Iberia drops Reward Flight Saver redemptions … will BA follow?

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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.

Iberia

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.

For Iberia and Vueling flights, you now pay:

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.

(Want to earn more Avios? Click here to see our latest articles on earning and spending your points and click here to see our list of current Avios promotions.)

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Comments

  1. mike turnbull says:

    As one who was living/working in the US when AA first introduced an FFP scheme, I have to say that the best days of earning and burning have long since gone…massive bonuses…easy long haul redemptions…easy, free upgrades…free lounges…no taxes to pay….the list goes on and on. I am so grateful that I was able to take the family to so many places around the world compared to today. All I have left now is a million each on BA and AF/KL (Sky Team…the worlds worst), which should see me and my wife out !

    • But the miles were harder to earn. When I started in this game a decade ago, people were always shocked when I said that it was possible to get 100,000 miles a year without flying. You really had to work Tesco and other promos to do it, though.

      I would now revise that up to 250,000 being a tough but manageable annual target. 100,000 is a doddle today as long as you and your partner are credit card worthy.

  2. Kathy says:

    100,000 a doddle?! Only if you spend a fair amount of money already! As a sad singleton who only spends £300-£500 on a credit card per month, I can’t get most of those credit card sign-up bonuses – I simply can’t hit the spending targets. Especially not with an Amex card, since my rare large expenditures all seem to be with companies who don’t take Amex.

    It’s unusual for me to fly twice a year, so I can’t rack up Avios that way. I don’t drive, so can’t earn them on petrol. That leaves me my normal credit card spend and Tesco. It took me about 5 years to save up enough airmiles for a return flight in economy to New York last year, which I claimed just before the scheme switched from Airmiles to Avios to avoid having to pay the taxes and surcharges.

    For people like me, getting rid of the RFS would make the scheme pretty much worthless. Even if I try churning low spend target credit cards and chasing down extra point offers it’s going to take me years to build up a big enough balance for a business class long-haul return, which is where the only value will lie if you have to pay full taxes and surcharges on short haul redemptions. For a lot of people it simply won’t be worth the effort – especially when there are cash-back cards out there offering more immediate returns.

    • I agree, it isn’t easy if you are only spending those sort of numbers on your credit card. However, as you know, if you can afford the long-haul taxes then you can probably afford the minimum spends (and vice versa).

      But, whilst Reward Flight Saver exists, you can take advantage of that – and you’d actually be getting a better ‘pence per Avios’ return than people who redeem for long-haul tickets.

      Aer Lingus and airberlin also offer ‘low tax’ alternatives. I have just booked another New York to Berlin ticket in Business class (one way) on airberlin for 40,000 Avios and £1.70.

  3. Kathy says:

    I’m clearly going to have to read up on your Aer Lingus/airberlin posts! Aer Lingus may really be worthwhile looking at, as they fly from my local airport to Dublin and it takes me an hour and a half to get to LHR anyway.

    Still, I maintain that most people on my end of the collection scale will not perceive Avios to be worth collecting without the Reward Flight Saver offer. Especially when you’ve been used to getting totally free flights under the old airmiles scheme.

    You’re right, by the way, I can’t afford the long-haul taxes in business class usually. I’ll be flying Club one-way for the very first time in October, having used Avios to upgrade a flight my work are paying for. Otherwise it’s economy all the way!

  4. Jane Easthope says:

    RFS price increases now announced on Avios.com:

    “If you book before 11 July 2013, the fee is £30pp in Economy Class and £40pp in Business Class. From this date, our prices are rising by a small amount to £35pp in Economy and £50pp in Business.

    For flights with Comair, from 1 July 2013 the fee will be £56 return in Economy and £64 in Business.

    Unfortunately the price rise is due to factors outside of our control, such as the continued increases in government and other airport taxes across Europe. We’ve kept the increase as small as possible, the table below shows you how we can continue to offer you big savings on flights.”

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