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Avios Redemption University – Lesson 10 – How to book low tax Avios redemptions on Iberia

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The “Avios Redemption University” series is a good starting point for beginners, although I hope everyone will learn something from them. Click here to see the other articles.

This article explains how to book Avios redemptions via Iberia Plus, and how you can save hundreds of pounds in taxes by doing so.

When an Avios collector in the UK looks for a long-haul redemption, British Airways is the obvious choice of airline. However, the taxes and charges can often be very high – up to £500 per Club World seat.

One way around the taxes problem is to redeem on Aer Lingus, the subject of a future article.  Often overlooked in the hunt for low taxes, though, is BA’s sister company Iberia.  Taxes on Iberia flights are often a fraction of those charged by British Airways.

Iberia has extended its UK connections network.  You can fly from Manchester, Birmingham and Edinburgh to Madrid with Iberia Express, which makes it a lot easier to use Avios to connect to an Iberia long haul flight.  There are also plenty of budget airline options.

An obscure route network

Iberia has been through a substantial restructuring since being bought by IAG, the parent company of British Airways.

To IAG’s credit, Iberia has been turned around. 16 new long-haul aircraft – 8 x A330’s and 8 x A350’s – have been delivered or are on order for delivery by 2020. There is a decent new business class seat, with an even better version coming on the A350 (see this HFP article) and the long-haul network is expanding again.

The great news is that the new destinations being added are places you would actually wants to visit such as Tokyo, Havana and San Francisco.  Avios demand for Iberia’s historical routes to places like Medellin, San Salvador and Managua was probably lower.

These are the non-European Iberia destinations:

  • Africa – Algiers, Casablanca, Dakar, Malabo (Equatorial Guinea), Marrakech, Oran, Tangier, Johannesburg
  • USA – Boston, Chicago, Los Angeles, Miami, New York, San Francisco (from April 2018)
  • Americas exc USA – Bogota, Buenos Aires, Cali, Caracas, Guayaquil (Ecuador), Lima, Mexico City, Montevideo, Quito, Rio do Janeiro, San Jose (Costa Rica), Santiago, Sao Paulo, Asucion, Medellin, Guatemala, Panama, San Salvador, Managua (outbound via Guatemala, inbound direct)
  • Asia – Tokyo, Shanghai
  • Caribbean – Havana, Santo Domingo (Dominican Republic)
  • Middle East – Tel Aviv

All of these are flown from Madrid.  Note that some of the African routes are served with short-haul aircraft.

Iberia has vastly improved its business class seating

Iberia has no First Class.

The great news is that, over the last five years, Iberia has installed new fully flat seating across its long-haul fleet.

Iberia business class seat

I was lucky enough to fly it on a Madrid to London flight as you can read (and see) here.  Iberia runs a few London to Madrid services a week with long-haul aircraft and flat beds in business class because it needs the cargo capacity offered by the bigger aircraft.

In Summer 2018 Iberia will be running its brand new A350 aircraft with the longer, wider business class seat between London and Madrid.  This is for crew training.

How to price Iberia rewards

This isn’t simple following the Avios changes in April 2015.

Iberia has its own reward pricing chart with its own peak and off-peak dates:

Iberia redemption chart

and

Iberia redemption Avios chart

This chart is NOT the same as the British Airways chart:

The charts are nearly the same, but not quite.

Let’s take New York as an example. Both British Airways and Iberia price New York as a Zone 5 redemption. However:

British Airways charges 100,000 Avios off-peak and 120,000 Avios peak for a Club World flight to New York

Iberia, as you can see above, charges 68,000 Avios off-peak and 100,000 Avios peak for a Business Class flight to New York

There obviously are not many destinations which are served by both BA and Iberia, of course, so the opportunities for arbitrage are limited.  You also need to factor in the cost and time of getting to Madrid, although if you live outside London it is not massively more complex than changing planes at Heathrow.

A word about peak and off peak dates

Just to make life even more complex, Iberia has its own list of peak and off-peak dates. This is different from the British Airways list. Here is the Iberia peak dates chart for 2018 (click to enlarge):

You can compare it with the British Airways peak and off-peak chart in this HFP article.

For clarity, the Iberia peak and off-peak chart is used even if you book an Iberia redemption via ba.com.  It isn’t exclusively for redemptions booked via Iberia Plus.

October half-term, for example, is a peak week for British Airways redemptions and peak pricing is in force. Iberia does not treat this week as a peak week.  During such periods the price differences can be stark:

  • London to New York, BA Club World, is 120,000 Avios during October half term
  • Madrid to New York, Iberia Business Class, is 68,000 Avios during October half term

And that’s before you factor in the massive difference in taxes ….

Iberia is the home of low taxes (but only on the Iberia website!)

Iberia Plus does not charge the full range of airport taxes and fuel surcharges imposed by ba.com.  This is a BIG thing and the real reason (apart from the better seat and potentially lower number of Avios needed) to consider Iberia seriously.

Let’s look at Madrid to New York in Business Class, return. Iberia, when you book on iberia.com, will charge 68,000 Avios plus £157.10 return on an off-peak date.

A BA redemption from London to New York (via ba.com on a BA plane) on the same route in Club World costs 100,000 Avios plus £537.06 on an off-peak date!  That is, by any stretch, a big difference.  It makes it well worth heading to Madrid to start your trip if you are price concious.

More interestingly, if you try to book the Iberia Madrid to New York flight on ba.com using BA Avios, it will charge you £365.50 of taxes! This is for the SAME Iberia flight which costs only £157.10 of tax on iberia.com using Iberia Avios.

Now, of course all is not plain sailing:

  • From the UK, you need to fly to Madrid. However, if you are not based in London you will be taking a connecting flight anyway. And the saving probably justifies not flying direct from London.
  • The London to Madrid flight cannot be booked on the same itinerary as the Madrid to New York flight or you will be obliged to pay UK Air Passenger Duty at the long-haul rate. Since you will have separate tickets, IB is not obliged to look after you if you miss your long-haul flight – although if you fly IB from London, it is very unlikely they would abandon you if the delay was down to them.
  • A flight from London to Madrid, return, costs 15,000 Avios and £35 in Economy – but that is hardly making a great dent in your £379.96 saving.
  • Iberia reward availability is not great as they fly far fewer seats to New York than British Airways

You need to open an Iberia Plus account to get the best deal

Note that, to get the £157.10 of taxes for Madrid to New York in our example, you must book on the Iberia website and use Iberia Avios. If you try to book this itinerary on the BA website, BA will add fuel surcharges and other ‘random stuff’ which adds up to £365.50! This means that you need to open an Iberia Plus Avios account.

Most importantly, you need to open it 90 days before you want to book.  You cannot transfer British Airways Executive Club Avios or avios.com points into Iberia Plus Avios if the Iberia account is under 90 days old.  (And this little wheeze is probably why.)

Your IB account also needs to have had an Avios earning transaction put through it.  You cannot move your BA Avios into an Iberia account, even if it is 90 days old, if the Iberia account has never had any activity on it.  You need to credit a flight segment or a car hire or a hotel stay to class it as ‘active’ and thus qualifying to receive incoming Avios transfers.  If you cannot put a flight or hotel stay through it, you could transfer some existing hotel points or American Express Membership Rewards points.

A word about availability

Even if you aren’t convinced to book via Iberia Plus to save money on taxes, you should also note that both economy and business class Avios availability on Iberia is better on iberia.com compared to ba.com.

We discuss this in more detail in this article.

Conclusion

There is no doubt that redeeming Avios points on Iberia is confusing if you are used to the British Airways system.  You need to get your head around the different peak and off-peak dates as well as remembering that using Iberia Plus will give you a lower taxes charge.  You also need to ensure that any new Iberia Plus account you open is ‘activated’ via an earning transaction and that you have opened it 90 days before you need it.

The bottom line, though, is that you can make substantial savings in tax – and sometimes in Avios too – if you are willing to fly the much improved Iberia business class instead of British Airways Club World.

(Want to earn more Avios?  Click here to visit our home page for the latest articles on earning and spending your Avios points and click here to see how to earn more Avios from current offers and promotions.)

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Comments

  1. Bit of a gloat, but on topic.

    Havana is on the bucket list. The fact that there are no BA flights direct to Havana makes Iberia from Madrid even more appealing. Virgin is an option but flying out via Madrid on Iberia business class and back Virgin upper class means avoiding the massive taxes on a UK departure for similar seats.

    • Another gloat too 🙂
      Doing a similar trip but in reverse in September. Virgin to Miami in Upper. I hated paying the rip off Virgin fees but we wanted to use the LHR Virgin lounge and fly on a 787 – it’s also 10,000 miles less per person than direct to Cuba. Couple of days in Miami in a hotel booked using the “£200 off if spending £600” AmEx offer then on to Havana (Supporting the Cuban people of course for visa purposes!). Flying back from Havana in Iberia business class in A330 then straight on to the aforementioned A340 business class back to London. Cannot wait! My first proper long haul trip in years.

      • Sounds fab – who are you flying with from Miami to Havana and was it easy to arrange?

        • Did you folks see the airfare of the day on LL yesterday with TAP,? }t was a good one, especially if a one way flight would be useful.

        • Flying with Delta – was 12,000SPG points transferred to their program and $60 in total. Money well spent for us as we’re on a tight budget and I think it was £160 for 2 paying cash.

      • You could have started the Virgin trip in Dublin to avoid the APD, assuming you transit London in <24 hours, still use the Virgin lounge. I booked myself a Dublin Miami return in Upper class for October, BA to/from Dublin, sadly one of the 787 flights is already a subbed A330. He's hoping it changes back to a 787.

        • That’s interesting – didn’t realise that. Ah well.
          I’m hoping our 787 doesn’t go to a A330 either…. They’ve already changed the flight time by bringing it 2 hours forward so that’s even less lounge time!

        • Just checked – it’s ours that’s the A330 🙁

  2. I am a bit confused by this article because it seems to be about flying IB only exMAD using IB+. However, is there any advantage in booking nonIB nonMAD OneWorld flights via IB+ as opposed to BAEC or avios? For BA flights I know the (off)peak dates could work in our favour but what about fees? Are those award charts above for all OneWorld partners or IB flights only? I presume the latter otherwise we would all be booking via IB+.

    • I believe Rob mentioned before that you should never reedem Oneworld flights via IB+ as they are not cancellable.

      • Thanks meta, that alone is enough to dusuade me.

      • Lady London says:

        On BA and IB (and possibly AA IIRC) they are amendable, at least. Not sure about cancellable. However flights booked on other OneWorld partner airlines appear to be non-refundable. It’s really worth a look at the IB rules. But to save nearly £400 off British Airways transatlantic so-called “taxes” – h*** yes I’ll look carefully at Iberia and try to use them.

    • Simonbr says:

      Does it also work out cheaper to book non-redemption (ie full cash) long-haul flights on Iberia.com or Aer Lingus sites due to the lower taxes, or is any saving on taxes effectively cancelled out by the cost and time spent to get from the UK to Madrid/Dublin hubs?

      • It can be cheaper, but mainly because London is an expensive place to book from, irrespective of APD.

        A lot of people fly Dublin – London – XXXXX because airlines price fares far more cheaply from Dublin because the Irish market is more price sensitive.

    • Oneworld flights are price at peak prices at all times so the calendar makes no difference.

      Good question re AA pricing on, say, London to New York but the ticket would not be changeable or refundable due to Iberia rules on partner redemptions.

      • Thanks, dealbreaker for me but maybe useful for last minute redemptions if availability is there.

  3. All I need for this to be perfect is for there to be flights from SEN to MAD! Keeping my fingers crossed that the route gets added one day.

  4. One of the best value redemptions I’ve ever done was Madrid to Lima (which is/was zone 6 despite the chart above: 85,000 Avios return in business). On the return portion we also booked Avios flights in economy for a further 6,500 each Madrid to London on the same ticket so that our connection was protected and we didn’t have to pick up luggage.

    In general though MAD seems to be a bad destination to use Avios for – there are so many cheap fights for cash. We got there for the outbound using Iberia Express for I think about £30 each, OW status benefits included!

  5. Roger I* says:

    OK if things run smoothly.

    I thought I was being smart booking a JNB-MAD-LHR biz redemption using Avios. Better availability (zero JNB-LHR on BA at BAEC), lower ‘taxes’ and fewer Avios.

    Except I had to cancel.:( The refund was processed as 4 items, one for each leg. I received all of the Avios back but only 2 of the cash refunds.

    Contacting IB customer service is a pig. For some reason, the cancellation had to be processed by IB Miami, and the local London number for IB+ has been as useful as a chocolate teapot.

    If anybody can suggest a method of getting all or most of my cash back, I’d be very happy. Sadly, my Spanish is poor.

    • Depends how you paid? If paid via Amex, just start a dispute via online account. Look for a transaction and when you click on show more there should be a button to start dispute. Upload all the evidence and that’s it.This usually results in them either paying up or Amex refunding you in two months if they don’t hear from them. Always works for me.

  6. Anthony Burns says:

    Iberia are pretty decent and I had a good experience recently from Madrid to Panama but be warned Madrid Airport is spread over a large area so allow plenty of time to change flights as it takes ages to transfer.

  7. “Note that some of the African routes are served with short-haul aircraft.”
    I’m pretty sure the TLV route also uses a short haul fleet.

  8. The business class availability is far better on their routes to Latin America rather than the USA in my experience

    • Lady London says:

      IB also frequently does really well priced cash offers to South American destinations that are worth keeping a look out for.

  9. What’s the deal with using Avios on Iberia Express for a weekend trip to Madrid? Given that there’s a direct flight from Edinburgh it should be less of an Avios hit than BA, but do they have Reward Flight Saver in place?

  10. Very new to collecting avios points so apologies if this seems a very silly question – can a BA companion voucher be used via Iberia ?

    • No. Only on BA metal.

    • Have a look at one of the HFPs articles on this because you need to know your stuff to make it work for you. So, as Ghengis says, you can only use it on BA flights (no codeshares even if they have a BA flight number), and generally only out of London airports (you can include a connecting flight from a regional airport, but you can’t use the voucher on one of the direct CityFlyer services to Europe from the regionals). Lots of other things to be aware of as well, but it’s a great feeling when you bag your preferred 2 4 1 seats!

      • You sure? I thought BACF can be booked on 241 (though a waste to be fair).

        • Term 17
          Avios and Companion Vouchers can only be used on British Airways mainline flights, where ‘BA’ is specified at the beginning of the flight number (e.g. BA1324). This includes CityfFlyer where flight numbers begin ‘BA’.
          https://www.britishairways.com/en-gb/executive-club/collecting-avios/credit-cards

        • Interesting – I’ll try a dummy booking. When I tried using the Lloyds upgrade voucher on a CityFlyer it told me it wasn’t eligible, so I assumed that it would also apply to the 2 4 1. But yes, not a great use of the voucher.

        • Inconclusive! There are CE seats available from MAN but the system keeps sending me to the stopover page and insisting I provide details, even though I’ve told it I don’t want a stopover! So I don’t know if there’s a temporary problem with BA’s IT or whether it can’t process the 2 4 1.

        • @Anna call BA if you want to book and hold them to the terms

  11. Twice now I’ve made redemptions in IB and didn’t receive an email notification. MMB shows up the bookings, and one of them received an email noting a schedule change. Weird but something to look out for. Also Rob add Medellin to the list of South American destinations (I’m using IB on my return flight).

  12. OT – Anyone got any advice on what card between Gold and BA Blue is likely to get approved for a retired first timer to this hobby?

    Thanks In adavance.

    • When amex had an income requirements for their cards, gold and BA free had the same (£20,000pa), so I’d imagine they’ll be similar requirements for approvals. There’s actually an eligibility checker for the gold card on the AMEX website which you can try out.

    • Better to go for Gold. Mostly same eligibility criteria, and you earn more MRs or avios with bonus spend. Also better chance to upgrade to Plat, and earn a further 20 MRs, when you want to refer partner for a gold etc. Later on. You earn a further 18k referring from Plat. Amex fairly flexibility on income at the best of times.

  13. I’ve credited a car rental to my IB Plus account which I opened in early 2017 but still cannot transfer into it from Avios or BAEC.

    Anyone else had this issue? Any tips on how to solve this?

    • More likely to be a mismatch between the email or the address on the account. Using avios.com to first pull them in and then push them out usually works.

      • I believe you are correct! IB has new house but BAEC still has old address. Thanks for the reply. Time to book JFK->MAD->XRY. 38500 avios is a great deal.

  14. What's the Point says:

    Great advice here from Rob.
    Bagged 2 x Business returns Mad to Costa Rica over New Year using Iberia Avios. Saved on tax and charges vs flying from LGW with BA – even taking into account not using a 2for1, positioning flights and hotel in Madrid.
    But more importantly flying and coming back on the dates we want – as Iberia fly daily vs twice a week with BA.

  15. I activated my Iberia account by buying a coffee voucher for 4€ via the IberiaPlus Store at the spanish groupon site. That earned 36 Avios back and an additional 200 Avios for my first activity after opening the account.

  16. james carp says:

    I know that to use a 241 to get from LHR to SYD is virtually non existent, but would it be a useful spend of this companion voucher to fly return first class from LHR to Singapore (SIN) and then just cash purchase the leg from SIN-SYD as a first slot has opened up.

  17. I’m wondering if the booking process is the same as for BA i.e. book the outbound first and then call to book the return or do you have to wait until both legs are available?

  18. Gillian Wilson says:

    Hello – as a relatively new comer to the points and redemptions process I am hoping for some advice. I am flying from Edinburgh to Miami in May with BA but the tickets on the outbound leg are IB flight numbers. I have been saving my points for a trip to either Mexico or Cuba next year and was wondering if I should credit these flights to Iberia to activate my account and book there? The down side is I may need the status points to achieve Silver with BA next year.
    Any advice would be most welcome

    • If the status points may be important, credit to BA. You can easily activate the Iberia account another way – use their shopping portal (not so easy I admit as Spanish based), credit a hotel stay or car rental, send over 1000 Amex points, move some existing hotel points etc.

  19. Hello, I didn’t activate my Iberia account on time so I had to book my trip through BA.com. However it’s not too bad as I got a round trip from Madrid to Santiago Chile for 60k avios + 45.5£ in taxes.

    • That is the LAN flight isn’t it, not the Iberia flight? I have another article on LAN lined up for next week.

      • Yes exactly the LAN flight. I was surprised by the low taxes booking through BA.com. I wanted to say thank you as this trip was my goal when I got into the avios game a year ago and I learned all I know now from you! So thanks for getting me to Chile 😉

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