IAG planning ‘consistent elite tiers’ across BA, Iberia and Aer Lingus – what does this mean?

Once a year, International Airlines Group – the parent company for British Airways, Aer Lingus, Iberia, LEVEL and Vueling – runs a ‘Capital Markets Day’.

This is aimed at the banks and institutions that hold the debt and bonds issued by the group, but the event has always been shared more widely. It is the single most important piece of information sharing that IAG does all year, with the heads of all of the IAG business units presenting.

To be honest, it probably wishes that it hadn’t bothered. The shares fell by 4% at one point, wiping £300m off the value of the group, as investors failed to be impressed by what they heard.

We will do a separate article this week about the British Airways slides.

What was the Avios news from the Capital Markets Day?

There isn’t a lot in the IAG Loyalty / Avios part which regular readers of HfP won’t already know. You may be intrigued to know that fewer than 40% of Avios are awarded from flying these days.

What is interesting is slide 69 which says that you can expect, at some point:

• ‘single Avios balance’
• ‘improved benefits’
• ‘cross airline recognition’
• ‘consistent elite tiers’

It isn’t entirely clear what this means, but if we go back 6-7 years there was a plan (foiled by IAG’s IT capabilities) to turn Avios into a Miles & More-style structure.

With Miles & More, there is a single status platform used across Lufthansa, SWISS, Austrian, Brussels etc. You also have a single points balance. All of your status and points activity takes place on miles-and-more.com and not on any of the airline websites.

Moving to a ‘single Avios balance’ would have some benefits. It would save the faff of moving points between BA, Qatar Airways, Finnair, Aer Lingus / Vueling and Iberia for a start. Something which should be simple – such as using your Avios to pay for a Vueling flight on the Vueling website – is currently very messy indeed.

What does ‘consistent elite tiers’ mean?

There are two ways of reading this.

One is that each airline would simply rename its existing tiers so that Aer Lingus and Iberia top tier status is called the same thing as top-tier British Airways status. Everything else, including the different ways of earning status, remains the same.

The more radical approach would be to have a standardised way of earning status across IAG. This would require, for example, each airline to have the same thresholds for Gold, Silver etc and to earn the same number of points per flight. It could also be tied in with a move to earning status based on spending and not flights.

The snag here is that what works for one IAG airline wouldn’t work for another. Aer Lingus has a greater focus on low cost and short haul flights, for example, so any status model which heavily rewarded spending or long haul flying would wipe out their elite base.

The other snag is that, irrespective of what happens across IAG, it cannot force Finnair and Qatar Airways to adopt the same status-earning model. There is little point aligning how you earn status across some Avios-issuing airlines and not others.

Is Aer Lingus going back into oneworld?

‘Cross airline recognition’ is another interesting one. Remember that this presentation was given in the same week that we reported that BA elites would no longer get lounge access in Shannon and Cork when flying Aer Lingus.

‘Cross airline recognition’ would imply that a British Airways Gold member would get the same benefits as an Aer Lingus elite member – including lounge access.

The easiest way of achieving this would be for Aer Lingus to go back into the oneworld alliance, which also solves the issue of BA and Iberia flyers earning status credit when flying on Aer Lingus.

Coming in 2024 ….

The presentation also told us what to expect from IAG Loyalty / Avios in 2024. Look out for:

• BA allowing you to use ‘part pay with Avios’ to pay for 100% of a flight, as Aer Lingus and Vueling already do, rather than forcing you to pay the taxes and charges element with cash

• more ‘Avios only’ flights, with the other IAG airlines also trialling it

• Iberia launching ‘Reward Flight Saver’, which could actually be bad news given how low the taxes and charges on Iberia redemptions are now

• a ‘new and improved’ hotel and car rental redemption proposition, which will hopefully get you a better deal than 0.5p per Avios

PS. Avios collectors are not rational

What is slightly worrying about the slides is that it shows that many Avios collectors are – how can I put this politely? – not economically rational.

We have written before – and it is confirmed in the slides – that allowing people to use Avios to reduce the cost of a BA Holidays package has been hugely successful. 20% of all bookings are now being part-paid with points. This is despite the fact that this is the worst possible use of Avios (0.44p per point for large volumes), especially compared to using them for a premium cabin flight redemption (1p+ per Avios).

We are also told that 80% of Avios redemptions involve the customer choosing one of the ‘more Avios, less cash’ options. On long haul this makes sense, but on short haul you make a big mistake by choosing the £1 taxes option. The £35 (Economy) or £50 (Business) taxes and charges option is usually the best, often by a large margin, assuming you value an Avios at 1p.

This is why marketing is an art and not a science. If you try to run a business on the boring principles of being better / faster / cheaper than the competition then you won’t necessarily succeed, because people are weird.

PPS. How old do you think Avios collectors are?

Here’s one interesting fact about Avios from the slides. This is the current age split of Avios collectors (and this includes Qatar Privilege Club members, who will skew younger than average due to demographics):

• 22% are under 34 years old
• 22% are 34-44 years old
• 39% are 45-64 years old
• 17% are over 65 years old

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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.