BAEC changes – “2 yrs in the making” and based on “extensive modelling”?
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would love to see the underlying data used re. BAEC changes. The total outlay for someone achieving status ‘on the cheap’ and then additional flights to benefit from lounge access, vs the revenue generated from the flights etc. how much did the average status holder cost BA from each lounge visit? £10-20??
Recent article on OMAAT says, “Based on what I’ve heard (and these are ballpark figures), you can generally expect that access to a business class lounge belonging to a major alliance will be billed at somewhere around $50 per person, and a contract or Priority Pass lounge will be billed at somewhere around $30 per person. Meanwhile for first class lounges, the reimbursement rate could even be a bit higher than that.”
So a Silver return trip in Economy costs BA about $100. Plus a lost opportunity to earn baggage fees or seat reservation fees. Plus the cost of upsetting high-yielding customers who face a queue at check-in. Nine times out of ten, the fare will be loss making.
These numbers are totally out for a BA passenger using a BA lounge…
So a Silver return trip in Economy costs BA about $100. Plus a lost opportunity to earn baggage fees or seat reservation fees. Plus the cost of upsetting high-yielding customers who face a queue at check-in. Nine times out of ten, the fare will be loss making.
BA’s marginal cost of lounge access would be limited if it is a BA-run / operated lounge. They missed the point that, if I don’t have status, I have no incentive to pay a price premium over EasyJet or RyanAir or Jet2 or Norse or any other carrier to fly with BA when I go on holiday. With status I would apply some value to premium checkin, FastTrack security, guaranteed lounge access (compared to the PP lottery), advance seat selection, TPs and Avios towards status renewal, etc., and rationally pay a premium to fly BA; other than seat selection (lost ancillary revenue for BA), those are all low or nil marginal cost services for BA. Without OW status, BA’s product differentiation in economy has disappeared, leaving them to compete on price and schedule alone.
People are skint and BA appear to have gone all in on travel to the US, which is fairly unattractive for a number of reasons.
Indeed and there is one very unattractive reason why I cancelled two US bookings for this year (and there won’t be anymore for 4 years).
The way he has started his first week it’s quite likely the Constitution will be changed so he doesn’t have to give up the presidency in 2028 !
I am sure it has been modelled well, but unlike science where one tries to DIS-prove a hypothesis – well in business often people employ consultants to PROVE their hypothesis. As the old joke goes “Ask a consultant the time – they will ask you for your watch, tell you the time, then pocket the watch…”
I’m sure they want to clear out the riff-raff like me, but asking for £12.5k real spend for Silver and £30k for Gold – they’re already flying Club so what are the benefits?? The number of status match offers has already shown plenty of people are coming after BA’s brunch 😜
BA’s marginal cost of lounge access would be limited if it is a BA-run / operated lounge.
These numbers are totally out for a BA passenger using a BA lounge…
Why would BA internally recharge at marginal cost? That’s a path to financial ruin.
It would have been a lot simpler to simply increase the TP required. Linking it directly to cash doesn’t feel smart either business-wise or psychologically
A mate who would know told me today that the BA sale, which just ended, did not go as well as expected.
The ‘extensive modelling’ didn’t go as far as realising that if Iberia came out with a lower spend target AND continued to offer segment based qualification then BA would have a problem ….
Offers much worse than last year.
And yes, I don’t understand how they missed the Iberia bit, they need to look at all OW partners there.
I thought these companies paid lots of money to consultants to identify such eventualities and also strategies to mitigate them?!
Consultants are very tempted to tell their customers what they want to hear. This can even be baked into the brief (in this case perhaps it was “tell us how to manage a move to revenue based earning for status in BAEC”, not, “what improvements can we make to BAEC to reduce cost and/or improve loyalty”). Telling your sponsor their basic suppositions are wrong is between tricky and fatal, and if you accept a statement of work loaded with assumptions, you’re painted into a corner before you start.
I’m a consultant of sorts, and sometimes tell my clients things they don’t want to hear. It doesn’t stop me, but I don’t see much of this going on, and never with the big players in my experience. I have few professional regrets, but not providing frank and unpopular advice to client as early as possible concerning a doomed technology choice is one of them.
Read up on “go fever” and “groupthink” — in large organisations it seems having more eyes on a problem is no guarantee very stupid decisions don’t get made (or the right decisions never get made).
One of the big assumptions about people leaving BA is that the Low cost carriers are low cost. Add in luggage and they are not.
Indeed they are not, at £50 per sector to add 20kg on Canaries and Greece flights! But from a regional perspective, if you want to fly direct to a European destination, they are pretty much the only choice. Further afield and there’s much more chance you’ll need to change somewhere, even to most US cities and the Caribbean, so then it becomes a case of whether BA is the only/best/cheapest option.
Was reading an interesting Nike article last night. They hired a consultant from Boston Consulting Group as CEO who knew nothing about fashion or sport but a lot about costs.
He pulled Nike out of a lot of retailers because they were taking margin which Nike could have for itself if it moved more heavily online. On paper, OK.
He also fired most of the design people and decided to base new products on customer surveys of what they wanted. Because doesn’t all fashion work that way?
Anyway, you can guess the rest:
*retailers, faced with empty shelves after Nike withdrew product, started to fill them with interesting start up brands like On
*customers who turned up and may have bought Nike shoes didn’t decide to go off and find some online instead – they decided that some of the other brands in the shop, especially some of these new brands that had come in, were actually quite good
*shops which were still getting supplied were getting ‘designed by committee’ gear which weirdly no-one seemed to want despite customers telling Nike via surveys it is what they wanted
CEO was fired last September and replaced by an insider with 32 years at Nike.
Hmm. I’m no expert in any of these fields but when it comes to expensive footwear people like to look and try things on before parting with their (or their parents’) hard-earned cash. Real products that you can touch and even smell (think leather!) are also much more appealing than a picture on a screen. Otherwise all clothing shops would be online by now, surely?!
Climate change has also been ‘extensively modelled’. Unfortunately those models tend to ‘run hot’.
BA’s model didn’t predict storms obviously.I have no issue with moving to spend to determine the loyalty level, it is the sheer amount that I find ludicrous. I’ve moved over from Qatar and seventeen years of Etihad before that and will be gold next month thanks to a series of F returns to Dubai of which I’ve needed four
Because the Dubai F return is often discounted I will need circa THIRTEEN returns to get gold, thirteen first class intercontinental return flights
Sorry that’s just mad and I’m off as quickly as I’ve arrived and will status match the Gold as soon as I have it
So yes my revenue is entirely lost to them as a premium flyer
Gold level will just be the JFK club amd they may as well call it that nowHow have you needed 4 x F returns to DXB to get BA gold?!! Or do you mean you needed the flights anyway, and this will get you to gold?
Under the current / old system, four long haul First returns = 1680TP.
I’m also BA gold, so I’m aware of how many TPs are required. It was absolutely not necessary to spend that kind of money, though …
Sorry wasn’t trying to be patronising, just explaining. What @Dogmatick was saying was that as regular traveller to DXB, four trips in First would get Gold. From April that won’t get him half way.
Indeed they are not, at £50 per sector to add 20kg on Canaries and Greece flights! But from a regional perspective, if you want to fly direct to a European destination, they are pretty much the only choice. Further afield and there’s much more chance you’ll need to change somewhere, even to most US cities and the Caribbean, so then it becomes a case of whether BA is the only/best/cheapest option.
Indeed
If you don’t live in striking distance of Heathrow or Gatwick, then flying BA short haul makes no sense, so people shouldn’t have logically been flying BA anyway.The question is will people flying ba out of LHR and Gatwick save much by going LCC
The question is will people flying ba out of LHR and Gatwick save much by going LCC
No, they won’t. Case in point – I could have gone to AMS last weekend (for my birthday, thanks for all the presents) LCC from STN or LTN. £70 return – if you want to leave at 6am. Instead I paid £300 to fly at sensible times from LHR. But guess what?? LOTS of airlines fly LHR-AMS at similar prices – so if I’m getting nothing for my loyalty, then I have no loyalty.
Anyone who’s ever heard/read someone saying “I’ve never flying Ryanair again”… They DO! Because cost is the most important factor, or it’s their nearest airport, or there’s no-one else flying to that destination (when I say “destination” it might be 100km away 😁) . Not the same with BA. Lots of competition on airports, routes, and on price.
Yes I fly monthly to Dubai for work. Used Etihad for years until I got cancer and couldn’t make enough flights and despite being such a regular flyer for SO long, sat on so many research groups for them etc their loyalty team said tough luck maybe next year. So I’ve burned the miles and walked as Qatar status matched me, then left me sat in Dubai and overnight in Doha to miss the coronation.
QA on the ground is rubbish and they do stupid stuff like move the 23:15 out of Dubai to 00:30 and then put in a new flight at 23:15, if i want to change flights yes please thats £500 or whatever so have given up on them as well
Finally came to ‘our first is their business just with a poor attitude instead of a smile’ BA especially as September’s sale was nuts and I booked through to June straight off
Lowest I paid was £2350 return in F which is £200 more than premium economy on EKWow – didnt expect any replies on this, but goes to show previously loyal customers have many use cases and problems with their new ‘strategy’ – which of course was likely the brainchild of some Delloittes grad temp throwing ideas out there to address a perceived problem with lounges rather than looking at the collateral effect or actual loyalty drivers for BA.
The whole thing is so not thought out that using the word strategy in this article is what killed me. Yes they may have looked at 2yrs worth of data on a spreadsheet that shows 100 out of 20000 BAEC members want this type of thing as ‘the lounge is too busy on a Saturday and they cant get a croissant before their F or A class flight to New York once a year’. Ironically these changes are most likely driven by feedback from ‘IN-Frequent’ Flyers.
BAEC TP system was probably the ONE thing BA had going for it – a loyalty scheme with solid benefits accessible to a lot of customers, especially helpful to holiday bookers (including retired folks off peak) with the 2TP offer and anyone who was on business as well. Once you have more customers in the loyalty scheme it literally drives usage of BA and drives loyalty. I mean this is a no brainer surely.
Doing this is crazy nonsensical – but its almost like an experiment on purpose. Lets do this for 2yrs and see what happens . Then we have 2yrs worth of data for our next ‘strategy’ from the next EY grad.I would say for me that the earnings levels etc are the main thing here – yes, change the system if you like, but why make it fares after taxes taken out PLUS a crazy high earning level for achievement? Back in 2022 I remember emailing customer services to complain about a TP bonus missing on a BAH and mentioning when i reviewed things we had spent £8K** that year on hols so giving us the TP we were owed was the least they could do – but that was a post lockdown burst and family trips – nothing like that since then with BA, as distributed amongst other better and faster and more reliable airlines when TP or Avios was not a factor. Hitting a 10k spend for most people, realistically isnt going to happen. IB half the level, and segments based, surely is fairer and where this whole thing should gravitate towards as Rob suggest.
** hmmmmm was it MY fault then? Did this random comment i made about 8K spend get sent to the grads?????? SORRY FOLKS I FEEL BAD NOW!
A mate who would know told me today that the BA sale, which just ended, did not go as well as expected.
The ‘extensive modelling’ didn’t go as far as realising that if Iberia came out with a lower spend target AND continued to offer segment based qualification then BA would have a problem ….
On this – I thought the same thing when the flash sale was announced pushing EU short haul, in the middle of the sale which wasnt a sale. It gave the impression of a ‘everything must go as its expired / past best user by date’ sale on routes which were not doing as expected post announcment. Best prices I saw were like 30-40 off business, not a lot really and not enough to force a button push now as opposed to some other time – but a lot for example in LUX etc weekends super empty (some fares of £61rtn seen).
Clearly there was IMMEDIATE blowback from the Dec30th announcements, and they must be seeing it in hard numbers already for January and projections into Summer/Q3/Q4. Yes there will be a proportion of customers (probably on this website) who were astute and booked XYZ TP runs to USA or ME etc for this summer, and BAJH bookings into June, prior to the 30th – but the rest of the driving sales likely just not there as the news of changes slowly drifted out.
Its clear as day that non BAEC customers pick non BA flights when they get a better deal. If this pushes people into being non BAEC, they are all just going to vote with their wallets – so unless BA are suddenly going to start upping their game, and producing an amazing product with same or lower costs as competitors I cant see how this is going to work out for them.
would love to see the underlying data used re. BAEC changes. The total outlay for someone achieving status ‘on the cheap’ and then additional flights to benefit from lounge access, vs the revenue generated from the flights etc. how much did the average status holder cost BA from each lounge visit? £10-20??
Recent article on OMAAT says, “Based on what I’ve heard (and these are ballpark figures), you can generally expect that access to a business class lounge belonging to a major alliance will be billed at somewhere around $50 per person, and a contract or Priority Pass lounge will be billed at somewhere around $30 per person. Meanwhile for first class lounges, the reimbursement rate could even be a bit higher than that.”
So a Silver return trip in Economy costs BA about $100. Plus a lost opportunity to earn baggage fees or seat reservation fees. Plus the cost of upsetting high-yielding customers who face a queue at check-in. Nine times out of ten, the fare will be loss making.
So change the TP requirements (but keep TP as it will promote frequency of flying PLUS spend for 90% of customers), and look at making the system chargeable for lounges (say GOLD £0 fees, SILVER £5 fees prebooked, £10 if just turning up at the door, etc). I would not like to be paying for these accesses personally but if costs really driving this there are better ways to do it. For me is sounds strictly like perception of lounges being too full and using a sledgehammer approach to resolve it.
For some of us a long way from London it’s still worth us trekking down to London, even for short haul. We’re time rich, so the extra time isn’t that important. We’ve just been in Lanzarote. I priced up Jet2 from Leeds to the Melia Paradisus (very nice, cold pool) and using a 241 from Gatwick plus Melia wonder week and 20% Gold discount. Even taking account first class rail, our custom trip was at least 30% cheaper. Going from Leeds was very early so we’d need a hotel anyway. Plus we were in CE with nice Gatwick lounge and more room, rather than packed in on Jet2 plane. In the end we tagged a week on in Fuerteventura later, not easily done with Jet2. In the end got a full refund on our rail ticket too due to delays. Also, can’t be certain but, having booked direct with Melia we were very well looked after with an upgrade.
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