How ‘taxes and charges’ on Avios flight 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, following recent rises, I use a ‘finger in the air’ sum of £700 for the taxes and charges on a Club World return redemption from London (£850 for North America) whenever anyone asks what they will be.

That obviously isn’t small change, but given current cash prices it still gives acceptable value for your points most of the time as long as you are redeeming for Club World or First Class.  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.

Avios is, of course, under threat from other angles.  You can switch from a British Airways credit card to a different rewards credit card.  You can convert Nectar points, Heathrow Rewards points or American Express Membership Rewards into a different treat. 

You can only squeeze things so far, and £1 earned by Avios from Sainsburys when you convert Nectar points is worth a lot more – because it is ‘real’ money – than £1 transferred across intra-group from British Airways.  If people stop seeing value in the scheme, IAG Loyalty will stop seeing the money coming in.

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 reflect anything in particular and the airline 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 £850.

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 the £850 you would pay flying UK – US – UK. If you go US – UK – US, would you pay ….

£950?

£1,250?

£1,500?

No, sorry, you’re still wrong.

The actual figure is an astonishing £1,801 return for a Club World Avios ticket from New York JFK to London Heathrow. 

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.

You should see this:

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 £716.  Book the trip in reverse and you pay £813.  That’s near enough the same, 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 of 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’ whilst your flight home, when booked on a separate ticket, will attract the higher US level of ‘taxes and charges’.

For example, as we noted above, a return ticket from the UK to New York has Club World taxes of £850.

Booked as a one-way in each direction, the total taxes are £555 outbound and £774 inbound, for a total of £1,329.

You should bear this in mind if, for example, you see a special one-way cash offer on a low cost airline from the UK.  Don’t think that booking the outbound flight to the US 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’ for the flight back.

PS.  Remember that using your Avios to fly on Iberia saves hugely on taxes and, for the US East Coast, Avios.

An off-peak Business Class return from Madrid to New York, booked via the Iberia Plus website to avoid British Airways surcharges, costs just 68,000 Avios + £220, a huge saving even after factoring in the cost of getting to Spain:

You can learn more about redeeming Avios on Iberia here.

---

How to earn Avios from UK credit cards (April 2024)

As a reminder, there are various ways of earning Avios points from UK credit cards.  Many cards also have generous sign-up bonuses!

In February 2022, Barclaycard launched two exciting new Barclaycard Avios Mastercard cards with a bonus of up to 25,000 Avios. You can apply here.

You qualify for the bonus on these cards even if you have a British Airways American Express card:

There are two official British Airways American Express cards with attractive sign-up bonuses:

You can also get generous sign-up bonuses by applying for American Express cards which earn Membership Rewards points. These points convert at 1:1 into Avios.

Run your own business?

We recommend Capital on Tap for limited companies. You earn 1 Avios per £1 which is impressive for a Visa card, along with a sign-up bonus worth 10,500 Avios.

SPECIAL OFFER: Until 12th May 2024, the Capital on Tap Business Rewards Visa card is offering a bonus of 30,000 points, convertible into 30,000 Avios. You must have a Limited Company to apply. Click here to learn more and click here to apply.

You should also consider the British Airways Accelerating Business credit card. This is open to sole traders as well as limited companies and has a 30,000 Avios sign-up bonus.

There are also generous bonuses on the two American Express Business cards, with the points converting at 1:1 into Avios. These cards are open to sole traders as well as limited companies.

Click here to read our detailed summary of all UK credit cards which earn Avios. This includes both personal and small business cards.