British Airways Hints at Disrupting Its Loyalty Program in 2018

Big changes may be afoot in the way British Airways' loyalty program members redeem awards as the airline seems to be moving toward dynamic pricing.

In a presentation to investors last week, IAG, the parent company of British Airways, suggested that changes may be coming to the way that loyalty program members book award tickets.

The blog Ultima Llamada spotted the slide in the presentation that showed that IAG was working towards a "progressive introduction of dynamic pricing from 2018."

This means that instead of a standard award chart where travelers book a 25,000 mile domestic fare, for example, members of British Airways' Executive Club would see award tickets priced as a function of how much the revenue ticket cost.

To many, that's a big, negative change to the way that loyalty programs work.

A single pricing tier yields good and bad deals for a typical frequent flyer. In the U.S., that 25,000 mile domestic award ticket, for example, could be good for a round-trip flight between New York and Detroit or New York and Anchorage. These two tickets would be priced far differently on a cash market.

Others, particularly those inside of the airline industry, argue that a more realistic way to spend miles would be to price awards in line with revenue tickets. A $600 ticket, for example, could cost 60,000 miles while a $100 ticket could cost 10,000.

Already, some airlines in the United States are experimenting with these models. In 2015, Delta threw out its award chart and started pricing awards more dynamically, though the alchemy hasn't resulted in many cases of egregious miles gouging.

United also planned to start offering similar Everyday Awards on November 1, though those haven't yet materialized.

As British approaches the launch date for its apparent dynamic pricing milestone, members of Executive Club may simply have more bad news to look forward to.

Already, frequent flyers on the airline only earn a fraction of points for travel on discounted economy fares. A flight from London to JFK, for example, could only earn 865 miles on a 3,458 mile journey.

American, Delta and United still award 100 percent of miles for even basic economy. Changing bookings to dynamic pricing may simply make the Executive Club go from already not competitive to even less competitive.