Britain's second largest grocery chain Sainsbury has been ditched by British Airways' loyalty programme, Air Miles, in favour of supermarket sector giant Tesco.

For the last six years, the Air Miles scheme has allowed the Sainsbury's customers who hold loyalty cards to earn points as they purchase goods in-store. These points can then be turned into "Air Miles", which may then be used to buy flights. A source quoted in the Daily Telegraph revealed that last year, Sainsbury's generated an estimated 200 million - 250 million miles.

Sainsbury was informed last December that the contract would not be renewed, but it is not believed that the company was told that its successor would be its largest rival.

The agreement with Tesco, which is expected to take effect from 15 March, has been welcomed by insiders at Air Miles, who told the Daily Telegraph that working with Tesco will prove lucrative, generating more miles than Sainsbury's because the chains have 10 million and 6 million loyalty cardholders respectively.

Furthermore, Tesco customers are expected to get a better deal than those collecting points through Sainsbury: if a Tesco shopper spends £60 (US$86.6) every week they will earn enough points to fly to Paris and back twice by the end of a year.

The Air Miles source said: "We are very excited about working together to find a way of securing more value. It creates a dream team."
 
Other significant partners for Air Miles are petrol retailer Shell, Scottish & Southern Energy and the NatWest bank, which is owned by the Royal Bank of Scotland (RBoS). RBoS works in collaboration with Tesco's personal finance to offer customers credit cards and loans.