How ‘taxes and charges’ on Avios redemptions from the US got out of control

The level of ‘taxes and charges’ added to long-haul Avios redemptions on British Airways is always a sore point.

In general, I use a ‘finger in the air’ sum of £550 for the taxes and charges on a Club World or First return redemption from London whenever anyone asks what they will be.

That obviously isn’t small change, but it still gives acceptable value for your points most of the time as long as you are redeeming for Club World or First.  The biggest threat to Avios – given BA’s dominant UK position – is not from other frequent flyer schemes but from aggressive sale fares from other airlines.

When you have Qatar Airways regularly offering Business Class tickets to Asia for £1,000 in a sale, admittedly starting elsewhere in Europe, for a superior product then it offers clear competition.  It also earns Avios and tier points, of course!

(Avios is, of course, under threat from other angles.  You can switch from a BA credit card to a different rewards credit card.  You can convert Tesco Clubcard vouchers or Heathrow Rewards points or Amex Membership Rewards into a different treat.  You can only squeeze things so far, and £1 earned by Avios from Tesco is worth a lot more – because it is ‘real’ money – than £1 transferred across intra-group from British Airways.)

But be grateful you don’t live in the US ….

What you might not realise, if you live in the UK, is how reasonable BA’s ‘taxes and charges’ are compared to what a US resident must pay.

The ‘charges’ element of ‘taxes and charges’ is just a made up number, which BA pockets.  It doesn’t actually reflect anything in particular and it has no qualms about changing it on a market by market basis.

Here’s a little Wednesday quiz.

The ‘taxes and charges’ on a Club World return ticket from London Heathrow to New York JFK are £534.

What do you reckon the ‘taxes and charges’ are on a Club World return ticket from New York JFK to London Heathrow and back?  Here’s a clue – it isn’t £534.

£400?

£500?

£600?

£700?

£800?

£900?

No, sorry, you’re still wrong.

The actual figure is an astonishing £970 return. 

You can prove this yourself by doing a dummy booking on ba.com.  You need to click through to the payment page for it to recalculate to the exact number.

Why is this?

It isn’t entirely clear why BA treats North America like this.

You don’t see it with other markets.  A return Club World redemption to Dubai is £505.  Book the trip in reverse and you pay £540.  That’s near enough, given currency fluctuations.

One view is that, because Avios are so easy to earn in the US (BA has, in the past, given out 100,000 Avios as a credit card sign-up bonus) it tries to create a level playing field with the UK by adding extra charges.  This ‘protects’ UK Avios collectors because it reduces the willingness to US members to redeem on transatlantic flights, with many choosing to use them on domestic American Airlines and Alaska Airways flights instead.  This is only a theory though.

Even if you live in the UK, there is a lesson here

If you are booking Avios tickets to North America, do NOT book them as 2 x one-way tickets.  This is because the ticket from London will attract the lower UK level of ‘taxes and charges’.  Your flight home, when booked on a separate ticket, will attract the higher US level of ‘taxes and charges’ and you will end up paying a lot more than £500.

You should also bear this in mind if, for example, you see a special one-way cash offer from Norwegian, Primera Air etc from the UK.  Don’t think that booking the outbound flight for cash and then using Avios for the return is a good deal, because you will be paying an inflated level of ‘taxes and charges’ on the flight back.

Bits: Use Avios to Lapland, new White Company bedding, 2000 Virgin miles with PointsHound
Bits: Loyalty Fraud Prevention conference, fixed Hilton / Iberia link, pretend to fly on a private jet
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Comments

  1. Andy Morgan says:

    Fairly new to Avios and would love some expert advice. I’m planning a trip to New York next September. The cost for 2 people via Avios website is 52,000 miles plus £610 taxes… which is flying economy. I can find the same economy flight for just under £700 on numerous websites. This would seem a waste of Avios right? They’d be put to much better use towards upgrading to Premium or Business right? I do also have a Lloyds Upgrade voucher begging to be used. All advice most welcome!

    • phatbear says:

      The reason you think its a waste of avios is because you think the tickets you are comparing are the same, however they are not.

      Subject to a small surcharge, i think £35, the avios tickets are changeable so if your circumstances changed you could change your booking, assuming your booking doesnt change from off peak to peak.

      The ticket you have priced up with BA is not changeable and therefore a lot cheaper.

      • …but, in general, using Avios for economy long-haul flights – except at super peak periods – is a bad deal.

        Flexibility, as you say, is pretty much the only reason I would use Avios in this scenario – and even then I would want to be fairly convinced I might need to cancel given how dreadful a deal it is.

        • the real harry1 says:

          would that be generally true on non-BA economy LH tickets, ex-EU?

        • You’d save, what, £200 in taxes and charges at best? Offset by the cost of getting to an ex-EU starting point and the fact that all dates are ‘peak dates’ with partners. Not sure it moves the needle much.

          Cathay to HK ex Paris is 60,000 Avios + £126 for example. To get 1p per Avios you’d need to be facing an £800 ex-UK fare, given the cost of getting to Paris and back. You can usually get to HK for far less than that.

        • the real harry1 says:

          yep – just thinking about [hoping to] retire to my place in the sun in a few years and my stash of Avios being worth a fair bit for LH redemptions

    • 52k avios will get you 1 return to NY in Club using the Lloyd’s upgrade voucher, off peak. Would you be able to earn another voucher and 52 k avios in the next 8 months or so? Availability to NY tends to be pretty reasonable as long as you are flexible.

      • Andy Morgan says:

        Hmm… doubt it. Just looked at similar flight with Virgin, and I can get 2 return premium economy flights for 70K flying miles (which I have), plus £755… that seems much better value.

        • Yes. To answer your original question it’s a really bad deal. Stick with the Virgin option IMHO. They are also much more fun.

  2. Andy Morgan says:

    LHR to JFK
    Outward 2 x Virgin PE for 35K miles plus £560
    Inbound 2 x BA Club for 52K miles plus £270

    Sounds like a good deal to me?

  3. Data Point for Virgin Atlantic

    Upper Class one way Miami to LHR

    Sept 2013 $450 + 50000 Miles

    Sept 2018 $501 + 47500 Miles

    Not a great deal of difference in 5 years, Good value as far as Unconcerned, esp compared to a one way cash UC ticket, so I’d happily pay that again for a great service. 🙂

  4. BA CW (inferior to VS UC IMHO)

    Sept 2018 (offpeak) – 62500 Avios + £ 374.50 (approx $490)

    • Obvs for same route, ie. MIA to LHR one way.

    • Although I enjoyed VS in flight service I’m not convinced re inferiority of bed. I still sleep better in CW (I pick window seat, so no-one stepping over me, ideally upper deck if the plane has one). By comparison I found the VS seat to be much more cramped. New CW dining service was also pretty good. For daytime flights it could be different but for overnight eastbound from USA (where I just want to get on and sleep) I still find BA CW pretty good.