Maximise your Avios, air miles and hotel points

Is the new British Airways ‘use more Avios points but just pay £1 of taxes’ policy a big mistake?

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During 2019, British Airways announced a shake-up of Avios pricing on short-haul flights.

Since Avios was introduced, short-haul flights have come with a flat £17.50 one-way / £35 return added on.  This was termed ‘Reward Flight Saver’ and is a contribution towards the taxes and charges due on the flight.

Our full Avios pricing chart shows these numbers.  A return flight to Amsterdam on a peak day was 9,000 Avios + £35 return.  Budapest would be 15,000 Avios + £35.

Under the new pricing system, British Airways cut the headline charges to £1 return.  In return, it increased the headline number of Avios needed.

You now see a headline price on ba.com for Amsterdam of 18,000 Avios + £1:

Amsterdam Avios pricing

and for Budapest:

Budapest Avios cost

Here is the important bit.  The old pricing hasn’t gone away.  When you click to the final payment screen, you see a range of options.  One of them will be very close to, if not the same, as the original option.

See Amsterdam here:

Amsterdam Avios pricing

…. where the 9,000 Avios + £35 option is still there, half way down.

Importantly, you will usually find that the best value deal is the one nearest to the old pricingThe £1 deal is usually a bad deal.

For Amsterdam, for example, British Airways is asking for 9,000 extra Avios (from 9,000 to 18,000) – which I’d value at £90 if used properly – in return for cutting £34 off the taxes and charges (from £35 to £1).

Avios 50p redemption taxes

Has this wrecked the value perception of Avios?

When BA started offering this, I thought it could backfire.  I was sure that pushing up the ‘headline’ price would make Avios look less attractive.

And yet …. people kept telling me that the new pricing was very popular.   Perhaps this is true.  If it IS true, it simply proves that the average (generally well educated) Avios collector has the maths ability of a gnat, because the £1 deal is a bad deal.

This is why I think there is a problem.

If you are thinking about collecting Avios, the obvious thing to do is to look at some typical redemptions and see what they cost, and whether that is realistic for you or not.

So …. off you go to ba.com and you look up the price of a return Economy flight to Budapest.  The headline price you see is the one in the picture above ….. 24,000 Avios + £1.

Your brain then goes …… whoa ……:

“I need to spend £24,000 on the free BA Amex credit card to get one Economy flight to Budapest?”

“I need to spend £10,000 at Tesco to earn 10,000 Clubcard points to get 24,000 Avios for an Economy flight to Budapest?”

“I need to take 192 one-way Economy flights to/from Amsterdam, earning 125 Avios each way, to get 24,000 Avios for a return Economy flight to Budapest?”

You wouldn’t blame someone for thinking like this.  British Airways thinks that 24,000 Avios + £1 looks more attractive than 15,000 Avios + £35.  I disagree.

To me, 15,000 Avios + £35 appears a lot more achievable than 24,000 Avios + £1.

Avios 50p redemption taxes

And it’s not just me.

The reason I wrote this article, and the reason I use Budapest in this example, is because of an email I received last week.  This person is perhaps not the typical HFP reader in terms of her background, but I think her thoughts are closer to the way that the average person looks at Avios than many of us.

I’m not going to comment on the email, but I’d like you to read it and then decide for yourself if British Airways is making a mistake by focusing on ‘£1 taxes’.

“I hope you are well.  I have read a lot of your advice on Head for Points, and I find it really useful.  I have now a problem though with BA and their redemption tickets.

I am a single mother on low wages with 2 kids, working hard, converting my Tesco shopping to Avios, using cashback programs to earn Avios, spending on Amex, etc.  I even bought some when they offered a 50% bonus.

My family lives in Hungary and we visit them 3 times a year. Unfortunately I am not a businesswoman with Gold status and upgrade vouchers, etc.

Until recently it cost 15,000 miles peak for a business class one way per person. So I collected and collected and now have 40,000 miles, just 5,000 short.

I logged into my account to see availability and other pricing options, and I was shocked to see that it now cost 21,500 per person for a one-way in business class? For 3 people that is a HUGE difference.

I would understand a raise from 15,000 to 17,500 miles, but to over 21,000??? I am now years away from that little treat which was within reach. I am heartbroken, I am devastated.

Is this a computer error, or the result of Covid19 or everybody is after reward tickets to Budapest?  I am sure you are busy, but it would mean a lot, if you could look into it. Can you imagine your dreams being shattered in front of your eyes? I know this is a short route, business class is not as fancy as on a long haul flight, but we don’t go anywhere else. A little treat, some excitement to collect for and look forward to. But for 21,500 per person it us no longer worth it. Unachievable.”

(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.)

Comments (137)

  • cinereus says:

    Betteridge: No.

    I think the “average” person doesn’t ever plan to spend £24k on a credit card to get a cheap flight. If anything they’d just use whatever points they get from the SUB.

    Conversely, for those of us who are awards addicts, 24,000 points is a pittance and can be earned in a month or two. And for many MANY of us, a valuation of even 0.5p/Avios is also wildly optimistic compared to what they’d normally actually shell out with cold hard cash.

    • cinereus says:

      You also have to question someone who is wasting Avios flying in Business for a 2.5 hour flight and is also seemingly unable to click the bright blue link saying “more pricing options”.

      • Zumodenaranja says:

        1p per Avios is all very well, but £34 out of my bank account is cold, hard cash

        Whereas (in normal times at least) Avios fall into my account as frequently as raindrops on Manchester….

        So my rational valuation is forever sabotaged by an unconscious certainty that the rain will never end… and I spend Avios rather than cash

      • ZB says:

        @cinereus God you’ve lived a shettled life. Our ability to waste mental energy on maximising the cash value of an bloody Avios is just one (against many I’m sure) indicators of privilege. Get off your high horse and stop sounding so condescending.

  • Bob says:

    Another thing is the option to use a cash booking and reduce the price with Avios. EG my trip GLA-VCE 32,000 avios + £2 or my fav 21,000 +£70. However taking a nu=ormal booking and reducing the price with Avios is £75 + 18,500 avios but you also get 3,500 back so a net of 15,000 avios plus you get TP’s.

  • Nick says:

    BA are making a big mistake promoting the lowest cash price, but highest Avios price first.

    I can completely understand why someone would feel disappointed that after all that effort to earn the points. To use them becomes even more distant. Totally illogical!

    I’m also surprised by some of the responses here – the original email was entirely valid and not everyone will be able to spend such high amounts on leisure spend or generate vast Avios balances from business paid travel.

    I do think a return to planet earth might be in order for some – I’m sure the people with REAL money just pay the cash price for a flight they want; and be done with it!

    The majority of us here are just bargain hunters for travel trying to get a good Club World / IB Business redemption! We aren’t that different from the buyers who flock to reduced counters in supermarkets. It’s just a different type of reduced product we want! Enough of the snobbery.

  • Nick says:

    Surely it makes sense for BA to show first the option that’s best value for them, not the customer? Then anyone who is happy with it will click it, and the rest can read the other options?

    Tesco doesn’t put the best value product for the customer at eye level (e.g. best price per 100g), they choose the one that makes them the most profit. Want a cheaper one? You have to hunt around the shelves. Same principle at BA – they’re not a charity. In both of these cases, those who search ‘win’ and are effectively subsidised by the lazy. Fine by me.

    • Alex W says:

      You shop in the supermarket every week and know full well there are cheaper products at the bottom.
      This lady has saved her Avios for years and doesn’t know there is a cheaper option to select on the website she rarely used.
      Not a problem for those of us in the know – unless/until that option disappears…

  • dabm says:

    It makes perfect sense to me. Surely BA would highlight the option that reduces the impact of Avios redemptions to them, not the user (i.e. giving lowest value for them). You can notice it especially if you use the part pay with Avios option – the highest cash discount using Avios provides the lowest value per mile.

    I would assume that the majority of Avios users are not thinking about it rationally on a value per mile basis. It would be interesting to see what the average redemption value per mile is from BA’s perspective, I would strongly bet that it is way lower than the 1p per mile that most people here value Avios at.

    • Rob says:

      BA should be highlighting the option which makes Avios look most attractive.

      When they run ads in the press for flights, they don’t show the most attractive price for them (£3,000 to New York for a fully flexible Economy return) do they?!