Why even peak-time Economy Avios redemptions have become poor value

The general mantra about using airline miles, especially those like Avios which impose hefty fuel surcharges, goes like this – ‘redeeming for Economy flights is a waste of miles’.

In general, of course, this is true.  If you try to use Lufthansa Miles & More miles for an economy short-haul flight from Heathrow to Frankfurt, it wants £82 in tax – plus an astonishing 35,000 miles – for an economy short-haul redemption, a truly ludicrous figure.

British Airways managed to knock this problem on the head for short-haul redemptions by introducing Reward Flight Saver.  BA rarely gets the credit it deserves for being the only European airline to tackle the problem of ‘taxes and charges’ on short haul.

By capping taxes on European flights at £35 in Economy / Euro Traveller, you will usually be getting around 1p per Avios of value.  This is ‘real’ value as you would otherwise have bought the ticket for cash – not ‘finger in the air’ value based on some notional value of how much you would pay for a business class seat.

Is it true that long haul economy redemptions are a terrible use of Avios?

Almost three years ago, I ran an interesting experiment which showed that – in many cases – redeeming Avios for peak season Economy / World Traveller long haul flights was often decent value.  Not every route, by a long way, but there were some deals to be had.  The widely held view that all long haul Economy redemptions are rubbish was wrong.

Today I thought we would see what has changed.  The answer is ‘quite a lot’ – and not in a good way.

Here is a sample of British Airways pricing from their Low Fare Finder tool.

These are the CHEAPEST Economy return tickets available during August 2019 at the present time.  Remember that these flights may be at inconvenient times or inconvenient days of the week.  In reality, the flights most convenient for you may be pricier, so it is possible that in reality the results will not be as bad.  These are also ‘hand baggage only’ fares, and Avios tickets come with a free suitcase.

I compare the cash cost to the ‘Avios plus taxes’ cost.  To be fair to BA, I only looked at flights departing between 1st August and 24th August 2019.  Prices tend to dip in late August because of the Bank Holiday but this is too late for anyone with children who return to school in the first week of September.

New York – £428 or 40,000 Avios + £375

Miami – £499 or 50,000 Avios + £375

Las Vegas – £709 or 50,000 Avios + £375

San Francisco – £481 or 50,000 Avios + £375

Barbados – £574 or 50,000 Avios + £336

Mumbai – £609 or 50,000 Avios + £324

Hong Kong – £719 or 60,000 Avios + £347

Singapore – £598 or 70,000 Avios + £362

The ‘pence per Avios’ score comes out like this:

New York – 0.13p

Miami – 0.25p

Las Vegas – 0.67p

San Francisco – 0.21p

Barbados – 0.48p

Mumbai – 0.57p

Hong Kong – 0.62p

Singapore – 0.47p

Have long haul Avios redemptions always been such poor value?

No.

I ran this same example almost three years ago.  In general:

the price of cash flights is generally the same or a little lower on most routes (I am comparing August 2016 flights booked in March 2016 vs August 2019 flights booked in January 2019)

the taxes and charges on economy redemptions have crept up by about £75 for the US and £35 elsewhere

More importantly:

in 2017, BA made ALL of August ‘peak’ in terms of redemption pricing.  Until then, ALL Tuesday and Wednesday flights were treated as ‘off peak’ irrespective of the month.  Here is the 2019 peak and off-peak Avios calendar.  This makes a MASSIVE difference.  New York, for example, jumps from 26000 Avios – if you could have travelled on a Tuesday or Wednesday in August – to 40000 Avios.

The net result is that using Avios for BA Economy flights has become substantially poorer value over the last couple of years.  When I ran this test in March 2016 I concluded that we had potentially been unfair in writing off all economy redemptions as poor value.  Today, I am less convinced.

The list below compares:

the value per Avios for a BA economy flight for travel 1-24th August 2019 (taking the lowest BA cash fare on sale in January 2019 and using peak rate Avios pricing as August is now ‘all peak’)

versus

the value per Avios for a BA Economy flight in August 2016 (taking the lowest BA cash fare on sale in March 2016 and assuming the Avios redemption was done on a Tuesday or Wednesday to pay the off-peak rate)

There are three caveats to this data:

Cash pricing is for ‘hand baggage only’ fares, so the Avios option improves if you are taking luggage

Avios tickets are refundable for a £35 fee whilst cash tickets are non-refundable

On the other hand, cash tickets will earn Avios back when you fly

Here we go:

New York – August 2019 value per Avios: 0.13p   August 2016 value per Avios: 0.50p

Miami – August 2019 value per Avios: 0.25p   August 2016 value per Avios: 0.74p

Las Vegas – August 2019 value per Avios: 0.67p   August 2016 value per Avios: 1.37p

San Francisco – August 2019 value per Avios: 0.21p   August 2016 value per Avios: 0.92p

Barbados – August 2019 value per Avios: 0.48p   August 2016 value per Avios: 0.91p

Mumbai – August 2019 value per Avios: 0.57p   August 2016 value per Avios: 0.75p

Hong Kong – August 2019 value per Avios: 0.62p  August 2016 value per Avios: 1.28p

Singapore – August 2019 value per Avios: 0.47p  August 2016 value per Avios: 0.60p

This is shocking.  Not just in terms of the appalling ‘pence per Avios’ value received – even the ‘best’ route I looked at doesn’t come close to a level where I could justify redeeming, unless I wanted flexibility to cancel – but also how the value has been slowly chipped away.

Like a frog boiling in a saucepan, the combination of:

flat or lower cash fares, partly from the launch of ‘hand baggage only’ on long haul

higher taxes and charges on Economy redemptions, and

the removal of off-peak Avios dates during August

…. has cumulatively crept up on us without being fully noticed.  It has wiped out much of the value of the Avios scheme for the ‘average’ customer looking to redeem during the school holiday for long haul economy flights.

Of course, on certain higher priced dates and factoring in luggage fees, the value you get can be a lot better but the base line valuation for long haul Economy redemptions is now pretty darn low.

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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.