Iberia has changed their partner award chart, significantly raising the miles required to fly on partner airlines. Gary thinks that means that British Airways changes are about to be announced as well.
“Of course, it makes no sense for Iberia to have this chart and not British Airways. Otherwise, you just transfer your Iberia points over to British Airways Avios and redeem on partners from there. In order to effectively charge so much for partners, you’d expect that both programs would have to more or less move in tandem.”
Since the launch of Avios in November of 2011 it’s been ridiculously cheap to fly on short-haul flights thanks to British Airways Avios. Just 4,500 Avios is enough to fly on partner airlines like American and USAirways without fuel surcharges. It’s quickly become the best way to book domestic flights thanks to the ridiculously low rates, the lack of last-minute booking fees, and the dirt cheap cancellation rates.
There’s always been the feeling that it’s too good to be true even though partner airlines are known to pay very small amounts of cash for partner mileage awards.
But I’m not convinced that the Iberia change means that a devaluation is imminent.
-The Iberia partner award chart has been the same for at least 2 weeks. If British Airways was going to devalue imminently or in tandem, wouldn’t we have heard something by now?
-Iberia eliminated reward saver flights within Europe over a year ago. British Airways still has the program which heavily reduces fuel surcharges when you fly within Europe.
-Iberia Avios have never been the same as British Airways Avios for partner flights. You can’t change or refund a OneWorld ticket booked via Iberia while you can refund a British Airways booked ticket for just the forfeiture of taxes paid ($5.60 for a domestic ticket).
-Iberia has always tried to push their own flights over partner flights. They offer a huge discount on fuel surcharges for booking Iberia flights with Iberia Avios. British Airways charges much higher fuel surcharges for Iberia flights.
Those differences have meant that there have always been arbitrage opportunities and plenty of reasons to convert Iberia Avios to British Airways Avios and vice versa. Saying that the allowance of conversion of Avios in both directions means that they have to move in tandem with this devaluation is dubious logic at best. It’s never been applied until now after all.
The British Airways and Iberia programs have many unique nuances and have different non-alliance partner airlines to earn and redeem miles with.
Additionally British Airways Avios program is run as an independent profit center from the Iberia Avios program and British Airways continues to partner with more American banks and credit cards than Iberia.
Those credit card companies will likely push back against a British Airways devaluation. At the very least they would have to announce that a devaluation is coming or else face the wrath of the banks and the people accumulating their miles. And risk losing the millions of dollars those partner provide.
Gary notes that the Avios program was launched in November 2011 without providing details in advance and that means they have a poor track record. Technically that’s true but they did announce in advance that major changes were coming and when they were coming, well in advance of the Avios launch. I wouldn’t consider that to mean that they have a track record of making unannounced changes.
Even if significant amounts of people start converting their Iberia Avios to British Airways (unlikely as it’s not a very well known feature) they can always turn off the conversion process with more ease than aligning the programs.
Might we see an upcoming British Airways devaluation? Sure. After all as flights get more expensive and the value of a dollar goes down there is mileage inflation as well. Airline consolidation also gives even more ability to devalue miles. That doesn’t mean airlines will kill the golden goose that has provided billions of dollars in income from selling miles to the banks and other partners, but they do have more flexibility to devalue up to a point.
However I don’t think that the Iberia changes prove that imminent changes are inevitable, nor am I running to burn my stash of 500K British Airways Avios for flights I don’t need. If you have flights you want to book anyway, then there’s no reason not to book those now. But otherwise, I’m not panicking at all.