“loyalty” schemes – Do they Really Care?

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  • VintageKrug

    You are right these are not on balance sheet, but there are clear accounting policies in place to represent the impact of this store of miles in the Accounts of most western airlines. So as a shareholder I have few concerns on this front.

    I would disagree it is less easy to redeem miles; with online redemptions now possible, more seats especially in premium cabins at least on BA (since the removal of the low J configuration 747s) and a widening of alliance reciprocal redemption potential, there is generally good availability on many routes within reasonable constraints as set out in my previous posts. This is evidenced with sirwolfie’s experience above.

    With a reasonable amount of research and knowledge, most scheme members should be able to get where they need to go using miles in a premium cabin.

    Similarly, miles do expire if the account goes unused for enough time, and I would imagine many less savvy travellers lose thousands of miles in this way.

    To illustrate the accounting policy, the British Airways policy is set out below, from page 59 of the Reports and Accounts at 31 March 2007:

    Revenue recognition – Mileage programmes

    The Group operates two principal loyalty programmes. The airline frequent flyer programme operates through the airline’s ‘Executive Club’ and allows frequent travellers to accumulate ‘BA Miles’ mileage credits which entitle them to a choice of various awards, primarily free travel. The estimated direct incremental cost of providing free redemption services, including British Airways’ flights, in exchange for redemption of miles earned by members of the Group’s ‘Executive Club’ is accrued as members of the scheme accumulate mileage.

    These costs are charged to cost of sales.

    In addition, ‘BA Miles’ are sold to commercial partners to use in promotional activity. The fair value of the miles sold is deferred and recognised as revenue on redemption of the miles by the participants to whom the miles are issued. The incremental cost of providing free redemption services is recognised when the miles are redeemed.

    The Group also operates the AIRMILES scheme, operated by the Company’s wholly-owned subsidiary Airmiles Travel Promotions Limited. The scheme allows companies to purchase miles for use in their own promotional activities. Miles can be redeemed for a range of benefits, including flights on British Airways and other carriers. The fair value of the miles sold is deferred and recognised as revenue on redemption of the miles by the participants to whom the miles are issued. The incremental cost of providing free redemption services is recognised when the miles are redeemed.

    I have had some difficulty redeeming miles on bmi, but as a Gold Card holder you can call and ask to be waitlisted, and usually this will result in seats being released in a premium cabin for the route you prefer.


    I spoke with an employee of a major European airline and she confirmed that most airlines now view loyalty schemes as an irritation they would love to get rid off however as long as one has them they all have to.


    You must be lucky to have booked. I tried to book for march 2009 on Club World over the last 2 weeks, and phone the Executive Club, NO LUCK!


    Lin—ny – As I suspected, my experience was not a one off. I have every sympathy for you; I know first hand how frustrating it is to book using BA miles. All I can suggest is that you keep persevering, or write to the CEO. Mr Willie Walsh (you can find his e-mail address via Google)

    Good luck!


    As one of the origional members of the Chieftian Club …British Caledonia ..remember those famous words …WE NEVER forget that you have a Choice…..I can safely say that I have always …mostly… had good experiences with the LC organisations …now Star Alliance …future maybe …?


    I’m also a BA Gold Holder, and quite honestly, I’ve been through the same troubles numerous times before too. There is almost nothing as stressful about holidaying, as trying to use airmiles/points.

    As a Platinum Starwood Preferred Guest, I wish the airlines would adopt this hotel groups scheme – if a room is available, it’s also available on points. No blackouts, no excuses. Why can’t the airlines offer the same? If there is an empty seat, you can book it on points!

    I’ll carry on dreaming…


    Can I use some of my 830,000 BA miles to pay the taxes and fuel surcharges?


    Unfortunately, you cannot use your BA Miles to reduce or eliminate the taxes and fees element of your British Airways/oneworld redemption bookings.

    However, if you follow my detailed advice above about how to successfully get the tickets you want, you should be able to redeem the flights you need, if you are prepared to be moderately flexible.

    FlyinJK should note that BA does offer to open up reward seats in economy for Gold card holders; you just need to call up and ask.

    Premium Cabins are just that; premium, and often sell out. I would rather that premium feel is maintained and a quality product sustained by purchased fares rather than devalued by becoming a upgrade only cabin, as is the case on many US based carriers, with appalling quality as a result.

    It can be very difficult trying to book for groups larger than two on the same cabin/same flight, though it can be done as I noticed four seats had been redeemed in F on a recent trip to TLV over the Bank Holiday weekend.

    The cash element of redemptions continues to be a significant component of the cost, partly because of the fuel surcharge, and partly because of Gordon “Never Won An Election” Brown and his astonishingly inept £80/$160 APD tax.

    However you can reduce this by booking one way exUS, where taxes are less, or avoiding a stopover in the UK.

    Finally, one way to mitigate the cost of the taxes and fees is to always book MFU Miles for Upgrade fares, where you pay a little extra (the WT+ price) but can upgrade round trip across the Atlantic to Club World for just 25k BA Miles, subject to availability, and earn 125% of miles flown.

    As you have to pay the taxes whether you redeem fully or MFU, the few hundred extra pounds can be worth it for the extra miles and tier points, especially valuable as a Silver/Gold Card holder as you get an additional mileage bonus and the tier points can contribute to status renewal for another year if you are on the cusp of requalification.


    Today, BA has launched a new redemption booking engine, which should make it much easier, within the constraints and requirement for flexibility outlined previously in this thread, to book your desired trip using your miles:


    You must login to your BAEC account.

    If you’ve been thinking of treating yourself to a reward flight with your BA Miles, you’ll now find it’s really easy to do. We have introduced a new online tool, called Reward Flight Search, that lets you look for flights by city, country, region or by how far your miles will take you.

    Another improvement is the introduction of a monthly calendar which helps make planning your journey easy. It shows available dates for your reward flight – up to 12 months in advance – and, should the city of your choice not be available, offers alternative cities close by. You can also check cabin availability which is useful if you’re planning to book different cabins for your outward and return journeys.

    To see how simple this is, log into your account and then click on ‘Spending BA Miles’. Then click on ‘Check availability’. You’ll see at a glance where you can go, with the results displayed on a map or as a list of cities, whichever you prefer. Of course, you enjoy wider choice if you can fly off peak through March to June and October and November.

    So why not start planning your next trip using your BA Miles?


    Just to chip in – I have always had a fairly trouble free experience over the years, with the redemption of BA Miles, more recently with the American Express Companion Voucher. The new software recently installed has made it much easier.

    Sadly though, I no longer have a Silver Card, having recently retired and I was disappointed to find out that, even booking in Club World, seat selection in “Manage my Booking” is no longer available to me as a mere Blue Card holder. So much for years of loyalty!

    Any thoughts on a way round this, as I have heard of couples not managing to sit together in Premium Cabins, because the vast majority of seats were pre-allocated.


    No way round it other than booking pricey fully flex tickets, or having a dangerous liaison with Willie himself.

    Unsurprisingly, neither option is recommended, especially for the more recumbent generation ;).

    What I can suggest is taking a few I class Club Europe Euro jaunts to attain Silver status. With plenty of time on your hands to maximise time in the lounges, and on board, five trips at about £200 a time will net you the necessary 400 points for Silver if you can locate your BAEC account in mainland Europe where the thresholds are lower.

    Plenty of info on the best routes to take on websites like flyertalk


    I guess I must be the lucky BA exception.. I have never managed to get beyond Blue status with BA’s FFP yet through miles collecting and consolidation from varying sources, I have managed a return to JFK on Concorde, returning in 1st, a business return to Dubai, 2 Caribbean trips 1 in First and 1 in Business and will shortly be heading to Washington in Business using my BA Amex 2 for 1. My bookings have been made anything from 6 – 2 months prior to flights without any issue. Admittedly, in all but 1 case, going solo has probably made this much easier.

    BMI? That’s a different story. Trying to get a business seat to any long haul (USA / Carib) destination have all failed even looking 10 months out. Consistently, absolutely no availability.


    I am about to cancel my BMI card as I have the experience of almost no flights ever being available from Manchester, our nearest airport. I was going to go for the American Express/BA card. Am I wrong?


    Interesting experiences. I suggest, based on my underwhelming or simply unacceptable experience of American airlines, that you simply travel with non-US carriers, who have a far better idea of service and what matters to the (especially) premium traveller.


    Does anyone think i should be getting rid of my Bmi miles, given the takeover by Lufthansa? I think it’s unlikely that the Diamond Club scheme will disappear anytime soon, but i guess Lufthansa could enforce stricter earning / redemption rules if they saw fit…

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