What is an Avios point worth?

It is, amazingly, two years since I last discussed my thoughts on how to value an Avios point.  At that point the 2015 Avios devaluation had just been anounced.  I thought it was worth running the numbers again for the benefit of new readers and to see if they still they stack up.

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 and/or airline 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 though bonus Clubcard points on a particular item.  Or perhaps Groupon brings back its Iberia Plus offer which lets you buy points for just over 1p.  Should you jump in at these prices?  You need to be sure that you are getting substantially more than your cost price to make it worthwhile, especially as you are substituting something very liquid – cash – for something that is not very liquid at all.

Avios banner

The same goes for Avios-earning credit cards.  Once you’ve got your British Airways 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 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 either via ba.com or avios.com, such as wine or hotels.   In general, you receive around 0.5p per point when you do this.

‘Part Pay With Avios’ adds another dimension.  Based on the current part-pay rates which you can find here, you will receive between 0.55p and 0.8p when redeeming Avios towards a British Airways cash ticket.

If you ever have the opportunity to acquire Avios for less than 0.55p, you will definitely come out ahead.  Whether higher valuations make sense depends on how you spend them.

Potential redemption scenarios:

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 or other airline sale he could buy a cash ticket during the school holidays for around £1,499. 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: £1,499 if paid cash – £500 taxes on Avios tickets = £999 per seat x 12 tickets = £11,988

Value received per Avios = 1.0p. 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 1.07p.

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 June on a ‘hand baggage only’ fare, booked three months in advance.  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 the ability to cancel if needed for a £35 per person fee.

If Jez and Louise travel on an off-peak weekend 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 June weekend, booked three months in advance, is £135.

Value received per Avios = 0.36p.  Glynn and Sarah would be crazy 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 0.5p 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.

(Glynn and Sarah may get some value from redeeming on Flybe, Aer Lingus, Vueling, Finnair or Iberia Express, all of which operate from UK regional airports and which let you book with Avios.  You pay full taxes, not the £35 Reward Flight Saver cap, when redeeming on these airlines so good value is not guaranteed.)

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 £64 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 £99.

Value received per Avios (based on £400 cash for a direct flight): 0.89p. This is a ‘real’ saving, although his journey is more complicated than it would be if he flew direct. 

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.

This is potentially the most likely scenario for a Head for Points reader without children – using one 2-4-1 voucher per year for one major redemption for a couple.

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.

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 £850 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.

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.

However …

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 £900 for World Traveller Plus, then the 1.7p valuation per point is NOT ‘real’ because they would never have spent the extra money for business class in the first place.)

If you earn your Avios for free by flying, the value you get per point 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 good 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) in lost cashback. 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 BA long-haul economy.  This is generally a poor use of Avios points because of BA’s taxes and charges.  However, the guaranteed availability of four Avios seats per flight at peak periods may lead to times when economy redemptions do offer value.

An off-peak redemption to San Francisco in World Traveller is 32,500 Avios plus £351.  Any cash price of over £595 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.  It is, easily, possible to get over 1p of value per Avios point.

My review of the ANA lounge at Tokyo Haneda's International Terminal
Review of ANA's business class service from London - Tokyo Haneda
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Comments

  1. Julian says:

    Apologies in advance for posting a little (but not that much given that this discussion is actually about the value and usefulness of Avios points) off topic but does anyone else who makes frequent very late booking with BA using Avios short haul in Europe have any real world experience of when unsold tickets for a flight are actually withdrawn from sale?

    BA’s official position is that Avios tickets are not bookable online less than 24 hours before the flight departs. But in practice Avios tickets seems to be able to be booked for short haul Economy flights down to about 21 hours before the flight departs. For instance I’m Iooking right now at 16.49 today (May 17th) at the 15.40 departure from LHR to PMI tomorrow (16th May – BA 0450 ) where Economy ticket availability opened up only this morning and I have to talk to another couple of people about my travel plans before I decide I can take that flight. But the flight is still available right now and I can proceed through the booking process as far as the payment page (which I haven’t tried using as I don’t want to book the ticket yet).

    Past experience of looking at Avios availability very late in the day suggests the flight’s availability on avios.com (not BA Exec Club site) has always vanished around 21 hours before departure. However when I spoke to the Avios call centre on the phone they said they might be able to do a manual booking later than that up to a few hours before the flight. But if that is true in this Smartphone friendly age that begs the question as to why avios.com doesn’t leave flights showing right up to departure as long as they still have seats allocated to them for redemption by BA/IAG? As surely on a heavily undersold flight they want to get rid of all remaining seats on that flight by any possible means that they can?

    Any thoughts by anyone else with any real world experience of booking very late using Avios (just before 24 hours to the flight or even below that supposed deadline) is very much appreciated.

    • ba.com will let me book the 2 7am AMS flights tomorrow, just 10 hours out.

    • You can book until the flight closes – it’s late to check in the UK so have instead checked for JFK-LHR leaving at 18:30 EDT (BA0112) – currently it’s 16:21 EDT so that’s leaving in 2h09m and still bookable)…

  2. Julian says:

    I see that now at 17.17 the flight is no longer shown as available to book. So either all 3 seats suddenly went (unlikely) or they actually take it off sale just under 23 hours before the scheduled departure time????????

  3. who books a weekend in Prague 3 months in advance !?
    Avios are not good value for short haul flights booked at the last minute, nothing beats Easyjet for that. my experience is the real value of avios was eurostar (that was discontinued) or long haul.

    • Pretty normal weekend break scenario in my (pre kids) experience.

    • Interesting, I’d say more the opposite! For last minute flights I find Avios far better value, but you probably do need to have Gold to have access to the wider economy inventory. Clearly with the domestic sectors now also being payable it shifts the argument much more in favour of the LCCs, but for last minute things I’ve often found them pretty pricey and Avios to be good value by comparison.

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