Why are People so Happy About Changes That (Mostly) Benefit Big Corporations?

British Airways Avios Redemptions

British Airways has made a change to the main reason to hold one of its co-branded credit cards. As near as I can tell, loyalty program enthusiasts are thrilled about the change, despite it primarily benefiting British Airways and its banking partners.

The change has to do with the “Travel Together” companion voucher benefit, which you can earn by spending $30,000 on the British Airways Visa Signature card offered by Chase. In the United Kingdom, American Express offers a similar Companion Voucher benefit (often referred to by Brits as a 2-for-1 voucher) for reaching annual spending targets.

In both countries, you can now spend your companion voucher when travelling alone – and pay 50% fewer Avios.

Why British Airways Made this Change

The maximum value of a British Airways companion voucher obviously comes from using it on two people. So, every cardholder spending a voucher on a single passenger is a cost savings for British Airways, but not necessarily in the way that you think…

For long-haul flights – most noticably in Club World or First Class – British Airways charges an impressively large amount as “carrier-imposed surcharge”. When using a Companion Voucher, the cardholder must pay the taxes and surcharges for both passengers.  As a result, British Airways receives a substantial amount of cash. The number of Avios / miles required for the “reward flight(s)” is just an accounting adjustment…

Because of the high cash co-payment element, however, British cardholders in particular have been adjusting their behavior. Instead of booking long-haul flights for two – and spending huge amounts in tax and surcharges – many 2-for-1 vouchers have been spent on short-haul flights.

And due to the quirks of British Airways pricing of short-haul reward flights – called Reward Flight Saver – you will pay only £1 as “taxes and surcharges” –  (£2 / $2.40 for two passengers) – when using a 2-for-1 voucher.

Not only is British Airways giving away two seats for £2 and a bunch of Avios, but it must pay the relevant taxes, airport charges, etc. to the relevant authorities (on your behalf). For a return trip between London and Greece, that would be £76 / $95 per person. Ouch!

As a result, British Airways is thrilled if you want to spend a Companion Voucher to travel alone, especially on a long-haul flight…

Marriott Too…

This change from British Airways also reminds me of Marriott Bonvoy allowing point top-ups to Free Night Award certificates. Bonvoy members are generally happy, except the main effect is to allow Bonvoy to charge more points for award nights (and to give Marriott an excuse not to increase the face value of Free Night Awards given to credit card holders and/or members staying 75 nights per year)

Bottom Line

Is this change from British Airways and its banking partners good for solo travellers? Yes it is…  But a real, customer-friendly “enhancement” would be increasing award space and reducing surcharges – not allowing members to use Companion Vouchers sub-optimally (often because they have no other choice)…

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