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British Airways to pay 2.2 BILLION Avios to settle a US Class Action lawsuit settlement

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If you lived in the United States between November 2006 and April 2013, you could be in line for a windfall following the proposed settlement of a class action lawsuit against British Airways over Avios redemptions.

The case – put simply – was that British Airways added surcharges to Avios redemptions in breach of Executive Club terms and conditions.  Whilst these were called ‘fuel surcharges’ there was no proof that they bore any relation to changes in the cost of aviation fuel.

For clarity, British Airways has not admitted it was at fault and no court has found otherwise – but the airline is handing over a pile of money to make the case go away.

You are in the money (well, Avios) if:

You booked an Avios redemption (100% Avios, not ‘cash and Avios’) between 9th November 2006 and 17th April 2013

You had a United States address on your BAEC account at the time of booking and gave a US address for whoever was flying, if it was not you

The taxes and charges paid included a fuel surcharge

You will get:

12,500 Avios for one redemption

20,000 Avios for between two and five redemptions 

35,000 Avios for six or more redemptions 

Avios will be awarded within 30 days of the final settlement being agreed.  The court is expected to rubber stamp the settlement on 27th July but BA has further rights to appeal which could extend the process by another year or more.

Alternatively, you can opt in to take a cash alternative which is roughly 17% of the fuel surcharges you paid.

Assuming that everyone takes Avios, a total of 2,228,677,500 Avios will be awarded.

The Avios will be awarded automatically to all BAEC members who made qualifying redemptions during the period.  If you want the money, you need to specifically opt in by 29th July.  If you have closed your BAEC account in the interim, your only option is to receive cash and you need to specifically opt in.

You retain the right to opt out of this settlement and sue BA directly if you wish.

Don’t worry about sending a thank you note to the lawyers.  They are asking for almost $15m in fees and expenses for their work (the fee represents 28% of the settlement value) although you are allowed to object to this if you wish.  The court will consider your objection before deciding whether to approve the payment.

You can find out more on the class action website here.

PS.  This settlement is only for US residents.  Whilst UK residents paid similar fuel surcharges over this period, they are not included.  Will any UK law firm now raise a similar case?

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Bits: Queens Club tennis with Emirates, access some Lufthansa lounges with Amex Platinum, Carlisle Airport delayed
British Airways launches 50% off Economy redemptions - but is it still a bad deal?
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Comments

  1. Mr(s) Entitled says:

    Made me click.

    Won’t make me spend.

    The award is small compared to the amount being issued annually and in circulation. One thing is for certain though, the devaluation will occur. They always do. We each run credit risk to BA. Always worth considering how best to mitigate this.

    • Genghis says:

      Earn and burn

      • Mr(s) Entitled says:

        Best strategy there is.

        • the real harry1 says:

          Some people don’t really have the choice (or manufacture for themselves a situation where they think they have no choice). I am forced to stash points because until the kids leave home for university, we won’t be taking any long haul flights. Perfectly good holiday home in the European sun (sunk costs) vs 5x LH redemptions & hotels? No contest.

          So I stash the points, BAEC & Virgin together look very healthy as a total but obvs won’t once we start redeeming properly on LH. Yes I will be somewhat p’d off if devaluation robs me of some value but I’d rather be where I am, ie plenty of points all ready to go once the green light shows – as opposed to squandering them earlier than necessary.

        • Mr(s) Entitled says:

          One’s circumstance doesnt detract from the best stratergy.

          To be fair, I dont follow it myself. I tend to travel where I want and if airline or hotel points help I will use them, if not I’ll go all the same. Life is too short to allow points to dictate my travel. It’s also sometimes too convoluted with two school age kids and limited windows.

          That said, in not burning the points and holding a large balance I accept the risk I am running. As long as people consciously do the same all is well and good. The danger is sleep walking into devaluation.

        • No body is forcing anyone to stash points or for that matter earn them in the first place. Plenty of cash back cc options out there or other ways to spend one’s time rather than buying/selling ink cartridges. I’m with Mr(s) Entitled – earn and burn is best strategy, although of course some folks might only accrue fairly slowly. I use points airline or hotel when it helps out with my own plans – but again I’m lucky enough to be in that position.

        • the real harry1 says:

          Laughable answer, @Evan. The only possible answer is: YMMV, horses for courses, what works for you best.

          Nobody mentioned some ill-defined person forcing me to stash points, not sure where you got that from.

          Earn & burn is definitely not the golden way, the correct answer, the right way to go —> for some people, including mygoodself 🙂

  2. So not applicable to UK members who redeemed ex-US one ways or rtns?
    I did – a lot.
    I can’t honestly remember what address I put down when booking (probably a Ukraine address ) but my BA account has remained UK based to keep the BA amex, even though I reside in the US.

    • Peter K says:

      In which case you’ve no doubt saved far more than the 35k (max) avios the Americans will get.

  3. BA might also get some more business out of it.
    I wonder how many of the beneficiaries will use the points for their own flights, and buy a cash ticket for another person.
    I can’t imagine BA is first choice for many US travellers, but given a stash of Avios to subsidise one ticket, it might be more tempting.

    • Callum says:

      I’d guess American users are more likely to use them on AA than BA.

      If they’re redeeming for AA short haul I’d assume BA would be paying AA quite a bit?

      • GUWonder says:

        If everyone entitled to this took BAEC Avios points and redeemed them all for AA flights, the amount of money AA would get from BA for this would be well less than $15 million, and probably several million below even that amount.

        BA/IAG should be hoping everyone opts into the Avios option rather than into the cash option. Why? Because it would mean a much lower cash outlay for BA/IAG than the alternative.

  4. Charlie T. says:

    According to the Avios Group Ltd accounts for 2016, 102 bn Avios were issued in 2016 and 84bn burned. I can’t see an increase in issuance of an incremental 2bn causing a material effect on the value of the currency especially when the stash of unused Avios most stand north of 50bn.

    Whether IAG use it as an excuse to trim their liability through a devaluation for the hell of it is another question.

    The number that really shocked me was their profit before tax of £171m. I know Rob has called AGL a cash cow more than once but I hadn’t realised the extent.

  5. Mr(s) Entitled says:

    I lived in the US during the entirety of this period. Unfortunately my BAEC account was registered in Portugual to take advatange of the lower teir point thresholds.

    You win some, you lose some.

  6. Redhroogar says:

    I guess that this doesn’t apply to Avios upgrade redemptions??

    • It depends. Did you pay a ‘fuel surcharge’ at the time? All the info you need is in the article – it’s not the type of redemption you made but what you were asked to pay!!

  7. Gus Paul says:

    So I was living in US for that period and registered to a US address. When I moved back to the UK 3 years ago I had BAEC merge that account with my exisiting UK account. I kept the US account number. I hope I qualify although I haven’t seen an email.

    • Gus Paul says:

      So I did get an email after all. 20,000 avios or $469.69

      • I would take the cash!

        • Gus Paul says:

          Don’t have a US bank account any more so not sure how that would work

        • Lady London says:

          Paypal or one of the virtual cards that is available in a foreign currency would do the trick.

        • Yes, cash sounds better in your case.

          It is now live, even though not June 3rd yet. I would have thought you just had to put in your BAEC number to check, but no, you have to have received an e-mail (based on info provided by BA) with a unique number.

          My husband has been offered 35,000 avios or $114.65. Which probably shows the difference between economy and business fuel surcharges. We’ve sometimes booked one-ways for him for flexibility in timing, and on BA because they were the only non-stop flights, so his BA economy redemptions have in fact been useful over the years even though they are not normally considered good value.

  8. Lady London says:

    Paypal or one of the virtual cards that is available in a foreign currency would do the trick.

    • My take is they devalue and wipe out fuel surcharges to counteract any further chance of court action elsewhere

  9. StewartR says:

    @Rob

    Any chance you could run an article looking back last, say, last 15 years – timeline, devaluation point, devaluation %. Would be nice to be able to infer an annual rate of inflation, irrespective of whether or not a valuation took place in that particular year, over a longer period of time. Graph with a line down the middle?

    I’d love to know how the rate of point inflation is growing over time – increasing, decreasing, staying the same (exponentially growing?).

    Lots of great points about “earn & burn”, “its another currency” on this thread. Difficult to justify without quantitative idea of the rate of inflation though.

    Critical point here probably is that you can’t “invest” your stash i.e. you can’t protect your stash from the rate of inflation of the currency. Don’t know how much trouble you are in though … if you don’t know how quickly its evaporating.

    • No 🙂

      What I would say is that it isn’t linear. Go back 15 years and there was no BA Amex 2-4-1 voucher. That was a major game changer. There was also no Qatar Airways in oneworld, no airberlin (admittedly gone now), no SriLankan, no Flybe etc.

      More importantly, you are generally getting a better product. Not on BA, of course, since it is the same rubbish seat!, but redeem for Qatar’s Qsuite and you’re getting a business class product which is light years ahead of what was about 15 years ago.

      Go back 20 years and you have NO flat beds in business – on any airline – and no Amex 2-4-1. There was no oneworld either, so you were only redeeming on BA in the main. More importantly, you were only EARNING on BA. Even if Business Class to New York was, say, 60000 BA Miles at the time it was (overall) a poorer deal than using 120,000 now on a peak date but using a 2-4-1 and getting a flat bed.

      But of course we had Concorde 20 years ago which was, I think, 100,000 BA Miles ….

  10. StewartR says:

    Ah … I see your point. Relatively easy to get devaluation points perhaps, but difficult to quantify change in product and, I imagine, difficult to pin down when costs of redemption’s increased.

    Fair dos.

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