The news yesterday that British Airways will start offering Executive Club tier points for British Airways Premium Plus American Express spend generated a huge amount of feedback. Our article had over 350 comments by the end of the day.
As I said yesterday, I feel that it’s the right idea but wrongly executed, although a fair attempt at a first stab.
Let’s look into this in more detail.
I had four issues with the offer. You need to understand that my key starting points when looking at any loyalty deal are whether it is easy to understand and how it plays on human psychology.
The spend threshold starts too high
You need to spend £15,000 within six months to start to benefit from this offer. This is too high and will simply lead to too many people tuning out.
It would make more sense to start earning tier points at £5,000 of qualifying spend for 50 tier points. Most people would earn something this way, and once a member had a handful of tier points it would – psychologically – encourage them to look into ways of earning more.
Remember that it costs BA NOTHING to give out tier points if the member does not go on to earn or retain status. It’s a different dynamic to Avios, where giving someone a handful of Avios which are never used requires IAG Loyalty to accrue for them on its balance sheet for three years.
The number of tier points should be uncapped
You can’t be half pregnant. If you’re going to give out tier points based on card spend, you should allow people to earn status entirely on card spend.
If someone wants to spend £60,000 to earn a British Airways Executive Club Silver card from scratch, assuming they also fly four segments, they should be able to (and the same for spending £150,000 to earn Gold).
Anyone who isn’t flying enough to earn status is unlikely to be flying enough to cost British Airways a fortune in lounge access etc. Some people who gained status via this route would also move travel to BA from other airlines to benefit from it.
Running a six month offer only benefits people with certain membership year end dates
Another issue with this trial is that, even if you were keen to take part, you may find that the way your year end falls counts you out. If you could spend a consistent £5,000 per month on your BA Premium Plus American Express card but your BA year end is 8th March, you’d trigger 100 tier points in your current 2023/24 year (which may be wasted) and 100 in the following 2024/25 year.
There are issues for people who have stopping using a BA Amex because they have spent £9,999
Some people have spent £9,999 on their cards and are holding off spending more so they don’t trigger their annual 2-4-1 companion voucher unnecessarily early – although I published the obvious solution for that problem here.
I spent nothing on my BA card between February 2023 (when I was above £9,500) and the last week of October 2023 because I wanted to ensure the 2-4-1 voucher would be valid for October half term in 2025.
If BA is going to give out tier points on card spend, it ALSO needs to address the issue of people deliberately holding off using their card to avoid triggering their voucher early.
An idea: should British Airways offer Avios OR tier points?
Ever since interchange fee caps cut the money that credit card companies have to fund travel rewards, I have been pushing the idea of giving out elite status instead of miles.
(Iberia has been offering the equivalent of British Airways Bronze status with one of its credit cards for some years now – all you need to do is pay a €100 annual card fee. IAG isn’t against the concept of ‘selling’ status.)
What would happen if you were given a choice with your British Airways Premium Plus American Express?
- earn 1.5 Avios per £1 (as you do now) or
- earn 0.75 Avios per £1 and receive 1 tier point per £100 spent?
Why would BA do this? Because it makes financial sense – and financial sense is something that BA understands.
The airline targets a 10% operating profit margin from flying, although it is currently doing better. Bear this in mind.
Let’s assume that BA started to offer the two options above and I chose the second – 0.75 Avios per £1 and 1 tier point per £100 spent on my Premium Plus card.
To earn British Airways Executive Club Silver status at 600 tier points would require £60,000 of credit card spend. I’d also receive (60,000 x 0.75) 45,000 Avios, instead of the 90,000 Avios I’d get at the standard rate of 1.5 Avios per £1.
Let’s assume Amex pays BA the same amount of money either way. Instead of paying BA around £750 for issuing 90,000 Avios, it pays BA £750 for issuing 45,000 Avios and giving me a Silver card.
Basically, BA will have been paid £375 for giving me a Silver card.
Because the airline targets a 10% profit margin on flights, BA makes the same profit on this as if I’d spent £3,750 on flying.
This is a big win for the airline.
Let’s assume I try to earn Silver from scratch by flying. A good ‘tier point run’ would cost around £2 per tier point. You can beat this – Heathrow to Sofia in Club Europe is currently as low as £210 return in March / April / May for 160 tier points, and you’d get another 80 tier points with a connection by starting outside London. Stay five nights in Sofia, book via BA Holidays, and you’d earn double tier points.
At £2 per tier point, I could earn Silver by spending (600 tier points x £2 per tier point) £1,200 on flights. BA would make £120 of profit this way based on a 10% margin. Instead, it would be getting £375 of profit by letting Amex buy me a Silver card.
Even someone with no real idea of what makes a good tier point run should be able to pick up a Silver card by spending far less than £3,750, generating less than £375 of profit for BA.
‘Selling’ status this way is actually good business sense for the airline.
This offer isn’t for you? That’s fine
Clearly this offer wouldn’t be for everyone. That’s fine.
BA doesn’t want it to be for everyone due to lounge capacity etc. After all, when everyone’s a princess, no-one’s a princess (a lesson I learned from reading ‘Olivia and the Fairy Princess‘ to my daughter when she was five – I can sense the blank looks from readers who don’t have a young daughter ….)
There are so many British Airways Premium Plus American Express cardholders – I am guessing 100k-ish – that BA would only want a couple of percent to earn status purely via card spend.
The extra revenue generated from this couple of percent of cardholders who went for it, gung ho, would be worthwhile for both American Express and BA, however.
How to earn Avios from UK credit cards (February 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.
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.