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British Airways and Air France-KLM are hacking back their loyalty schemes to help them compete against low-cost rivals. Among the changes planned for 2018, BA is moving to so-called “dynamic award pricing” in Executive Club, its loyalty program. This means that tickets paid for with points from the program will be no longer calculated in distance, but the cost BA is selling the ticket at. Air France-KLM, a rival legacy carrier, also announced similar changes as part of an overhaul of its Flying Blue loyalty program. Starting in April, in addition to dynamic award pricing, members of the scheme will also earn points based on how much they spend on a ticket rather than how far they fly. There is no doubt that the changes will shrink the loyalty programs to focus on those that tend to be high spenders on tickets. But from the airlines’ perspective, a smaller scheme with fewer potential liabilities is what is necessary to compete with the likes of Norwegian, a low-cost carrier with much lower overheads. Read original article |
