Will Lufthansa sell ‘Miles & More’?

Reports in the German media suggest that Lufthansa is considering the sale of its ‘Miles & More’ loyalty programme.  (If you open the link in Chrome, Google will automatically translate it for you.)

This is not a totally original idea.  Frequent flyer programmes are generally hugely profitable, with great cash flow (partners pay now for miles which won’t be redeemed for years – if ever.)  Even when miles are redeemed, the seats are ‘sold’ by the airlines for a very modest sum.

Aeroplan, the Air Canada loyalty scheme, was sold a number of years ago – not a lot of people know that it now owns Nectar.  airberlin sold 70% of TopBonus to Etihad as part of Etihad’s investment in the airline.

Miles & More

Lufthansa’s logic is that it would like Miles & More to become more like Avios or Nectar, appealing to a broader number of people than just a frequent flyer scheme. 

Unfortunately, for Lufthansa, this would be a terrible move.  For a start, lets consider the obvious problem.   The majority of people redeem for short-haul, low-cost rewards.  Lufthansa is unbelievable uncompetitive in this market – they ask for 35,000 miles plus £110 of tax to fly from Germany to London.  BA asks for 9,000 Avios plus £35 ….

Secondly, once the frequent flyer scheme becomes disconnected from its sponsoring airline, the relationship between the scheme and the airline becomes a 100% business transaction.  At the moment, BA drops seats in and out of Avios rewards buckets as it feels like it.

If BA sold Avios, or Lufthansa sold Miles & More, you would end up with a contractual agreement that x seats would be released per class, per flight, with limited grounds for flexibility.  Would you rather than BA released two (and only two, never more) business class seats on every flight, or released between 0 and 10+ depending on demand?  Air Canada does this with Aeroplan, unless things have changed recently.

You also have a separate issue of how to run a status programme as part of the airline whilst running having the loyalty scheme run separately.  You need to deal with issues with alliance partners, who want to book your reward seats and (vice versa) use Miles & More miles to book their seats.

If Aeroplan is the model, then this is not a line that the industry wants to follow – my reading of the runes is that Aeroplan members are generally unhappy with the way the scheme operates.  Ironically, if Miles & More was sold then it would be forced into a fundamental restructuring which may make it more customer friendly, with no more ‘35,000 miles + £110’ seats to London.

Overall, though, customers would be the loser.  It would be best for everyone if this proposal remained just that.

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Comments

  1. Would you rather than BA released two (and only two, never more) business class seats on every flight, or released between 0 and 10+ depending on demand?

    I would prefer the former method than the current method which is broken. The last year has seen premium long haul seats all but disappear on man routes and there is no rhyme or reason to BAs approach.
    2 j on every flight guaranteed would enhance the offer significantly and there is nothing to stop BA continuing to offer further seats subject to demand.
    Avios today seems aimed at either short haul for tesco shoppers or upgrades for those with paid tickets. ( the elite tiers of gold have a separate access to booking classes also)
    Flying BA 2 or 3 times a year in paid club and obtaining silver is not rewarding and access to seats is very hard.

    • James67uk says:

      Depends on circumstances, for those of us flying solo or as a couple that is obviously better but famillies and groups of friends are totally screwed just like solos are screwed bt the frequent 241s the travel industry likes to use.

      • My thoughts precisely! I’d definitely prefer more consistent release of seats (which are still needed for UuA, remember!) but agree this would need to be coupled with some possibility of further seats being added on lower demand flights.

  2. James67uk says:

    I don’t know the details of Aeroplan but one thing in its favour was that there always seemed to be a useful J business class redemption available. Admittedly this was a good seven years back when I was flying to the States at least twice a month. For my flights back from the west coast I would prefer to fly AC if I could not get NZ out of LAX Could often find a route from SFO/LAX to LHR via YVR or YYC. This way I was getting a flat bed overnight when UA and LH were still in the dark ages. That said, the best way to experience AC was to sleep the whole way! I think a well-managed independent frequentflyer program probably offer greater scope for earnings via increased partners and promotions but this will generally most likely be cancelled out by poorer burning opportunities. I believe the real reason airlines want to sell them is for a short term cash injection.

  3. Are you sure Lufthansa is planning a sale? I don’t know how Chrome translates this but the German version only says that Miles & More is to be converted into a subsidiary of Lufthansa’s passenger division. Such a move would make a sale more easy of course but the report you link to does not suggest that Lufthansa actually considers a sale at this stage.

  4. you are compleet right. and it is still a drama Ba because i was trying in april may and august to book buss class on avios and what do i get. royal jordania and other but no ba!! how could Ba offer this avios system and you can never use it for long hall because that is the best for the money to use.

  5. Agree entirely on Aeroplan– the shift from being owned by AirCan and being independent sparked a wave of devals and other annoyances, and is one of the reasons I’m an ex-Aeroplanner. An earlier comment about usually having some J is correct, but better accessed via a *A partner rather than via Aeroplan… and I can’t help but suspect part of the reason they’ve got good J availability is because they make it such a pain for their own users to actually earn&burn. If there was a decent non-AC alternative for domestic flying (right now it’s AC or one of the ever-shifting bus-of-the-sky outfits) then Aeroplan would be a very different programme.

    • Yes, I always accessed it via UA MP. I was n3ver very impressed eith AC though, a fact I also put down to their virtual monopoly.

  6. AP was great till they devalued 4 times in the last 3 years.

  7. Interesting article because I live in Switzerland and am currently considering joining Miles and More via Swiss. At the moment I’m not a member of any frequent flyer programm. However, if Miles and More is such a bad deal compared to Avios I’m not sure what to do. Although I probably couldn’t earn many Avios points living in Switzerland! Any advice from members of Miles and More welcome!

    • You should go with M&M, because there are lots of local partners including the Co-Op and presumably a local credit card partner. It is a decent programme as long as you don’t redeem for short-haul.