BA: the central banker in the sky 

The changes British Airways is making to its Avios rewards scheme will be very familiar indeed to the world's central bankers, says Merryn Somerset Webb.


Demand for flights paid for with Avios points exceeds the supply of seats BA is willing to provide

Worried about currency debasement and inflation? If you are a member of BA's Avios scheme you should be.

Earlier this week it was announced that the number of points an economy class customer can earn from each flight is to fall dramatically. If you had taken a non flexible economy class flight from London to Sydney under the old scheme says the Times you would have received 10,600 air miles, enough for two flights to Paris. Do it now and you'll get 2,600 which won't even cover one.

At the same time, points pricing is changing to a more "railway style peak and off peak pricing system", with flights costing more in the school holidays, for example.Regular passengers weren't much impressed, particularly as first class passengers are now to get more rather than fewer points per flight (look up Avios changes on Twitter).

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But look at the changes through the prism of monetary policy and it all makes sense. Avios has in effect been running a very loose money policy for ages. Avios points have been easy to get (I don't travel much and I've got lots); too many people have collected too many of them; and demand for flights paid for with them now exceeds the supply of those seats BA is willing to provide.

So it makes sense to first create inflation to devalue the currency already out there (ie make peak time flights cost more points) and then to tighten policy to reduce the future supply of them.

It's a problem all central bankers will understand.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.