Avios CEO on expanding the currency to more airlines and even hotels …. and a devaluation

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• Andrew J says:

  14 Jun14 June 06:16

  But most hotel schemes let you earn airline miles instead of hotel points anyway, so hotel customers who only stay occasionally can set their accounts to credit to Avios already.

  • TGLoyalty says:

    14 Jun14 June 12:16

    For me for the smaller groups outside Hilton/Marriott/IHG/Accor/Hyatt it makes total sense to drop their rewards. I’m never earning enough to redeem anything value so it never seats my decision.

    I’ll book via the cheapest route possible.

• BJ says:

  14 Jun14 June 06:22

  They will rely on member ignorance to devalue without causing a flood to both QAPC and AY+ who generally offer better redemptionvalue in their core markets than BAEC, in may casrs even where BAEC redemptions are done in conjunction with an amex or Barcs voucher. I am not even sure I understand tge scope for avios devaluation driven my IAG Loyalty where there are niw multiple (competing) airline, and other partners. Ultimately, who can pull the strings hardest and push the most buttons when the avios environment becomes ever more complex?

• Bernard says:

  14 Jun14 June 06:38

  Having met the avios ceo there’s an arrogance about him (we’ve created a new currency’ guff, etc).
  It’s more simply getting out of control: when it becomes more rewarding to earn avios on a credit card paying to fly on competition than to fly on BA or other core airlines, then something has gone badly wrong.

  For the non flying customer that’s great to exploit short term, but long term throwing avios at never ending credit card promotions means guaranteed huge devaluation in future.

  • BJ says:

    14 Jun14 June 06:59

    There is little scope for huge devaluation without killing the goose. Members already have problems with the scale of fees at BAEC, and the number of avios needed for longhaul premium rewards is already massively high relative to the ease of earning them. We are told huge SUB at Barcs are a thing of the past, and amex has been progressively tightening the scope with their own and branded cards for a few years already. A lot of the success of avios and other reward schemes rely to an extent on the ignorance of large numbers of members with respect to value and nuances of the schemes but I think they would be unwise to take their members for fools, a tipping point will be reached where many members will not cobsider it worth the hassle and will let loyalty schenes have less influence on their choices and behaviour.

    • JDB says:

      14 Jun14 June 07:23

      @BJ – Amex has hardly been ‘tightening’ – they are still printing MR points to a ludicrous extent with ever higher SUBs and retentions to support outdated products.

      I do think you are right about the limited scope for devaluation when BA has opened up new purchase routes such as boost and subscriptions which must be incredibly attractive for them but could be killed off quite easily if they got greedy.

      • BJ says:

        14 Jun14 June 07:44

        Not as tigbt as you might lije but it is still less easy than pre2020 provided we ignore the farcical points give-aways that were widely available on customer demand during the pandemic.

        That the BAEC environmebt has changed is most evident to me in the number of HfP readers reporting a willingness to pay 0.9-1.2ppa via boost etc. While I know that can sometimes make sense it’s changed days since when readers were unwillingn to pay more than half that much.

      • TGLoyalty says:

        14 Jun14 June 12:18

        @JDB retaining customers is cheaper than accumulating new ones.

        Also the subs haven’t changed with inflation the cards have had the same bonus for yonks. I fact they were reduced so again I’d argue they are still far better off than 4/5 years ago.

    • Bernard says:

      14 Jun14 June 07:25

      It would be great to think that holds.
      Unfortunately the history of what’s happening in the US suggests your analysis doesn’t survive contact with the reality of airlines as there become an oligopoly. They too have swallowed the mileage kool-aide as a means to easy profit.
      The history in Avios also demolishes optimism. It’s always been one of direct or back door devaluation (eg adding spurious taxes and extras).

      The moral here is earn as you will but burn don’t hoard. For burning a bigger range of avios pesos customers is a big help though 🙂

      • JDB says:

        14 Jun14 June 08:04

        @Bernard – the history of Air Miles/Avios actually doesn’t support your devaluation narrative, even taking account of added fees (many of which apply to cash fares) a big chunk of which is APD. The doomsayers have been claiming devaluation to be imminent for twenty plus years!

        Also, while acknowledging the US parallel, the UK market is totally different (Amex hasn’t worked this out which is why its market share continues to dwindle) and IAG is well aware of this.

        • BJ says:

          14 Jun14 June 08:26

          Ot’s always been the cases that some doors open and some close. Change ir flux is a better description of schemes overall than devaluation. I’ve always believed in ear abd burn versus hoard but having sid that for many years I have been able to sustain an avios balance sufficiebt to fund my anticipated travel for the subsequent two years on a rolling basis. I can no longer do that but I am no less adept at collecting avios so something has changed and not for the better from my personal perspective. For over a decade here I advocated tve simpkest and most direct routibgs from the UK, scorning the exEurope game. That has now change for me too, I now look favourably on usibg shirt European breaks in conjunction with exEurope revenue flights or ex-Zone 1 AY+ redemptions. This shift too has been driven by changes in BAEC not working for me as well as it once did.

    • NigelthePensioner says:

      14 Jun14 June 07:34

      Regrettably the Walsh doctrine still lives on in IAG. Con and cut as much as you can until you start getting emails of complaint about poor value from your members. So maybe we should be emailing the BA CEO and point out the massive devaluation over the last X years AND the reduction in earning potential in numbers of Avios rewarded for transactions (so what about the increase in partners who give you 5 Avios for buying £000’s worth of stuff).
      We are trying to wind down our Avios but will not throw them away on silly redemptions. It’s a difficult job especially when trying to retain Gold as well. The BAEC is broken as is the airline. Avios need to be attractive and if BAEC think swapping them for a greasy processed sausage roll from Greggs is what collectors want then clearly either I am in the wrong club or their “CEO” is way off the mark!
      I mean, really, a loyalty club having a CEO……does the Tufty Club have a CEO too???
      Bring back the traditional real value of Avios or soon they will be a lame duck!

      • Peter K says:

        14 Jun14 June 07:38

        Um, Nige, it’s Virgin that offer you a sausage roll for miles, not avios.

        • Erico1875 says:

          14 Jun14 June 07:42

          😁😁😁

      • JDB says:

        14 Jun14 June 08:07

        @NigelthePensioner – I wouldn’t be writing to the CEO to “point out the massive devaluation over the last X years AND the reduction in earning potential in numbers of Avios rewarded for transactions” because neither is true.

      • AJA says:

        14 Jun14 June 08:16

        And Nigel if you are retaining Gold even via BAH double tier points deals you are paying decent sums of money to BA. They are doing OK out of your custom and they are still keeping you hooked. So even with devaluations you haven’t walked away even if you say you are trying to.

      • Rob says:

        14 Jun14 June 08:48

        Avios makes £280m per year profit. CEO is massively underpaid compared to what the CEO of a standalone PLC worth, say, £4bn would be paid.

        In fact, it makes so much money that it literally doesn’t know what to do with it. The reason Avios bought BA Holidays was apparently to use up spare cash which can’t be paid as dividends due to lack of (accounting) reserves.

        • BJ says:

          14 Jun14 June 10:52

          They could run a special offer where the co-payment on all redemptions for a month was 1p – problem solved and a flood of new members.

        • Thywillbedone says:

          14 Jun14 June 13:24

          The CEO is probably paid based on how difficult it is to earn that £280m p.a. …which is to say, not very difficult at all

        • Bagoly says:

          14 Jun14 June 17:08

          Given that most income is intragroup, the profit number is meaningless.
          Selling subsidiaries within a group is similarly meaningless.

          And “makes so much money… lack of retained earnings” for a company is just nonsense.
          It’s all just creating a story to back an IPO to get external investors to put cash into the group more cheaply than otherwise.

        • Rob says:

          14 Jun14 June 19:46

          2/3rd of the income is not intra-group. Expenses, I admit, different story.

          The retained earnings thing is true. Why else would IAGL buy BA Holidays, a business it has zero interest in?

          There will NEVER be another IPO or sale of an airline loyalty business after Aeroplan crashed and burned.

        • Bernard says:

          14 Jun14 June 21:07

          Much of the £280m is magic of transfer pricing from BA mostly. Look at what avios makes as net profit if you strip airlines and airline linked credit cards out of it. (Hint selling wine for avios isn’t a money spinner)
          The avios CEO is probably overpaid for what he really generates, and may indeed have an over sized opinion of his value as if he was genuinely underpaid then where are the job offers taking him elsewhere more lucrative?
          None have arisen, which tells you all you need to know.

    • Andrew says:

      14 Jun14 June 10:39

      One ‘easy’ devaluation to make would be to short haul RFS. No other European airline is anywhere near as generous and I don’t think the taxes/fees have increased since they were introduced. Economy fees could be increased to £50 and business to £75 and they’d still be better value than the competition.

      • Mr. AC says:

        14 Jun14 June 13:39

        Shhh don’t give them ideas. This is the only major part of the program that has remained competitive. If they devalue this, the program will die for experienced collectors, and that means that, inevitably but will some delay, it will die for the casual traveller.

      • the_real_a says:

        14 Jun14 June 16:05

        Whilst i think it might go that way, it virtually eliminates the incentive for the middle class supermarket shopper. When they find out the avios they saved up for 10 years to get to Paris – now requires MORE in cash than an equivalent easyjet flight without Avios…

        • Londonsteve says:

          15 Jun15 June 19:14

          This. The comparator for short haul RFS flights is not what BA is charging for the flight in question, but the price the casual traveller would pay to fly to the same destination on a low cost airline. Yes, there is some inherent value in the BA brand but not much so most collectors wouldn’t pay more than 10 or 20 pounds more to fly on BA instead of the low cost competition, unless Heathrow was exceptionally convenient for them. If reward flights are significantly out of kilter with other low cost option, most collectors simply wouldn’t use them for this. Reward seats are a useful and discreet back door BA to get rid of seats that would otherwise fly empty so it’s money for old rope. b

• david says:

  14 Jun14 June 06:57

  “If an Avios is not earned by QR means then it will be transferred from BA, AY, IB, EI to QR at 0.75 per Avios”. I am guessing something along those lines.

  • Erico1875 says:

    14 Jun14 June 07:23

    Where does it say that?

    • david says:

      14 Jun14 June 15:24

      I meant as an example of a potential devaluation.

• Nico says:

  14 Jun14 June 07:30

  If they issue 1bn avios a year, may have 2bn on balance sheet so a 10% devaluation worth 100m at 0.5p per 100?

  • TooPoorToBeHere says:

    14 Jun14 June 09:06

    The internal valuations of avios (divided on the balance sheet between “expected redemption this year” and “future years”) are I believe a closely-guarded secret.

    As with the issuance of any garbage currency – whether small coloured pieces of paper/plastic with pictures of live or dead leaders, or the cryptocurrency world’s “alt” coins – the game is to get as many as possible out there into the hands of mugs who will sit on them while they lose value.

    The more people you can bring in and the higher the average balance, the better.

    • Lady London says:

      14 Jun14 June 21:40

      Sounds awfully like Gilts, and the Government’s plan to push pension schemes to invest in highly illiquid UK assets.

• Tony says:

  14 Jun14 June 07:57

  “Arguably”….wrong word, should be “unarguably” !! Similar to “questionably” and “Unquestiomably”….☹️

• G says:

  14 Jun14 June 08:23

  Fairly non committal answer.

• Christian says:

  14 Jun14 June 08:39

  My earning on partners (in this case, Alaska) has decreased same flight, same distance, same tier points, less than half Avios – 2023: 2038 Avios, 2024: 849 Avios, so earning on partners has changed.

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