Oneworld is pressing ahead with plans to allow alliance-wide reward redemptions. Put simply under current proposals, a member of one frequent flyer program will be able to redeem a seat upgrade when flying on any carrier within the alliance.

With the information at hand, this is set to be a first for the airline industry. While Star Alliance already offers something similar, what I find is that Star Alliance’s offering isn’t very useful to the wider public as it allows member airlines to cherry-pick who and how benefits are extended. Unsurprisingly upgrades aren’t uniform across the alliance. Oneworld, conversely, tries to remain as consistent across member airlines as much as possible which is why this is so groundbreaking if it pans out the way many are hoping for.

With 13 full members making up the Oneworld Alliance – soon to become 14, after Alaska Airlines joins in early 2021 – the alliance as a whole has a reach of some 180+ destinations.

The scale of what is being accomplished is no small task.

Generally speaking, if you’d like to upgrade a flight, you need to redeem miles in the particular airline you are flying with. In other words, if you wanted to upgrade into Qatar Qsuites, you need Qmiles; if you wanted to upgrade into British Airways Club Suites, you need Avios – so on and so forth. Although there are some exceptions, for example, you can use AAdvantage miles to upgrade a paid codeshare flights on British Airways and Iberia across the Atlantic thanks to the joint venture agreement.

In some ways, it can be seen as Oneworld trying to make up for their removal of the interline baggage agreement back in 2016 which upset so many people.

Why Propose Alliance-Wide Reward Redemptions Now?

With a global downturn within the aviation sector thanks to Covid-19, Oneworld is banking on this as a new source of revenue. The alliance is making the best of a bad situation by using the downtime to get their systems ready. Such an undertaking is no simple task thanks in part to the back-end infrastructure having to be built from scratch. In effect, each airlines revenue management system needs to be in sync to purchase and accept other members reservations and orders.

“Oneworld is evaluating a number of new customer initiatives, including a potential offering that will give Oneworld member airline frequent flyers the option of using points for upgrades across the alliance, as it seeks to deliver a superior customer experience that provides value for both Oneworld member airlines and their customers.”

Ghim-Lay Yeo, VP Corporate Communications, oneworld

In the short term, The alliance is pushing for an early 2021 launch as a way to relieve frequent fliers of their stockpile of miles that they would have built up over the pandemic. But what this means for consumers is that there is no actual launch date other than the widely published “ready for when aviation picks up again” – which isn’t that helpful. Anecdotal evidence suggests that Oneworld wants this to be ready for when Alaska Airlines becomes a full member.

How Would Oneworld Alliance-wide Reward Redemptions Work?

The mechanics of how this will all work out is still being worked through, airlines are evaluating how best to implement a wholistic upgrade system that balances the business needs and the complex economics of the industry while maintaining the simplicity and expectations of the frequent flyer base as a whole.

Right now, each airline handles its own frequent flyer upgrades a little differently depending on what best suits their target consumer base. While it would take years to understand how an airlines revenue management systems work, these are some of the challenges they are facing:

  • On an alliance level, how do you set what a redemption mile is worth? Some airlines use revenue-based models while others use a zone-based model to calculate redeemable miles.
  • What’s more, some airlines allow upgrades to be cleared and confirmed instantly, while others require upgrades to be ‘waitlisted’ for consideration closer to departure, and indeed, some offer both.
  • Additionally, some airlines allow for miles and cash co-pay (to take AA terminology) as a way of upgrading to the next class, how would this translate across multiple airlines.
  • How do airline-specific upgrade vouchers fall into this – like British Airways Gold Upgrade vouchers or American Airlines 500 Mile Upgrade vouchers?

Speculatively this would likely involve the creation of standard fare classes for upgrades so that there would be some portability across carriers, as well as common rules for which fares are eligible to be upgraded.

What Does Star Alliance Do?

While trying to remain realistic of what we are likely to get, we should look at what Star Alliance is currently offering as a baseline of what is to come. Star Alliance has offered an alliance upgrade concept for many years with the main draw being that it lets you upgrade with any alliance mileage currency on any alliance airline, but:

  • Upgrades are only permitted from the highest fare classes (in economy that includes “Y” and “B,” and in business class that includes “C” and “D,” and on some airlines additional fare classes are allowed)
  • Each airline sets the required points required to upgrade
  • The upgrade inventory is typically identical to award inventory – no award availability means no upgrade
  • Each Star Alliance upgrade award is valid on a single segment.
  • When you add up the cost of doing the upgrade, it may have been cheaper just to buy a discounted fare in the premium cabin.

Ultimately, It’s not yet clear exactly how the concept will work and more information will be released once its all hammered out.

But once everything is finalised – including how the airlines will compensate each other when upgrades are processed – is how each member airline will press forward with the roll out process.

At The End Of The Day

Many will see this as a long-overdue enhancement, matching a similar benefit already available to Star Alliance frequent flyer programme members. It’s not surprising that Oneworld would want to target this market with upgrades being one of the most popular ways of redeeming frequent flyer points, so it’s an appealing prospect for both the carrier and the frequent flyer.

The proof will be in the detail, of course, if Oneworld creates their alliance-wide reward redemptions a mere copy of Star Alliance’s system, or the current agreement between American Airlines, British Airways & Iberia, it would be a let-down for frequent flyers. Those existing systems are so restrictive that they are not useful for most people. Still, it is nice to at least have the option.

If they take a fresh approach to make the value proposition more attractive, such as more fare classes being eligible,  this could be a good opportunity to differentiate from Star Alliance. It would defiantly be a welcome benefit for frequent flyers of Oneworld airlines.

Besides, it is likely that many airlines will struggle to fill their premium cabins in coming years as business travel recovers very slowly from the global pandemic and subsequent recession. A generous alliance-wide upgrade system could help airlines to fill more of those empty seats and earn some extra revenue in the process.

LEAVE A REPLY

Please enter your comment!
Please enter your name here