Massive devaluation of Air India Flying Returns

Air India just killed its Flying Returns program, at least to the extent it relates to Star Alliance awards.

Ever since Air India joined Star Alliance back in mid-2014, its been rather good news for AI loyalists, with the increased ability to redeem AI Flying Returns miles for award tickets across the Star Alliance network. This made AI Flying Returns miles intrinsically more valuable, although one still had to pay airline-imposed surcharges (read fuel surcharges), in addition to taxes and airport fees. Also, while business class redemptions required 2x the miles as economy, first class redemptions were only slightly more expensive at 2.5 times the economy mileage requirement, making it a pretty good deal for Star Alliance redemptions.

However, in what now is clearly a massive devaluation of the Flying Returns program and miles held in it, Air India has revised its redemption chart, while making only a few slightly positive changes to redemption mileage requirements. This was announced last week.

The new redemption chart

So far, AI has published only the economy redemption chart, which is as follows:

So, instead of 12 zones earlier, there are 7 zones now, each segregated into distance-based sub-zones. The problem is, except for some rare cases (see separate section below), this new requirement - which BTW is for one-way travel - is a serious increase in redemption miles required, compared to the earlier requirement. For instance:

• India to Europe used to cost 65,000 miles for a round-trip economy ticket. It will now cost 180,000 miles, ie a 177% increase.
• India to Australia used to cost 85,000 miles for a round-trip economy ticket. It will now cost 180,000 miles, ie a 112% increase. 
• India to the US used to cost 110,000 miles for a round-trip economy ticket. It will now cost 200,000 miles, ie an 81% increase.

You'll find the old award chart here, for reference.

Also, while there are 4 categories under each zone, some of them are truly pointless - for instance, there is really no India-USA route that is less than 2500 miles! So I don't really see the point of so many sub-zones.

Lufthansa A340 Business Class

As I mentioned up front, as of now Air India has published the mileage requirements only for economy class award tickets. Nothing is known about business and first class redemptions, which till now has required 2x and 2.5x the miles needed for an economy class redemption. Any increase to these multipliers will make business and first class redemptions even less exciting.

There is, however, just a wee little bit to cheer about.

No more YQ (fuel/airline-imposed) surcharges

There will no longer be any YQ surcharges on award tickets, though taxes and airport fees will continue to apply. This is consistent with what Jet Airways did in mid-2014, when they too did away with YQ surcharges, while re-aligning the mileage requirements for award tickets. I agree that this would push up the mileage requirement to some extent, but clearly not as much as what AI has just done. 

Fewer regions, but distance-based miles required for awards

The earlier award chart categorised destinations into 12 different regions, while the new one has only 7. What's more, there's a distance-based classification under each of the 7 regions, as <500 miles, 501-1500 miles, 1501-2500 miles, and >2500 miles.

To some extent this is good news, since this reduces the mileage requirement for awards within a region (eg, LHR-FRA), or awards between two cities that are say less than 2500 miles but fall within different regions (eg, BOM-DXB is only 1198 miles but involves 2 regions - Indian subcontinent and the Middle East). This is particularly useful in places like Europe or North America, if one is looking to redeem AI Flying Returns miles for intra-Europe or intra-North America flights. 

Why did this happen?

To be honest, I have no facts - only guesses. One thought that crossed my mind was that perhaps there was an unequal exchange between AI and other Star Alliance partners, for award tickets across each other, resulting in AI suffering a deficit, which in turn has led them to revising the mileage requirements.

Another idea I considered was that AI is trying to disincentivise redemptions on partner airlines (given that it involves actual payments to the operating airline), and instead trying to have its members redeem more on domestic sectors, and on international sectors on AI operated flights. 

As I said, these are just guesses. This is Air India, after all, so you never know why!!!

Conclusion

Make no mistake, this is a terrible devaluation. While I haven't valued AI Flying Returns miles, I'd have previously put them on par with Jet Airways at least - because even though service quality on AI flights can often be iffy, they made up for it with the ability to redeem awards on Star Alliance flights. That latter part is now hugely devalued, and so I'd value AI FR miles at least 25% lower than Jet Airways' JP miles.

Personally, I'm not much invested in AI Flying Returns miles, so this affects me very little. I hardly fly AI, and when I do, I credit my miles to Aegean (in the hope that I'll be able to do a Grecian holiday sooner than later!).

So, what's your take on this devaluation, or the reasons for it?