Iberia’s new ‘earn Avios based on your spend’ scheme gets messy before it starts

Iberia Plus, the Avios-based loyalty scheme for British Airways’s sister airline Iberia, recently announced a massive overhaul of its Avios earning structure.

Effective from this month, the Avios you earn will no longer be based on the cabin you fly and the distance you travel

From some time in November, the Avios you earn will be based exclusively on what you spend and your elite status. Iberia has also announced that British Airways will move to the same model in 2023.

Full details can be found on this page of the Iberia website.

British Airways claimed in the official press release, that this will:

“unlock even more opportunities for our Members to earn Avios when they fly.”

In truth, it represents a sharp cut in Avios earned for most people, except for those on fully flexible tickets which are generally paid for by their employer.

What is changing with Iberia Plus?

One alleged selling point for the new arrangement is that it is simple. The number of Avios you earn per Euro is based on your status in the Iberia Plus programme.

In fact, Iberia claims that members actually wanted to earn fewer Avios when they fly:

In future it will be clearer and simpler, the way you like things.

A base level member earns 5 Avios per €1, whilst an elite member will earn up to 8 Avios per €1.

Take a look here:

It’s so simple, Iberia is already having to mess with it

It isn’t simple at all, of course, because Iberia is basing your earnings on the NET cost of your ticket, after taxes and external surcharges have been deducted.

This information is tucked away and makes it very difficult to know in advance how many Avios you will earn.

After all, taxes and external surcharges can make up 90% of the cost of an inflexible Economy ticket but only 5% of a fully flexible Business ticket.

Iberia has already realised that this arrangement doesn’t work

The new ‘earn based on what you spend’ method is great, it seems, except when it isn’t.

Flights to Latin America will earn more Avios

The only routes where Iberia faces real competition, long haul, are those to Latin America.

The airline has now realised that 5 Avios per €1, after stripping out the taxes, is going to be so weak that customers will defect to other airlines.

It has announced that flights to Latin America (Central America, South America, Caribbean) will NOT follow the chart above.

Instead, there will be a separate chart which is 2 Avios ‘bigger’. This means that it starts at 7 Avios per €1 and goes up to 10 Avios per €1.

Flights between Madrid and Barcelona will earn more Avios

High speed rail is tough competition for flights between Madrid and Barcelona. This is despite Iberia offering a ‘turn up and go’ shuttle service where you are not tied to a particular flight.

In an attempt to keep passengers from defecting, this route has also been removed from the main earning chart.

There will be a separate chart which is 1 Avios ‘bigger’, running from 6 Avios to 9 Avios per €1.

It still might not be enough, given the cutting of elite bonuses

Part of the problem with Iberia’s new scheme is that it is alienating elite flyers by cutting elite bonuses.

Historically, you got a bonus of 25%, 50% or 100% of Avios earned based on your status.

If you do the maths on the numbers above, working from a base level of 5 Avios per €1, elite status bonuses have been cut to 20%, 40% and 60%. Because stuffing your top tier members is the way to go ….

We said this model doesn’t work, and Iberia is helpfully proving it

This model of earning Avios has been used by other airlines and is generally agreed to be a dud. The only exceptions are Finance Directors, who can easily understand how the cost of miles is linked to the money coming in and so like the idea.

Those who think more carefully about these things usually don’t agree. This is because you are rewarding the wrong people most highly.

The people who are flying on £10,000 fully flexible business class fares to New York are the ones who are laughing all the way to the mileage bank. However, with few exceptions, these are corporate travellers whose choice of airline is made by their employer. You could give these people zero miles and it wouldn’t impact the money that their employer spends with the airline.

Similarly, it is (duh) the fullest flights which charge the highest prices. Because these flights are ALREADY full, it makes no sense to spend most of your loyalty budget rewarding the people who fly on them. Those seats would sell anyway, multiple times over. I didn’t see anyone offering incentives to buy Peter Kay tickets last week.

On similar logic, fares are higher on routes where there is no competition – but on routes where there IS competition, and where fares are lower, the lure of Avios is more important. Weirdly, you will now be rewarded more for flying expensive routes where only British Airways or Iberia could have got you there. You will earn fewer Avios on competitive routes where you can choose between carriers.

This final point (competitive routes have cheaper fares) is why Iberia has now been forced to abandon its ‘simple’ chart and increase the Avios earned where it is fighting for passengers (Latin America and Madrid to Barcelona) in order to keep people flying.

The only upside from this, apart from some amusement that Iberia already seems to realise that it has messed up, is that the problems should be ironed out before British Airways goes the same way. It wouldn’t surprise me, for example, to see a higher elite bonus when BA announces its plans.

You can find out more about the Iberia changes on its website 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.