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What is an Avios point worth?

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It is, amazingly, 18 months since I last discussed my thoughts on how to value an Avios point.  I thought it was worth running the numbers again for the benefit of new readers and to see if they still they stack up, especially as:

British Airways has recently sneaked up its ‘taxes and charges’ on most routes, and

the cost of BA cash tickets, especially on short haul, continues to fall

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 you take advantage of Groupon’s 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.

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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 or, say, 3 Marriott / SPG points per £1 via the Starwood Preferred Guest Amex.  If not, your BAPP Amex card can go back in the drawer.

Here are six different Avios scenarios – which is right for you?

Instead of answering the question of Avios 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 via ba.com such as wine, travel ‘experiences’ or hotels.   In general, you receive around 0.5p per point when you do this.

‘Part Pay With Avios’ adds another dimension.  Depending on the route and class you are booking, 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 0.5p, you will definitely come out ahead.  Whether higher valuations make sense depends on how you spend them.

Here are some potential Avios redemption scenarios:

1. Andrew takes two long-haul holidays a year with his family, requiring four Club World tickets per trip.

Let’s assume these are 120,000 Avios per seat Club World redemptions (eg Dubai). One of the two holidays uses the 2 x 241 vouchers Andrew and his wife earn each year. Let’s assume £535 of taxes per ticket because he redeems on BA instead of, say, routing on Iberia via Madrid to save money. He redeems on leisure routes (Middle East, Caribbean etc) where in a BA or other airline sale he could buy a Business Class cash ticket during the school holidays for around £1,499. He could afford to pay cash if necessary.

Total Avios spent per year = 720,000 (6 x 120k, adjusting for the 241’s).  This assumes that all the flights are at peak pricing periods.

Value received: £1,499 if paid cash – £535 taxes on Avios tickets = £964 per seat x 8 tickets = £7,712

Value received per Avios = 1.07p. This is a ‘real’ saving since Andrew 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 (80,000 Avios in total), then the value would increase to 1.20p.

The annual fee for the two British Airways Premium Plus 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: £160 per person for March 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 £140.

Value received per Avios = 1.16p. This is a ‘real’ saving, compared with the easyJet price. There is extra value from the ability to cancel the Avios ticket.

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 1.31p.  The value also goes up if they would take checked luggage, since Avios tickets allow one free suitcase per person.

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 or Leeds Bradford via Heathrow: 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 March weekend, booked three months in advance, is £120.

Value received per Avios = 0.28p.  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 their 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 0.31p.

(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 fixed fee, when redeeming on these airlines so good value is not guaranteed.)

4. David is single and happy to take an odd routing if necessary. He only flies Economy when using his own money but is happy to fly Business Class when using Avios. He would normally spend around £350 on a holiday flight to New York in Spring.  He lives in the South East.

David flies Iberia in Business Class from Madrid to New York for £163 plus 68,000 Avios (plus 15,000 Avios + £35 for a BA Economy flight to Madrid from Heathrow to position). His total cost is 83,000 Avios plus £198.

Value received per Avios (based on £350 cash for a direct flight): Not clear   David has spent £150 less in money than the cost of an Economy cash ticket, and gets to fly in Business Class instead, but obviously using 83,000 Avios to save £150 is not smart.  The real value, of course, is that he is flying Business Class and not Economy, but he would never pay for Business Class so how should be judge the value?

5. Alex and Nicky earn enough Avios per year for one long-haul redemption to California in Club World, using their 2-4-1 voucher. They would be willing to pay £1,750 each for a cash ticket in a BA sale or flying BA ex-Europe. Taxes will be £650.

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 £1,300 of taxes. This assumes they travel in a peak period.  The cash alternative would have been £3,500 for two.

Value received per Avios: 1.46p. 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 1.76p if they travel to California in an off-peak period for 125,000 Avios.

The annual fee for the British Airways Premium Plus credit card is not factored into this analysis.

6. Charles and Vicky also do one 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.

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.

As an example, an off-peak redemption to San Francisco in World Traveller / Economy is 32,500 Avios plus £375.  Any cash price of over £618 would see you getting 0.75p+ per Avios of value.

To conclude …

How YOU value an Avios is totally dependent 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.

(Head for Points is the UK’s biggest frequent flyer website with 1.5 million monthly page views.  Want to learn more about earning and spending Avios?  Click here to read our latest news storiesclick here to join our email list and click here to read our ‘Avios Redemption University’ series.  Read this article to learn how you can get 10,000 FREE Avios by signing up for the American Express Preferred Rewards Gold credit card.)

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Comments

  1. Shoestring says:

    [You will notice that none of these people flies BA long-haul economy.]

    This old chestnut needs revisiting. If you can avoid paying BA’s fees, taxes and carrier charges by starting your journey from a non-UK airport, I think Economy could be a perfectly good option. It’ll just come to cash cost vs reward flight cost.

    Many of us love Europe and tacking on a short break to each end of the LH flight could give you a great 3-country holiday (and the 3rd one can be deferred until a later time of your choosing).

    Plus the Avios can alternatively be used to book LH Economy reward flights on Oneworld partners with no need to involve BA at all or back track to the UK. Particularly useful if you have a place in the sun.

    • Hi Harry

      Sorry, new to this, I don’t understand how you can defer?

      “(and the 3rd one can be deferred until a later time of your choosing)”

      TIA
      RK

      • Shoestring says:

        Maybe you have to do it on the phone (multi-city/ stopovers)?

        Not booked an itinerary like this myself but plenty of others have done it. Can anybody adivise/ is it possible with reward redemptions as well as cash bookings?

        • Lady London says:

          Yes you do it with stopovers. Also stunningly effective, and about the only good thing, about Lufthansa redemptions which are end to end and not point to point. So cheaper and also offer this advantge to do the first leg of another trip by delaying the last leg back to Europe for up to 11 and a half months (maximum time you can nornally book the last leg on your ticket, from the date you booked the ticket).

  2. Gold members can book into V class. They can use avios for last minute one way long haul in economy (and biz to jfk most days).

    One way SIN-LHR in economy 18 Dec £1163, or using avios £315 + 12250 avios (you can use less cash and more avios too)

    Value: 6.9p per avios.

    Who does this? I am today.

  3. Have certain posts been deleted, or maybe I was dreaming ?!
    Somebody kicked off a question about BA flights ex AMS, and lower costs etc, but it’s gone.?

  4. I think what this discussion genuinely lacks is the ways how to earn more avios for free to justify less attractive redemptions and still make them profitable. Apart from various sign-up gimmicks, just channel some of your work-related travel through BA and collect ‘free’ miles. For me, for example, it reduces the average cost of earned avios and makes less attractive but necessary redemptions more sensible (from time to time)

  5. I’m kind of getting confused on how British Airways manages they redeems.. so I come from LATAM world where the amount of miles needed is depending on how much the flight does actually value on the market. So I have the amount of avios defined by this table BUT it asks me to pay more than £300 pounds on.. something? Maybe airport fees? Never seen something like that for flights to Buenos Aires. I could actually buy a separate flight with that for the same dates.

    https://www.headforpoints.com/2015/07/27/british-airways-avios-redemption-pricing-by-route/

    • The extra fees cover airport fees, tax and BA’s charges.

      • Lady London says:

        BA’s charges being the difference between British Airways, and where you come from Ayelen! Some people call it a “co-pay”. Others might call it the “carrier greed” thing .

    • Lady London says:

      For Buenos Aires, so far as pricing is concerned for both avios bookings and cash bookings, you might do better to pay very close attention to the Iberia website, in Spanish, at such times of the year as near to this kind of timing.

  6. Bunksunbound says:

    I do much the same as you NtP.

    I manage to trigger a BA 241 voucher each year on domestic spending (including a fair bit of travel) via BAPP. We use it for long haul redemptions. This year LHR-HAN, business class outbound and first inbound). Next year we are looking to go to Chile.

    I also aim to maximise avios and tier points when i can by booking long haul with one stop (ie via Madrid for some S American jaunts and HK for some Asia jaunts).

    My decisions about which airline to fly on any given day is influence by a variety of factors, including price, quality of the hard product, and convenience to me of the flight times from either LHR or LGW. Whilst BAdoes not have the best hard product, it does have a good route network and is convenient

  7. Why doesn’t anyone have any interesting names, like Helmut and Stardust?

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