The British Airways Kerfuffle

Outrage about airline loyalty changes is nothing new—but has BA taken it to the next level?

By Rick Ferguson

If you’re in the loyalty game, here’s a story you’ve heard many times before. A major airline makes draconian changes to its loyalty program by moving to a revenue-based model or by devaluing an existing program. Almost immediately, the world-wide interwebs explode with outrage, the flyer blogs dissect the changes, and the press tears the airline apart like a pack of rabid weasels.

This week, it’s British Airways that have ignited the firestorm by rebranding its loyalty program as the British Airways Club and moving to a revenue-based model. Starting April 1, members will earn 1 Tier Point for every pound spent on eligible purchases. This change means, of course, that BA flyers used to earning elite status on short-haul flights will be left struggling to maintain that status, while big spenders will take their place in business class and in the premium lounges.

As for the press reaction to this announcement, we might best sum it up with this quote from Sunday Times editor Andrew Neil, who wrote on X: “The changes to the BA loyalty program have the makings of a self-inflicted disaster. Maybe one of the biggest corporate cock ups of modern times.”

A Familiar Firestorm

Strong words from Mr. Neil. But why is BA’s transition to a revenue-based model such a “cock up?” BA is just the latest entrant in a long line of carriers that have transitioned to a revenue-based program, in which members are rewarded based on dollars spent rather than miles flown. The Big Three US carriers switched to revenue-based models nearly a decade ago. In Europe, Air France-KLM and Lufthansa have made the switch; so have Air India and Virgin Australia.

On paper, the move makes sound business sense. Long gone are the days when mileage junkies could earn status by racking up cheap short-haul flights. Revenue-based programs reward the loyalty of those flyers who contribute the most to the airline’s bottom line.

In the US, the most valuable members are those who spend the most on the airlines’ cobranded credit cards. But in the UK and Europe, the math is a little more complicated. While the BA American Express card is lucrative, it’s far less so than US airline cards, which generate roughly $25 billion in ancillary revenue annually.

So: Does the switch make sense for British Airways? We asked BA for comment on this story but received no response. But we did speak to a pair of veteran airline loyalty experts: Phil Gunter, a pioneer of spend-based airline loyalty programs, and Rob Burgess, editor of Head for Points. As Phil Gunter tells it, part of the problem with the change is that the move seems to most benefit the BA customers least susceptible to switching.

“I can understand why they've done it,” says Gunter. “What they're trying to do is slim down their tiers and focus on the customers they perceive to make the most money. On the top level, it kind of makes sense.

“The challenge is that it's excluding an awful lot of customers that have a lot of more choice. The customers they’re excluding are premium leisure, small businesses, and even customers within the UK regions where BA isn’t the only choice. It’s much easier for these travelers to switch, and they’re actively being driven out of the program with these changes.”

Rob Burgess echoes this view. In terms of their implications for non-corporate travelers, says Burgess, the changes as baffling.

"It’s a strange move by the airline in my view," Burgess says. "It’s basically putting leisure travelers and self-funded travelers at a disadvantage. No one is spending much money with BA except corporate travelers who are forced to fly British Airways by their employer under the terms of a corporate contract. Those of us who can choose the airline we fly with are effectively being pushed out of the program."

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Impact on Status Holders

And what about the loyalty impact on those leisure and self-funded elite flyers? Burgess predicts that the changes will dramatically reduce the number of status holders within the program.

"It will probably cut the number of status holders at BA by eighty to ninety percent, which is just bizarre," says Burgess. "The lounges might be slightly crowded, but they’re not tensely overcrowded. There’ll be more mice than people in the BA lounges by 2026 if this continues."

For BA’s competitors, the backlash presents an opportunity to poach disenfranchised frequent flyers. According to Gunter, status-matching initiatives from the likes of Virgin Atlantic or Air France-KLM are likely to ramp up.

"The obvious thing is to make an offer to people who’ve been disenfranchised by British Airways," Gunter says. "When they come up for renewal and look at their ability to retain status next year, they’re going to be open to offers."

Burgess sees these developments as reflective of BA’s confidence—or hubris—about its place in the market.

"There’s a view in the airline that British Airways is the greatest carrier on the planet and people will flock to them whatever happens," says Burgess. "People fly BA because they want status benefits for future flights. When those benefits are taken away, are they still going to choose British Airways? Realistically, many will think, ‘Why should I?’"

Whether British Airways’ overhaul proves to be a savvy business move or a self-inflicted wound remains to be seen. What’s clear is that the changes have alienated many of the program’s most loyal members. As airlines worldwide continue to grapple with balancing profitability and customer loyalty, BA’s decision serves as a cautionary tale for the industry.

Will BA charge forward with these changes or backtrack? The jury is still out. After a decade of revenue-based program changes and devaluations, however, one burning question remains. Even if the changes are defensible, then why are the airlines so bad at communicating them?

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Rick Ferguson is host of the Loyalty Newscast and a partner at Loyalty Wired.