Did you know? You can earn Avios points on any flight booked at Alternative Airlines. Simply select Avios as your frequent flyer programme and add your Avios membership number at the time of booking your flight.
The Spanish carrier of IAG (International Airline Group), Iberia, has recently announced a major overhaul of its loyalty program, Iberia Plus. The airline has stated that as of noviembre 2022, 9.5 million members of its loyalty program would now be awarded Avios based on their elite status and how much they spend on their flights. Previously, the airline used to award its frequent flyers Avios based on the distance they’ve flown. Therefore, the Avios earned by the customers will now be based exclusively on what the customers spend (including ancillaries) and will not be affected by what cabin the customer is flying in and what distance they’ve travelled.
The revenue-based earning model is very common in the United States as the “Big 3” airlines (Delta, United Airlines and American Airlines) all reward their frequent flyers based on the dollar spent and their elite status rather than distance flown. Southwest, JetBlue, and Spirit Airlines follow a similar model as well.
In a press release, the Loyalty Director of Iberia commented on this change:
“We think this is a more fair and transparent way to reward our more loyal members, with a model that they have been requesting for some time and which is also more in line with other industry loyalty programmes.”
Moreover, Iberia Plus members will also receive Avios for spending money on ancillaries like additional baggage and seat preference. This extra earning was not present in the previous Avios earning model.
Following Iberia’s move, another IAG member airline, British Airways has also announced to change its executive club membership awarding model to revenue-based Avios earnings. According to the Head of Retail and Customer Relationship Management at British Airways, Ian Romanis stated:
“We congratulate our colleagues at Iberia for introducing this change and we look forward to joining them in 2023. More announcements will follow about what this change will mean for our Executive Club programme, which will unlock even more opportunities for our Members to earn Avios when they fly.”
The transition of British Airways towards the same revenue model makes sense as both the airlines award Avios points to their frequent flyers and the earned Avios points are interchangeable between these two carriers. However, there are some prerequisites for transferring your British Airways Avios points to Iberia Plus, such as :
If you're booking your British Airways or Iberia flights through www.alternativeairlines.com, you would get your full share of Avios earnings.
Back to the revenue model; so what does this mean for the travelers? How will the Avios be awarded exactly, who will benefit from this change? and who will be at a loss? Let’s have a look.
As of noviembre 1, 2022, the airline will award its customers Avios points based on the number of Euros spent and their elite status. The earning rates for each respective elite status is shown below:
There is one caveat though; Iberia has announced that passengers will only earn Avios points on their net spending, including ancillary purchases but excluding taxes, fuel surcharges or fees. It’s worth mentioning that these taxes, surcharges and fees can cover a significant portion of the ticket price and this could leave low spending customers with little to no Avios earnings per sector per trip. This is indeed a very drastic measure taken by Iberia, as airlines that have shifted to a revenue based model in the past have all included the fuel/carrier surcharge as part of the fare to which they award miles/points.
However, Iberia has not changed how members earn and progress through their elite status and therefore the old terms and conditions for status progression will remain unchanged for Iberia Plus members.
British Airways has announced that it will follow Iberia's example, albeit it has not yet disclosed how its Executive Club Avios accruals will change. The airline has planned to shift to the revenue model in 2023 and once that happens, Qatar Airways’ Privilege Club would be the only Avios airline left which will allow members to earn Avios based on the distance they fly.
We can also assume that British Airways will retain their existing tier point system, just like Iberia, and there would be no changes in the terms and conditions of how the members progress the tiers. We’ll keep you updated as soon as new information comes to surface. Meanwhile, you can have a look at one of our blog posts regarding Frequent Flyer Programs.
Undoubtedly, this change would benefit the high spending business class and first class customers because the more expensive the fare, the more Avios will be earned. Last minute travelers who pay a large sum of premium for their flights will also benefit from this as they’ll get some respite from the added Avios earned.
On the other hand, price conscious travelers who are not loyal to the carrier and try to grab the most economical airfare, regardless of the carrier, will likely suffer the most under this revenue model as the less expensive the fare, the lesser Avios will be earned. These customers are also expected to have a low tier member status too, which will make their earnings even lesser. It’s indeed bad news for budget travelers who shop around to find the best available price. Also, those who fly on promotional business and first-class tickets will also miss out on rewards as the Avios gained are directly proportional with the ticket price instead of distance.
Whereas, Iberia Plus and Executive Club customers who earn Avios flying through partner airlines (OneWorld Alliance) will remain unaffected from this change as this new revenue based model doesn’t extend to partner airlines (for now). This change is very unlikely though , as implementing this would cause unnecessary complexities and will erode the value proposition of the alliance. Similarly, those customers who earn their Avios points from non-flying activities such as credit card spending, credit card welcome bonuses, Barclays Avios Rewards, online and supermarket shopping, hotel bookings, and car hire etc. will also remain unaffected from this change.
Transforming the rewards model to revenue-based has become an industrial standard as more and more airlines are making this shift. Both Iberia and British Airways have portrayed this as a positive change - calling it fair, transparent and a more preferred system by the customers. However, it’s evident that customers grabbing the cheapest sale fares will be the losers in this new system as their euro/pound spend would be less and they won’t be too happy about this change. Whereas, business travelers who pay a significant premium on their ticket will benefit outrageously through this change and they will be earning large amounts of Avios per trip and those members who earn their Avios through non-flying means such as their credit card spending through AMEX, hotel stays, as well as shopping through British Airways with selected retailers such as John Lewis, Marks & Spencer and Apple, don’t have to worry about this change at all.
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