Breaking: Iberia goes bizarre, British Airways award chart intact (for now)
/About 12 hours ago, at 10:23 am, I sent out what seemed like an innocuous tweet:
"Did Iberia go revenue-based while I wasn't watching? Short domestic flights are pricing out astronomically"
Here's what I was referring to. While planning an award trip using some of the 100,000 British Airways Avios I earned during that short-lived signup bonus back in January, I wondered whether I might see different availability or cheaper taxes and fees if I transferred my British Airways Avios (through Avios.com) to Iberia.
Here's the itinerary I was looking at, in British Airways' booking engine:
This is an example of an itinerary that, since British Airways prices segments out individually, is a pretty good deal despite their policy of charging three times the price of coach for US domestic first class. It's two 13,500 Avios legs paired with two 4,500 Avios legs, for a total cost of 36,000 Avios, while the same itinerary would cost 50,000 AAdvantage miles or 65,000 Alaska Airlines Mileage Plan miles.
Here's the same itinerary priced out with Iberia's award engine:
That's...weird. The same itinerary is pricing out cheaper using Iberia Avios than British Airways Avios (although the additional taxes and fees make British Airways the better deal overall).
But even weirder is that there's no reason, based on the award charts we all thought Iberia was using, for that odd number of Avios to be required at all.
Since Iberia only allows round-trip award reservations, I thought I'd see whether I got a similar result with a single-cabin reservation. Instead, it got weirder.
Here's a first class reservation between Madison and Chicago using British Airways Avios:
Just as we saw above, this roundtrip flight in first class prices out at 27,000 British Airways Avios.
Here's the same reservation priced out with Iberia Avios:
You read that right. The itinerary costs over twice as many miles using Iberia Avios (which, as a reminder, are freely transferrable to British Airways Avios).
For a final test, I thought I'd check the economy itinerary between Chicago and Lexington. Here's what British Airways shows me:
As you'd expect, the short round-trip itinerary prices out at 4,500 Avios each way.
Here's Iberia's pricing of the same award:
In this case, the economy itinerary costs almost three times as much using Iberia Avios!
The Explanation
As my Twitter follower @KennyBSAT was the first to point out, Iberia has quietly introduced what most bloggers this evening are calling a devaluation (see here, here, here, and here). They've already implemented a new award chart for partner award bookings, including American Airlines award bookings like the one I was booking today.
The new award chart will require close study, and as Gary points out, "long haul flying can be cheaper than using BA Avios."
The most interesting point my example above illustrates is that they appear to use a formula to weight mixed-cabin redemptions, such that adding short-haul economy legs radically reduces the total cost in Iberia Avios, sometimes below the cost in British Airways Avios. Since Iberia requires round-trip redemptions, it isn't obvious how to use this loophole to add a "third strike" to a reservation in order to drag down redemption costs. However, adding a short-haul economy flight to a long-haul business or first class flight may, as in my example, drastically reduce the number of Iberia Avios required for your award redemption.
Conclusion
Trust me: you'll be seeing a lot more analysis along these lines on all the most popular travel hacking blogs in the coming days and weeks. Potential arbitrage opportunities like these are the bread and butter of travel hackers, and I suspect a lot of discussions will be taking place on Twitter, as well as in the comments to this blog and others. Be sure to follow me @FreequentFlyr and check out my list of some of the best travel hacking feeds to make sure you're in the loop for this ongoing and guaranteed-to-be-lively discussion.
