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British Airways cuts Avios flight taxes to £1 in the UK and Europe – but it isn’t as good as it sounds

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It’s back.  Following a short trial in April, British Airways is rolling out ‘£1 taxes’ Avios redemptions on ALL UK and European routes for a trial period.

Instead of paying £35 (Euro Traveller) or £50 (Club Europe) in taxes and charges on return short haul flights, you can now choose to use more Avios and reduce your taxes and charges to just £1.

Be wary, however.  This is not necessarily a great deal.

Avios wing 9

Take a look at the screenshot below as an example.  It shows a return Avios redemption on British Airways in Euro Traveller (economy) from London Heathrow to Nice.

If you look at our full list of Avios redemption pricing by route (click here), this would normally price at 8,000 Avios + £35 for a Reward Flight Saver reward redemption on an off-peak date.

Instead, you get (click to enlarge):

New British Airways Avios pricing

The ‘headline’ price is shown as 15,000 Avios + £1 in taxes and charges.

When you click through to the payment page, you are given this list of options:

£1 British Airways Avios pricing

The ‘old’ option of 8,000 Avios + £35 is not there.  It has actually got cheaper – you are now offered 8,000 Avios + £31.

It isn’t easy, at first glance, to see which option is the ‘best’ value, assuming you have a lot of Avios and a lot of cash.  However, doing the maths:

15,000 Avios + £1 = base offer

11,500 Avios + £21 = £20 spent to save 3,500 Avios = ‘buying’ Avios at 0.57p

8,000 Avios + £31 = £30 spent to save 7,000 Avios = ‘buying’ Avios at 0.43p

5,900 Avios + £61 = £60 spent to save 9,100 Avios = ‘buying’ Avios at 0.66p

5,000 Avios + £71 = £70 spent to save 10,000 Avios = ‘buying’ Avios at 0.7p

4,400 Avios + £81 = £80 spent to save 10,600 Avios = ‘buying’ Avios at 0.75p

As long as you value an Avios point at 0.43p or higher – and all HfP readers should value them far higher than this – you should NOT take the £1 offer.

The only question in your mind should be which of the other scenarios is best for you – all of them are basically letting you ‘buy’ Avios VERY cheaply by using more cash. The only issue is whether you buy a few for a very low price (8,000 Avios + £31 is the best ‘price per point’ spot) or buy a lot for a higher price (4,400 Avios + £81).  Taking the £1 offer is a bad deal.

British Airways reduces Avios taxes to £1

It happens in Club Europe too

If you try to book a Club Europe return flight to Venice, you get these options on a peak day.

This flight SHOULD cost 30,000 Avios + £50 return.  The new headline offer is:

British Airways £1 Avios pricing

…. with the following alternatives:

British Airways £1 Avios pricing

If we do the maths again:

40,000 Avios + £1 = base offer

35,600 Avios + £25 = £24 spent to save 4,400 Avios = ‘buying’ Avios at 0.55p

30,000 Avios + £50 = £49 spent to save 10,000 Avios = ‘buying’ Avios at 0.49p

22,000 Avios + £121 = £120 spent to save 18,000 Avios = ‘buying’ Avios at 0.67p

20,000 Avios + £141 = £140 spent to save 20,000 Avios = ‘buying’ Avios at 0.7p

16,000 Avios + £161 = £160 spent to save 24,000 Avios = ‘buying’ Avios at 0.67p

You get the same result as in the Economy example.  The £1 deal is the worst deal.  As long as you believe you can get more than 0.49p per point on another redemption, it makes sense to pay more cash and use fewer Avios.

Another factor …. cancellation costs

I have just said, twice actually, that the £1 deal is the worst deal.

Except ….

If you believe that there is high chance of cancelling a ticket, the £1 route is possibly the best one.  When you cancel an Avios redemption, the cancellation fee is the lower of £35 per ticket OR the taxes paid.  If you only paid £1 in taxes, your cancellation fee is only £1.

For a family of four, you are getting your potential cancellation cost down from £140 to £4 by taking the least cash route.

Is offering ‘£1 taxes’ a good thing or not?

On the face of it, it is fine.  It gives people more options and that is generally a good thing.

I don’t recommend taking the £1 deal if you earned your points from credit card spending, Tesco Clubcard conversions, Heathrow Rewards conversions etc.  You are getting a poor return compared to taking one of the other deals.

Of course, you may be happy with this new offer if all of your points came from flying or you are ‘Avios rich, cash poor’.

I’m sure that more quirks in the pricing will come clear in the next few days.  And, of course, this is officially still a trial.

PS.  You need to qualify for Reward Flight Saver to get the £1 deal.  We explain Reward Flight Saver here.  This means that your British Airways Executive Account needs to have earned 1 Avios over the past 12 months.  If you have not done this – unlikely for a HfP reader – you will be shown the full taxes when you try to book.

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Category

British Airways and Avios

Comments (142)

This article is closed to new comments. Feel free to ask your question in the HfP forums.

  • Bob says:
    16 Jul16 July 15:01

    Why £1 is still needed?

    Why not a proposal with £0?

    • nick says:
      16 Jul16 July 15:03

      I prefer £1

      Lets you use a credit card for better trace and protection

    • Lumma says:
      16 Jul16 July 15:08

      Isn’t there an issue with the BA website when there taxes are zero (JAL domestics)? You have to put a charity donation on or it won’t let you book

    • Memesweeper says:
      16 Jul16 July 15:08

      My guess? BA’s IT cannot handle a booking with zero cash component.

      • Rob says:
        16 Jul16 July 15:13

        Correct. It can’t. We know this because Japanese domestic redemptions used to be tax free – and ba.com couldn’t book them. It only worked if you added a £1 Flying Start donation.

  • Lee says:
    16 Jul16 July 15:24

    Does that mean RFS is cheaper?
    Booking Prague next Easter, It used to be 4500 avios + £17.5
    now 4500 Avios + £ 15.5

    • Rob says:
      16 Jul16 July 16:17

      Yes, for some odd reason Economy has come down by £4.

      • Lady London says:
        16 Jul16 July 17:06

        “for now”. IMV this is a disguised price rise.
        The plan is clearly to get more Avios liability off thé books. That 15.5 plus 4k is not going to stay.

        In the end everyone will for sûre ne paying more Avios. And if any ways Of payung les money become widely used, a rule change by British Airways will take care of that.

        Very few people will like this better than the current scheme once it’s established. Only those who have worked out Avios production machines, and those who earn lots of Avios flying for their employer so they have a lot of Avios which cost them nothing.

        Could we hope this change in short.haul awards value will get enough Avios liability off BA’s books, and bring in enough overall money to enable the outrageous extra charges (YQ) BA makes on longhaul redemption tickets to be reduced?

        • pauldb says:
          17 Jul17 July 08:11

          There’s no pressure on BA to get the liability off its books. Year after year it grows. It’s free working capital for BA: deferred revenue – money that has come in from ticket sales or partners, against which the costs of redemption are month or years away (or never come).

          If paying less avios was a problem it would be gone already. Both the less-avios and more-avios options are offered because they are thought to be positive for customer engagement and allow BA to redeem the avios at an acceptable cost (i.e. probably an accounting profit).

  • David Williams says:
    16 Jul16 July 15:29

    Cross posting my comments left on Flyertalk:

    There are two hidden issues here that make me think this is a change for the worse for many of us.

    1) On routes where tax was lower than RFS fee, you previously had the option to pay the fixed Avios price and the actual tax. This is now gone. E.g. have just priced PMI-LCY which used to be 6500/7500+£9.70, now it is 6500/7500+£17 just like the outbound. Hidden price increase.

    2) Refunds. When you used to have the flat rate and the option to pay reduced Avios for more cash, the cancellation fee was always capped at the amount of the taxes and the additional cash paid to reduce the Avios element was always refunded. E.g. continuing the example above, PMI-LCY was 6,500 + £9.70 off peak but you could reduce this to 2,150 + £35 + £9.70 (and effectively buy Avios from BA at 0.8p) and if subsequently cancelled the fee was capped at the amount of the taxes, £9.70 and you got the ‘cash’ element back in full. I have a feeling cancelling one of these will result in a £35 fee whenever more than that has been spent, which obviously makes the higher Avios/lower cash options more attractive, but as we know these are at a value of less than 0.5p/avios spent.

    As someone that books 50 of these a year it’s a big negative impact for me personally.

    • Rob says:
      16 Jul16 July 16:18

      It would need a re-write of ba.com to impose a £35 cancellation fee (since it would require you to make a fresh payment) so I doubt it will work this way.

  • AJA says:
    16 Jul16 July 15:34

    One advantage to paying £121 and only using 22000 Avios (in Club) is that you get s75 protection if you pay using a credit card as you’ve paid more than £100.

    • Shoestring says:
      17 Jul17 July 07:09

      You only have to pay £1 on a credit card if the total purchase cost is over £100, so all the purchase options above (in Club at least but probanly also Economy) would be covered by S75. Interesting legal point as to how you work out the value of Avios points to derive the full purchase cost. You could use 1.6p or BA’s normal selling cost, I suppose.

      • Callum says:
        17 Jul17 July 07:25

        I wouldn’t imagine Avios would be valued as being worth anything when it comes to working out how much you’ve paid for S75.

        • Charlieface says:
          17 Jul17 July 08:16

          People have already won cases of S75 with the FOS where they used vouchers to bring the cost below £100, I know someone personally who did this. Avios should be no different

          • Shoestring says:
            17 Jul17 July 09:30

            You would just compare it to the cash equivalent fare. Club is easy as it’s pretty much always over £100.

          • Jonathan says:
            17 Jul17 July 10:01

            Does the £100 bit have to be the overall transaction value or individual line items. Say i bought 3 CE tickets at £50 each on one transaction – is that covered? I thought it was line items thats why Ryan Air and the like charged single fares only even for return trips?

          • Jonathan says:
            17 Jul17 July 10:09

            Actually, i just looked at my BAPP card statement and despite it being one single booking BA charged the credit card 6 times – 3 timed for each persons airfare and 3 times for each persons seat selection so 6 transactions for one booking. Neither transaction alone is over £100 so is this covered by S75?

          • Shoestring says:
            17 Jul17 July 12:08

            S75 looks at the single aggregate transaction/ payment, not individual fares/ tickets – this has been ruled on by the FOS

          • Charlieface says:
            17 Jul17 July 14:27

            Thought that FOS ruling was only regards parts of return tickets, not different passengers. Could be wrong, haven’t checked that one up.

          • Callum says:
            17 Jul17 July 20:52

            Surely a voucher is completely different though? It’s a payment method denominated in a real currency, avios are not.

            Comparing it to the equivalent cash price and using that figure seems even more ridiculous. What makes you say that’s how it works?

  • Martin Pelant says:
    16 Jul16 July 15:56

    Some observations:
    * You can no longer save when booking 2x one way tickets (before the change the taxes were capped at £17.50 meaning flights FROM countries with low taxes like Luxembourg could cost as low as 4,000 Avios + £3.30 LUX-LHR. Now they now all seem to cost the same 4000 Avios + £15.50 regardless of direction)
    * Choosing £1 + Avios option might be useful if you have tentative plans as cancellation fee is capped at what you paid meaning you should get all Avios back if you cancel and only pay £1

    • Ed says:
      17 Jul17 July 12:15

      You can still transfer the required Avios to Iberia Plus and make a booking at the old BA rates, such as 4,000 Avios + £3.40 in taxes for an off-peak economy reward flight from LUX to LHR.

  • Mike says:
    16 Jul16 July 17:24

    My upcoming LON-AMS flights are actually marginally cheaper now if I use the minimum amount of avios and maximum cash!

    Yesterday it was 15k + £210 for 3xCE tickets, today it’s 15k + £196…

  • BJ says:
    16 Jul16 July 17:59

    What I like about this is that if I am prepared to pay BA or another airline £X for a nonrefundable nonchangeable flight, how many extra avios (Y) would I need to pay BA at the same £X cash point to buy flexibility? And, how does this £X + Y avios compare with purchasing a WTP revenue flight and subsequently UUA to CW where the cost to change on a longhaul booking is typically a fee of around £280 + £35 reward change fee + any difference in fare. It could all get very interesting, especially given the increasing difficulty in collecting avios.

    • Russ says:
      16 Jul16 July 18:16

      I’d agree. I’d Imagine those who collected most of their points by churning cards would be more hesitant to use points to reduce the costs.

      • Rob says:
        16 Jul16 July 18:27

        But you have this flexibility anyway via a redemption. Nothing in this experiment changes the number of seats available.

        • Pgw says:
          17 Jul17 July 07:54

          Indeed. The question of value only comes into play when there are flights available for redemption. A very obvious point I know but frequently forgotten in these discussions.

  • Paul says:
    16 Jul16 July 22:56

    If you value 1 Avios as 1p then the least number of Avios option works out best value.

    40,000 Avios + £1 = £401 equivalent price
    35,600 Avios + £25 = £381
    30,000 Avios + £50 = £350
    22,000 Avios + £121 = £341
    20,000 Avios + £141 = £341
    16,000 Avios + £161 = £321

    • Rob says:
      17 Jul17 July 07:45

      …. but that is unrealistic here, because Venice is far cheaper in Business than that if you include a Saturday night.

This article is closed to new comments. Feel free to ask your question in the HfP forums.

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