The middle of the end for bmi and Diamond Club
Posted by Seth on January 18, 2010 under News, frequent flyer | 
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It has been barely six weeks since the new management team stepped in at bmi, the British carrier that Lufthansa took full ownership of several months ago. But the new management team hasn’t wasted any time in making rather drastic changes to the airline, its service offerings and its frequent flyer loyalty program. First there were the cuts to the mid-haul service and the announcement that the Airbus A330s would be returned after the lease expired in early 2010. Then there were the announcements of the Dublin crew base closures and cuts to the service between that city and London. And then they started strictly enforcing some of the previously unenforced rules of their loyalty program, trimming a bit of value out for folks looking to redeem in premium cabin service.
Today’s announcement, however, seems to be a rather major milestone in the efforts to completely reform the carrier into less of a stand-alone brand and into more of a regional feeder carrier. As of January 27, 2010 – only 10 days out – the carrier is cutting business class service on all its domestic UK and Dublin flights, switching to an economy-only product.
They will be introducing “Flexible Economy” fares as part of the cuts. These fares seem to be comparably expensive – less the APD tax differences – and earn the same Diamond Club miles as the business class seats did. They come with complimentary snacks and drinks and seats in the front of the plane. They even include access to lounge facilities in most destinations. In other words, they’re just like the business class seats used to be but without the name “business class” attached.
So roughly the same product with a slightly different name probably shouldn’t raise too many red flags for most folks, right? Well, except for the few very loyal domestic bmi customers you’d be right. The perks being cut affect the few customers who were generally paying more to fly on bmi than on competitors based on the benefits that the program offered in the form of upgrades and free snacks on the flights, two things that used to be a big part of the elite benefits for those flights. They’re gone now and that leaves a lot of customers wondering where the benefits are for the increased spend.
Ultimately this actually seems like it is the right move for the carrier to make. The service wasn’t really anything like an actual business class product so at least they won’t have disappointed customers who thought they were buying one thing and end up get something rather different. And the “out-the-door” price of the flights drops by about £20 thanks to the APD cut. That’s going to work out well for them from a competitive pricing perspective. But it is also yet another in a series of recent changes that have slowly chipped away at the value of the bmi product and loyalty program. It isn’t much of a surprise that this is happening – Lufthansa is in charge now and they actually want to change the carrier into a profitable organization – but it also raises some concerns about what may be just around the corner for folks holding a lot of Diamond Club points. They’re almost certainly going to become Miles & More points sooner or later and the pace of these other changes suggests that the case is likely to be sooner.