One of the most popular reference articles on the site is the one I wrote a couple of years ago about how to value an Avios point. I thought it was worth running the numbers again in the light of the April 2015 Avios devaluation to see how they stack up now.
The value of an Avios point is based on numerous factors – where you fly, what cabin, whether you normally use a 241 voucher and (the one rarely considered) what class you would pay for if Avios flights were not available.
You need to know how YOU value an Avios because it impacts on what you are willing to pay for them. Let’s imagine that Tesco runs a promotion which effectively lets you buy Avios for 0.75p. Should you jump in at this price? Perhaps you would in the past, but should you still do it after April 28th?
The same goes for Avios-earning credit cards. Once you’ve got your BA Premium Plus American Express ‘2 for 1’ voucher in the bag, you need to know whether 1.5 Avios per £1 is a better deal than a cashback credit card – if not, the card can go back in the drawer.
Six different scenarios – which is right for you?
Instead of answering the question of value directly, I have devised six scenarios for an Avios redemption. As you can see, each puts a different value on an Avios point.
Before we start, remember that Avios points definitely have a ‘floor’ value. There are various non-flight redemptions available for Avios which are bookable via avios.com – Eurostar tickets, hotels, car hire, experiences, sports tickets etc.
In general, you receive between 0.5p and 0.6p per Avios point when you do this. If you ever have the opportunity to acquire Avios for less than this, you are highly likely to come out well ahead.
1. Rob takes 3 long-haul holidays a year with his family, requiring 4 Club World tickets per trip.
Let’s assume these are 120,000 Avios per seat Club World redemptions (eg Dubai). One of the 3 holidays uses the 2 x 241 vouchers Rob and his wife earn each year. Let’s assume £500 of taxes per ticket because he redeems on BA (a low-tax airberlin redemption is too complex with the kids). He redeems on leisure routes (Middle East, Caribbean etc) where in a BA sale he could buy a cash ticket for around £1,399. He could afford to do this if necessary.
Total Avios spent per year = 1,200,000 (10 x 120k, adjusting for the 241’s). This assumes that all the flights are at peak pricing periods during school holidays.
Value received: £1,399 if paid cash – £500 taxes on Avios tickets = £899 per seat x 12 tickets = £10,788
Value received per Avios = 0.90p. This is a ‘real’ saving since Rob would pay cash in a sale for business class seats if necessary. There is intrinsic extra value from the ability to cancel the Avios seats if needed. However, the calculation ignores the miles and tier points that cash tickets would bring.
If one of these trips fell into an off-peak period, saving 20,000 Avios per person, then the value would increase to 0.96p.
The annual fee for the two BAPP credit cards is not factored into this analysis.
2. Jez and Louise live in the South East and use their Avios to do European short breaks, flying Economy Friday to Sunday. They do not spend enough to be able to generate a BA Amex 2-4-1 voucher, and do package holidays for their ‘main’ holidays.
Avios required for an Economy flight to Prague: 9,000 plus £35 taxes based on a peak weekend
BA cash price: £220 per person for May on a ‘hand baggage only’ fare. However, Jez and Louise would use easyJet from Gatwick if Avios seats were not available, with a typical price (out Fri, back Sun) of £170.
Value received per Avios = 1.5p. This is a ‘real’ saving, compared with the easyJet price. There is extra value from BA’s free refreshments and the ability to cancel if needed.
If Jez and Louise travel on an off-peak weekend they are actually better off after April 28th. The cost of the trip would fall to 8,000 Avios per person which takes the value per Avios point up to 1.69p.
3. Glynn and Sarah live in Yorkshire and use their Avios to do European short breaks, flying Economy via Heathrow. They do not spend enough to be able to generate a BA Amex 2-4-1 voucher, and do package holidays for their ‘main’ holidays.
Avios required for an Economy flight to Prague from Manchester via LHR: 18,000 plus £70 taxes on a peak weekend
BA cash price: Not comparable as they would fly Jet2 from East Midlands if they could not use Avios. Typical cash price for a May weekend is £135.
Value received per Avios = 0.36p. Glynn and Sarah would be crazy to want to transfer in Heathrow and add two hours to their travel time for such a poor return. It would make more sense to redeem Avios points for a hotel room in Prague and receive around 0.58p per point.
Even if Glynn and Sarah travel off-peak, it remains poor value. At 16,000 Avios per person the value per Avios point only increases to 0.41p.
4. Jamie is single and happy to take an odd routing if necessary. He only earns enough Avios for Economy redemptions. He would normally spend around £450 on a holiday flight to the Middle East. He lives in the South East.
Jamie flies airberlin in Economy from Berlin to Abu Dhabi for £48 plus 25,000 Avios (plus 9,000 Avios + £35 for a BA flight to Berlin from Heathrow to position). His total cost is 34,000 Avios plus £83.
Value received per Avios (based on £450 cash for a direct flight): 1.07p. This is a ‘real’ saving, although his journey is more complicated than it would be if he flew direct. The April 28th changes do not impact him. Because he is not flying on BA, there is no additional saving by flying on an off-peak date.
5. Alex and Nicky earn enough Avios per year for 1 long-haul redemption to California in Club World, using their 2-4-1 voucher. They would be willing to pay £1,750 for a cash ticket in a BA sale or flying BA ex-Europe. Taxes will be £500.
Alex and Nicky spend 150,000 Avios (with the 2-4-1) and pay £1,000 of taxes. This assumes they travel in a peak period. The cash alternative would have been £3,500 for two.
(You may want to dispute the £1,750 cash value given the low pricing currently available to the US West Coast from Europe on BA but those prices are atypical.)
Value received per Avios: 1.66p. This is a ‘real’ saving because they would pay cash otherwise. They also gain cancellation flexibility which a cash ticket would not have, although they lose out on the Avios and tier points earned on a cash ticket.
The value increases to 2p if they travel in an off-peak period for 125,000 Avios.
The annual fee for the BAPP credit card is not factored into this analysis.
6. Charles and Vicky also do 1 long-haul redemption each year to California in Club World. They earn fewer Avios than Alex and Nicky, though, so prefer to ‘Upgrade Using Avios’ a World Traveller Plus ticket to Club World. They expect to pay £900 in a BA sale for their WTP ticket and would pay up to £1,750 for Club World.
The ‘miles for upgrade’ cost of this ticket would be 50,000 Avios per person during a peak period. This saves them £1,000 per person on the cost of the Club World ticket.
Value received per Avios: 1.7p. This is a ‘real’ saving because they would pay for Club World if necessary. Whilst this is an excellent result, it would have been double that before the April 28th changes.
If Charles and Vicky travel off-peak, the value per Avios point DROPS to 1.42p. This is because the cost of upgrading World Traveller Plus to Club World is higher – at 60,000 Avios – during off-peak periods. Crazy but true.
In reality, because Charles and Vicky would earn Avios points back based on the underlying World Traveller Plus ticket, the value per Avios is actually higher than the numbers above because fewer Avios (netting off those received) would be used.
You will notice that none of these people flies First. That is because very few of us would pay cash for First, even if we would pay cash for Business Class. The additional Avios you spend for First over Club World give you intrinsic satisfaction and perceived value, but do not translate to a hard cash saving.
(In the last example, if Charles and Vicky would never pay £1,750 for Club World but would pay £750 for World Traveller Plus, then the 2p valuation is NOT ‘real’ because they would never have spent the money in the first place.)
If you earn your Avios for free by flying, that is not a concern. However, let’s assume you earn your miles via a credit card at a net cost of (say) 0.5p per Avios compared to what a cashback credit card would pay you.
In this case, you need to understand that the extra 50,000 Avios for First over Club World to California is actually costing you £250 (50,000 x 0.5p). Whether that is good value is down to you – but if you’ve paid for the Avios, you need to understand the choice you make.
What about long-haul economy redemptions?
You will notice that none of these people flies long-haul economy. This is generally a poor use of Avios points. However, post April 28th, three things may change this:
- BA may reduce fuel surcharges sharply
- The guaranteed availability of Avios seats even at peak periods may lead to times when economy redemptions do offer value
- The reduction of up to 35% in the Avios required at off-peak times may make redemptions more valuable
An off-peak redemption to California in World Traveller will become 35,000 Avios plus £360. Any cash price of over £625 would see you getting 0.75p+ per Avios of value.
To conclude …
How YOU value an Avios is totally dependant on how you use them. As I have shown above, there are good deals to be had – in the right circumstances.
Despite the devaluation, it is still possible to get over 1p of value per Avios point. This means that credit cards earning at least 1 mile per £1 still offer good value and converting Tesco vouchers still gives (based on 1p per Avios) 2.4 x face value.