, was the announcement that Reward Flight Saver redemptions have been scrapped – effective as of, erm, 2 hours ago.
Reward Flight Saver, for those who are not clear, is the scheme whereby British Airways and Iberia capped their taxes and fuel surcharges on short flights (all of Europe, in BA’s case, plus short hops elsewhere such as Bahrain-Doha). The cap for BA is £30 / Euro 35 for Economy flights and £40 / Euro 45 for Business.
Reward Flight Saver was the smartest British Airways idea for a long-time. Short-haul redemptions, which are laughably useless with most airlines, are suddenly a great deal.
(Lufthansa charges 35,000 miles – or 45,000 for a same-day return – plus over £100 of taxes for an Economy flight from London-Frankfurt. It is beyond a joke, given that you can fly Business Class from London to Dubai on Lufthansa for 35,000 miles one-way.)
And, when short haul redemptions are a good deal, you encourage the ‘casual’ Avios collector. These are the ones who are unlikely to earn 150,000 Avios for a First Class trip to San Francisco. However, they are happy to get a British Airways Amex card to earn 9,000 Avios for a flight to Amsterdam, with taxes capped at £30.
So what has Iberia done?
First, of course, you need to remember that Iberia is a financial basket case, losing vast amounts of money every day. British Airways is profitable. These changes are best seen in that context.
All airport charges, plus a ‘contribution’ towards fuel costs of:
Zone 1 (up to 650 miles)
Economy €5 per sector
Business €10 per sector
Zone 2 (651 – 1,150 miles)
Economy €7.50 per sector
Business €15 per sector
Zone 3 (1,150 – 2,000 miles)
Economy €30 per sector
Business €40 per sector
For British Airways and other short-haul redemptions:
You pay the full amount of taxes and surcharges that would be paid on a cash ticket
What does this mean in reality?
As of May 31st (or indeed as of today if you book on ba.com), an Economy flight on Iberia from London to Madrid cost 15,000 Avios points plus £30 return.
Today, on an Iberia plane, an Iberia Plus member will pay 15,000 Avios points plus £58.70.
Today, on a British Airways plane, an Iberia Plus member will pay 15,000 Avios points plus £95.70.
£95.70 is, indeed, the same level of taxes charged by British Airways on a cash ticket. However, for the date I checked in September, a cash ticket from London to Madrid is just £104.70! The price breakdown is £9 fare + £95.70 taxes, total £104.70.
With Reward Flight Saver, this was not a great deal but you still got £74.70 of value for 15,000 Avios. Now, you would be getting a laughable £9 of value for 15,000 Avios if you booked the BA flight!
How does this affect BAEC or avios.com members?
It doesn’t, at the moment.
However, you now have the crazy system whereby Iberia Plus members can simply transfer their points across to British Airways Executive Club and make an identical redemption whilst paying less tax. It seems odd that International Airlines Group (BA and Iberia’s parent) will let this anomaly exist for long.
This approach does not work for Vueling (you can only book Vueling redemptions on iberia.com with Iberia Plus Avios) but that only accounts for a very small number of redemptions. I expect BAEC saw a rush of account opening by Spanish residents over the weekend.