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UK: British Airways considers revenue-based program

The reinvention of airline frequent-flyer programs continues apace: According to a recent Facebook Live chat with new British Airways CEO Alex Cruz by the Points Guy, the Avios program may soon follow the lead of the Big Three US carriers by evolving the program from a mileage-based to a revenue-based earning structure. Will the future of airline travel mean smaller programs focused exclusively on big spenders? Stay tuned.

By Rick Ferguson

Cruz mentioned the possibility of a revenue-based program in answer to a question about the high fuel surcharges levied by BA on reward tickets. Money quote from Cruz:

"The solution to all of this is the setup that I had previously at Vueling where the actual earning of points was value-based (value of the ticket) and the redemption was actually value-based (based on the actual price of the ticket at that time). And I think that, at some point, at BA weíre going to have to start thinking about that. So you eliminate the consideration of the taxes and fees and everything else, you look at the total price and based on that price is the number of Avios."

As author JT Genter points out, the move would simplify program participation in a world strongly moving toward a frictionless customer experience: Avios points would have a fixed value that flyers could use to book any flight at any time, with no need to consult complicated rewards charts. Genter also points out, however, that mileage hounds actually enjoy playing the game, and might become less excited about participating in a simplified program. Money quote #2:

"However, it'd take the 'fun' out of the program. With all Avios having a set value, there would be few (if any) ways to maximize your Avios. The transatlantic sweet spots would no longer be sweet. You wouldn't be able to get up to 7 cents of value per Avios on non-US short-haul flights. And, last-minute bookings would likely be charged at last-minute ticket pricing, when there could've been a low-cost saver award under the current system."

This conundrum represents the tension currently present throughout the loyalty industry: while the entire consumer marketing world is moving toward a simplified frictionless experience, it is the very act of "playing the loyalty game" that has long made loyalty programs attractive for active members. The trick will be to enable that frictionless program experience - represented by ease of participation, fungible currency, and a seamless, omni-channel experience - while still keeping members actively engaged in and enthused by program participation. We're all flying in the same direction as British Airways.

Watch the Facebook Live inteview with British Airways CEO Alex Cruz here.

Rick Ferguson is CEO and Editor in Chief of the Wise Marketer Group.