Last week Alex Cruz, BA’s CEO and Chairman, gave an interview to the South China Morning Post in Hong Kong.
Whilst the interview behind the article also covered the upcoming changes to British Airways Executive Club and Avios, the newspaper decided not to publish that section. Instead, the South China Morning Post offered it to us as an exclusive.
(This is not as random as it seems because I met with their aviation correspondent when I was in Hong Kong last Easter.)
Here is what Cruz had to say. I have edited his words in a couple of places to make them easier to follow because this is a verbatim transcript (heaven help anyone who ever tries to read a verbatim transcript of any speech I give) and corrected three small errors he made.
I will do a separate article with my thoughts later in the week.
“South China Morning Post: I understand the IAG board approved changes to Avios, what do those changes look like for BAEC members?
Cruz: I think there are two waves of changes. And the first wave has begun, it began mid-way through last year and will continue throughout this year.
What is this first wave? It is fine-tuning a lot of elements of Avios to make it more friendly, more accessible.
What am I talking about? I am talking about maternity leave for members that don’t travel for a number of months and because they don’t travel they lose their status. We have expanded that to say “no, no, no, you will keep your status”.
You will find a lot of small refinements to the programme to make it more friendly, to make it a programme that people feel comfortable with: extensions, family accounts, flexibility around reaching of the tier status. If you miss by one point and at the end of the year you don’t make it to Gold, let’s talk.
We are providing a little bit more flexibility to our agents to make sure we are more friendly. Many of those you will see increasingly being released on a monthly basis throughout this year.
The second topic is a big one. The next wave of changes I think you are making reference to.
We aren’t in a position to speak about it openly because of the technology, the timing it takes to get the technology going. We don’t want to over-promise and under-deliver. We prefer to under-promise and over-deliver.
So at the moment we have seen how a number of airlines around the world have changed the way in which they collect points and redeem points to be much more value driven. If the ticket costs £1,000 you get more points than if your ticket cost £100.
Also, at the time of redeeming, finding more flights available for different amount of miles. I think we are definitely going to go in that direction.
One of the key instruments which I hope we will completely redevelop by the end of the year is the “Pay with Avios” concept. I got a short-haul ticket for my son the day before yesterday and I used 2,500 Avios to discount it by £20. As a consumer, I was looking at it and I wasn’t given an option to buy the whole ticket or pay half of the price. What I really wanted was a slider. I am willing to pay £30, “how many points will you take?”. So moving it up and down. That is the direction we are heading in.
We would like to be in a place, I am not sure if we make it by the beginning of next year or the end of this year, where every single payment that is made in BA through every channel – baggage, seats, upgrades, tickets themselves – can be paid with Avios. You can say “I have so many points and I have so much money” and if I have a lot of points, you can pay for the whole thing independently of when you travel which is very, very important.
There are a lot of people that say “Can I fly to London at Christmas in business class?” Yes, there are always seats available which people log-in exactly 355 days before departure to select. That’s not the point. The point we are moving to is that if there is a seat for sale, you should have access to it. You should make a decision how many points you use and how many money you pay.
Is that the direction we are going in? Yes, absolutely. Do we have a launch date? We don’t have it yet, we have some technology developments we are going through and I want to feel 100 per cent sure we can make the promise on the date.
South China Morning Post: Can you reassure BA frequent flyers that thresholds won’t change? Or revenue-based mindset won’t be introduced?
Cruz: Let me rephrase your question. Is the exchange of points for money a tricky subject? The answer is yes. So, how do you tier that in how it makes sense to the consumer. That is something we have to figure out.
Now the technology we are building will allow us to do multiple things but we haven’t defined what those roles are like and we are doing tests at the moment with groups of frequent flyers to present different types of propositions to see which ones will be better live. By the way, we are doing this across regions and a number of Hong Kong-based frequent flyers have been contacted to give feedback on this particular topic.
It is a very tricky subject because we can’t come out with a product that will be seen to be more punitive. It has to be more positive. It has to give you more flexibility or it won’t work but no we haven’t defined it yet.”
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