Major restructuring (devaluation, for most) of BA On Business announced

A few days ago I wrote about how On Business redemptions (the British Airways loyalty programme for small companies) now represented better value due to the removal of fuel surcharges.

It seems I spoke too soon.  A major restructuring of On Business was announced yesterday. Full details can be found here at ba.com.

In some ways the changes are very similar to what is happening to the Avios programme:

Redemptions in Eurotraveller / World Traveller become proportionately cheaper

Redemptions in premium cabins become proportionately more expensive

With a twist:

The programme is going 100% revenue based.  The points you earn will be based ENTIRELY on the amount you spend.  For the purchaser of cheap economy flights, every redemption will be harder to earn in the future.

There is one difference to the Avios changes:

Your existing points will buy you the same as you can buy today and in some case you will get a lot more

The winner, as with the Avios changes, will be the rarely-spotted individual who flies exclusively in Club World and First on fully flexible tickets during the week but who loves nothing more than jumping into a World Traveller seat when he travels for leisure.

The changes to On Business are even more far reaching than the Avios changes:

Three membership tiers will be introduced, based on £ spend.  A base level member earns 1 point per £1.  Spend over £30,000 and you move to tier 2, earning 1.25 points per £1.  Spend over £300,000 and you move to tier 3, earning 1.5 points per £1.

Your spend to date will be backdated to the start of 2015.  This will include spending with American Airlines and Iberia although it is not clear how BA will track this.

US members of On Business will have their accounts closed and transferred to the American Airlines small business scheme.  It is not clear yet if UK members of the AA scheme will be forcibly transferred to On Business.

There is some good news which will benefit everyone:

Points can be earned and redeemed on Iberia and American Airlines flights.  This is a change from the current position.

You can agree to waive your points for a cash discount.  A saving of ‘5% or more’ on the ticket price will be available on ‘selected flights’ if you choose not to earn points on your booking.  This may be a better deal for most people.

Almost all tickets can now be upgraded with points.  Far more economy tickets will now be eligible for upgrading.  The cheapest Club World seats will also be upgradeable.

Upgrades look like good value at first glance.  They start at 5,000 points long-haul for World Traveller to World Traveller Plus, from 10,500 for World Traveller Plus to Club World and from 7,000 points for Club World to First.   These are one-way prices.  Remember that On Business availability is better than Avios availability so you have a decent chance of being able to upgrade if you wish.

These prices are so generous that someone who travels on fully flexible Club World tickets for a Tier 3 company will earn almost enough for a one-way upgrade to First for every return trip they take.  I’m not sure this is sustainable.

No new members will be accepted into On Business between 27 April and 27 May.  Current members will be able to redeem at the old rates until 24 May.  The programme will then close for two days before the new scheme is launched on 27 May.

What about current members?

Interestingly, BA has decided to double the existing points balance of every member.

This is, genuinely, of value at the lower end.  I currently have 2,700 points.  That will get me 86% of a return flight to Hamburg in Economy or 15% of a Club World return to Dubai.

On May 27th, I will have 5,400 points.  This is enough for 2.4 return flights to Hamburg in Economy – the value of my points is almost tripled.  The bad news is that I only have 13% of a Club World return to Dubai.

Let’s look at it another way.  At the moment, a Club World return flight requires roughly 300% of the On Business points required for a World Traveller flight.  That is changing to roughly six times.

Effectively, most small companies can now forget about redeeming for long-haul premium classes.  You would need to spend roughly £40,000 to earn one Club World return to the Middle East.

In the short term, I am a winner.  My 2,700 points were almost worthless and now I have enough to get both parents in law across from Hamburg and back.  In the long term, I am a loser.  I now need to spend £2,700 with British Airways to get one economy flight to Germany.

What impact will this have?

It is difficult to know what impact these changes will have.  As with the changes to main Avios scheme, they seem poorly thought through.

The small business, spending only a limited amount on European flights throughout the year, is being told that it is not wanted.  Coupled with the cut to Avios earning, owner-managers are more likely to seek out easyJet and other options.  They may want to take a look at PartnerPlusBenefit, the Star Alliance small business programme.

Larger companies are flying British Airways anyway.  This is unlikely to change their behaviour – I know from experience how an individual traveller will try to get himself onto a BA flight because he needs the tier points, but no company travel department is going to behave that way!

I would be interested to know how larger companies deal with their points.  My last employer used to have a raffle amongst the PA’s at Christmas and the winner was given our entire annual OB points total to spend as she wished (we may even have paid the taxes!).

Full details of the changes can be found on ba.com here.

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How to earn Avios from UK credit cards (April 2024)

As a reminder, there are various ways of earning Avios points from UK credit cards.  Many cards also have generous sign-up bonuses!

In February 2022, Barclaycard launched two exciting new Barclaycard Avios Mastercard cards with a bonus of up to 25,000 Avios. You can apply here.

You qualify for the bonus on these cards even if you have a British Airways American Express card:

There are two official British Airways American Express cards with attractive sign-up bonuses:

You can also get generous sign-up bonuses by applying for American Express cards which earn Membership Rewards points. These points convert at 1:1 into Avios.

Run your own business?

We recommend Capital on Tap for limited companies. You earn 1 Avios per £1 which is impressive for a Visa card, along with a sign-up bonus worth 10,500 Avios.

SPECIAL OFFER: Until 12th May 2024, the Capital on Tap Business Rewards Visa card is offering a bonus of 30,000 points, convertible into 30,000 Avios. You must have a Limited Company to apply. Click here to learn more and click here to apply.

You should also consider the British Airways Accelerating Business credit card. This is open to sole traders as well as limited companies and has a 30,000 Avios sign-up bonus.

There are also generous bonuses on the two American Express Business cards, with the points converting at 1:1 into Avios. These cards are open to sole traders as well as limited companies.

Click here to read our detailed summary of all UK credit cards which earn Avios. This includes both personal and small business cards.