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

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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

British Airways 350 3

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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Comments

  1. The_Real_A says:

    Working for one of the worlds largest tech firms, our travel policy is Economy only – even long haul.

    OB is used for upgrades for those those with medical certificates and for last minute travel when cash price is above threshold.

    • That seems a very reasonable use of them.

      I work for a large company with an outsourced travel department, and have no idea who gets ours – but I know it’s not those who have to do the travelling.

    • I’m surprised that a large company would be part of OB. Mine has an agreement with BA for a corporate discount. Would they collect OB points on top? If not I’d ask: what business would choose OB over a sizable ticket discount?

      I don’t know how it’d work for economy tickets, buy my company gets >50% off the website price for business/first.

      • The_Real_A says:

        Our business flights are to well served locations, so the direction to our travel dept is to purchase “lowest cost” at the point of buying the ticket.

  2. Interesting, I’ve got a few OB points lying around, this may prompt me in to action!

    I booked return business class flights for two from DUB to HNL recently, but they haven’t been credited to my OB account yet (flight not until July) I wonder if they will credit at new rates or old rates… The flights were booked when the old T&Cs were in use!

    Cheers

    • Michalis says:

      So for a £2500 cw flight to let’s say LAX will you get 2500 points if you are a tier 1 company. While you can earn for the same flights 26000 avios as a gold. Sounds reasonable!

      ok OB redemption rates are lower but that’s maybe 2X-2.5X lower.

      Now you would earn around OB 5000 points and it would cost less than half to redeem for the same flights.

      Makes the scheme as a small business completely worthless if you wanted to actually get some long haul redemption ever.

      • @Michalis, you get OB points and avios!

        • Michalis says:

          I know that. I am just comparing how ridiculous the earnings are when compared to avios earned on a flight.

          I am just saying how worthless the scheme is now for a small business.
          You need £50000 spend to get a CW ticket. This seems hardly an incentive to use BA OB. The spending needed before for the same was probably at most between the £10000-£15000 region.

  3. In essence what this means with devaluations of both Avios and On Business points is that the tips and suggestions from H4P (and its followers) becomes even more important. I am a very recent ‘finder’ of this website but have added a Gold Amex card so did the Mrs (subsequently cancelled) for ‘free’ Avios. Have taken advantage of the Dublin/Hawaii in biz for £1040 (any other H4P going on July 10?!) and I will now sign up for the hotel recommendation and 70 AA’s per review. BA are making the earning and power of their currency much harder and I for one look forward to seeing and hearing about how the H4P team and community are going to make sure that we are optimising the earning and spending opportunities. I do see this as a bit of a game, they’ve changed the rules half way through the match, time we sent on our ringer to exploit their weaknesses!

    • Keith, we are going on July 6th.. doing 4 nights in Honolulu, thanks to IHG “intothenights” then 4 days on big island thanks to SPG points from Amex, then back to HNL and probably spend some cash on St Regis for 5 days. All connecting flights via AA points 😀

  4. Luke Atkinson says:

    The corporate card bonus of 2500 onbusiness points just became a lot more useful then

    • Missed the 2.5k OB points is this for getting a corp Amex?

      • I just read the T&Cs… Requires £25k p.a spend… “2. 2,500 Additional On Business Points: Companies will receive 2,500 On Business Points per British Airways American Express Corporate Card Plus Cardmember who achieves a spend threshold of £25,000 on the Card within a 12-month period commencing on the Card issue date or an anniversary of the Card issue date.”

  5. I was most interested in this: “A saving of ‘up to 5%’ on the ticket price will be available if you choose not to earn points on your bookings”. Signing up for a useful every time if small discount seemed interesting. I found this:

    “As part of the new programme members will be offered greater flexibility through the option to choose member only discounts on selected flights, instead of earning points. You will be able to access member-only discounts on many of our flights worldwide, of at least 5% off the fare. To choose a discount when available, simply select that option at the time of booking.”

    That says 5% or more not 5% or less, but it also says “selected flights” and “when available”.

  6. I agree with the analysis that the small operation is being told it is not wanted.

    We have a series of long haul premium econ flights booked for the summer period. The value of the points earned for each of these have effectively been halved. Before the devaluation we would have got 1320 points to JNB but now we will get 1150 while the points needed for the redemptions have more than doubled.

    Immediate impact the long haul redemption being saved for is now out of reach! Not happy at all!!!

    Longer term it will mean moving away from BA and looking more at low cost and the PartnerPlus scheme for the office as they have much lower points requirement compared to the new scheme.

  7. I used to work for an organisation which used OB for the few times that we were confident enough to book a long haul non flexible ticket – normally everything was booked as flexible in case we (well, the senior colleague I supported) were needed back at base. Meant that I could go CW when the policy for a cash ticket would have had me in economy.

  8. Roger Wilco says:

    Large corps are unlikely to be part of OB, they’d have their corp rates. OB is a SME programme.

    I treat OB as something “extra” and used it a few times in Europe when Avios redemption was none and cash prices high.

    • Lady London says:

      Taking both the Avios and the On Business changes into account, these can only work if BA is very confident it has a tight hold on its corporate customers. If there is a backlash then top corporate customers can be assured their BA sales reps will really open the cupboard to give them even better discounts and deal than those major corporates get now.

  9. Rob, you nailed it with:

    ‘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.’

    Whereas both BA’s loyalty programs used to act as a means to reward the traveller who booked in economy by default, to aspire to travel in premium classes, to purchase flights regularly with BA in order to accrue points so that they could fly once in Club or First, love the experience and then to want more; now they best reward those that already fly in the top tiers through corporate policies to accrue points they either don’t use, or else are worthless enough to give away to friends/family that wouldn’t pay to fly otherwise.

    I find it utterly bizarre from a strategy perspective. What are upper management trying to gain by the changes to both BAEX and On Business. I just don’t get it…

  10. Froggitt says:

    “now I have enough to get both parents in law across from Hamburg and back”

    Or a one-way to IKT.

  11. I originally thought of our company’s OB points as useful for positioning flights for ex-EU trips in CW where there was no Avios availability.

    We’ve not had to use them, and had accumulated around 24K in the last 12 months or so – wondering whether to burn them before the change, or hang on to them. We’ll certainly earn many fewer in the next 12 months.

    Having said that, one potentially good change is that I class fares will be upgradable to F (whereas previously it was only C, D, and J). The same is true for all the other cabin upgrades as well – discounted fare buckets are included.

    But then the question is whether the OB availability will be as good as it was previously!

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