Finnair will officially adopt Avios as their loyalty currency, according to memorandum from both Finnair and IAG Loyalty, the issuing company of the Avios loyalty currency.
If you don’t speak points nerd, it means that the reward you get for engaging with Finnair from flights on the airline, its airline partners and many other non-flying activities will soon earn you this type of points currency called Avios.
Avios initially became famous as the reward system for British Airways and Iberia, but has since grown in global appeal thanks to robust ways to earn and burn the points among global partners, including leading US credit cards.
While the Finnair announcement is quite interesting on its own, I can’t help but look at the broader factors this news creates for loyalty, points and credit card rewards. It now feels like airlines might not be the only use case for Avios.
More Appeal For A Regional Program
Loyalty kept airlines alive during the 2008 financial crisis and also during the global health crisis of 2020. It’s a valuable part of any airline operation in good times and bad and helps airlines, hotels and other brands to generate engagement and revenue, not just for flying planes and putting heads in beds.
People can earn points all day from home, or from their daily activities and that type of engagement and earning is good for loyalty programs.
Finnair, until now, was a relatively obscure program without much global appeal. Sorry, it’s true. Brass tax, it was what Finnish people defaulted to for their airline program of choice, but it’d be hard to name a large cohort of Americans, or even Europeans who ever signed up or meaningfully engaged. Further afield and that’s even more true.
Current Finnair Points and award charts (the rates they charge for flights from one place to another using points) will convert into Avios 3:2 when the conversion happens in 2024.
But adopting Avios brings an interesting angle.
Avios, the loyalty currency issued by IAG Loyalty has a much broader appeal, thanks to US financial partnerships with Amex, Chase, Capital One and BILT, allowing people to create Avios from other rewards they already earn.
In addition, the currency has global earn and burn partners including all the EU Oneworld alliance airlines, as well as Qatar Airways and a myriad of online travel and every day shopping online retailers. People can earn Avios by buying laptops online from Apple, or shoes from Adidas, or car rentals and even wine.
In plain English, Finnair will likely pick up new members and international interest from the play, since it’s easier for people to earn Avios with these things they already do, than Finnair’s previous loyalty currency with limited partnerships.
What’s Next For Avios?
With the news today, every European, Oneworld airline alliance member now uses Avios for their loyalty currency. Qatar Airways does too. That’s big.
Impressively, it feels like a virtuous circle at present, as each partner gives greater strength to the Avios currency, while the currency offers greater strength to under recognized programs that adopt it.
It’s no secret that points can be a great profit center for airlines, so I can’t help but wonder if there’s more to come. Many Oneworld airlines aren’t based in the US or EU and don’t have any penetration in these great markets.
Airlines like Malaysia have big ambitions abroad but a virtually non-existent loyalty program outside of the country. A move like adopting Avios seems like the fastest way to change that overnight with the flip of a switch.
I’d Love To See A Hotel?
Loyalty programs are so much more in focus as financial boons for travel businesses and hotels are in an interesting period of time. The “big” hotel groups have massively expanded their loyalty programs and this has really locked travelers into their system.
People with loyalty to a big group like Marriott, Hilton or Hyatt aren’t typically going to chance it with a smaller brand just to earn some one off points they’ll never be able to accumulate in larger droves. These big programs make it too easy to jump into perks, with great credit card welcome bonuses for points and strong benefits.
It feels like there could be a situation where a hotel group that has struggled to crack the US could be innovative and adopt Avios, rather than an unrecognized currency if they want to actually siphon off some loyalty.
I certainly don’t care about earning a one time amount of points from a smaller hotel group, but i’d actually be fairly open to staying with a new brand if I was earning Avios and complementing my daily credit card spend and air travel earning with my hotel stays too.
Basically, I’m less likely to stay with a small chain if I’ll earn a loyalty currency I don’t care about, but if I could earn points and or status with one I already engage in, that’s another story entirely.
For the first time in years, I’m seeing really meaningful fare discounts on transatlantic routes and a dip in hotel daily rates. It feels like the absurd once in a lifetime pricing and demand in the wake of the pandemic is waning. I don’t care what execs say to the contrary.
If that’s true, airlines and other travel businesses will undoubtedly need to get back to delivering value not only to shareholders, but customers too. Loyalty remains the best pathway to keeping people immersed in the brand. It seems like Finnair has timed this well and I’ll be curious to see if there’s more to come.