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).

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.

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.”

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Comments

  1. Arguably a greater threat to the longer term Avios brand is … HeadForPoints! (sorry Rob).

    Whilst I am prepared to adjust my spending habits to play the Avios game, picking up bonuses and directing spending etc, many people including others in my family are not. They see the scheme as an opportunity to pick up a “free” flight with casual usage, and expect to do so maybe every couple of years. For them, making the flight genuinely closer to cash-free is an improvement.
    However, my family are surely not alone in ditching Avios entirely, Covid notwithstanding, for the simple fact that there’s no availability unless you want to go to Wuhan or Bangalore or sit on the phone until 4 in the morning a year out.
    Avios has been taken over by people who are prepared to be organised, read the websites, jump on opportunities, find the loopholes, and then hoover up the flights. It makes it a game for a small number of people to travel more frequently in a higher travel class and frustrates the casual user.
    Is this necessarily a problem? Not really – as long as BA feel it’s a profitable enterprise for them and as long as people are inclined to compete for the points and availability, then it’ll keep running. But if the perception is that it’s a perk for a narrow customer base who pick up a load of points by flying with business anyway and not something that the everyday user will get any value out of, then they will struggle to attract the high street applicant, which for longer-term viability will more often than not lead to a steady decline.

    • I think I agree with you. I have done very well out of my 241, playing the game, mileage runs and ex EU ticketing etc however I have become more and more frustrated at the lack of availability (despite all the nonsense about x or y seats on every flight.
      This view is compounded by recent experience of other airlines to whom I defected for cash tickets. One example is TK who seem to have seats on every flight, every day. Out of the UK the charges are mad but ex the USA they are very reasonable and the value is great. Another irritant is that while BA never seem to have seats they then advertise that Cathay or one of their other partners do have availability on the same day, often with multiple premium seats available. This would not be so bad except they still charge their outrageous fees masquerading as taxes even when the operating carrier has none.
      I have now moved permanently to the “cheapest premium cash fare” camp of travelers and my loyalty to any brand is at an end. As a leisure passenger comfort food and service trump convenience every time.

      • Aston100 says:

        I agree with this.
        Relying on Avios availability for specific destinations is always going to be a turn off for those who are quite casual.
        Like if you only wanted to go to South Africa or Thailand or Australia etc hoping to use your Avios and a companion voucher. Almost no chance of getting those flights during peak summer or Christmas holidays.

    • You know there are 5 million active Avios accounts in the UK and our core readership is around 50,000 people?

      • memesweeper says:

        > Avios has been taken over by people who are prepared to be organised, read the websites, jump on opportunities, find the loopholes, and then hoover up the flights. <

        I’m sorry, that doesn’t match my experiences. Outside of this forum, TLFL and FT (and their respective social events) I’ve never met anyone IRL who is behaves as you describe. I know a few of frequent flyers and they absolutely squander their Avios and other perks in my experience. Most Avios collectors are not frequent flyers and are just casual collectors, as Rob describes. Those casual collectors, the huge numbers carrying the BAEC Amex or cashing in ClubCard vouchers, they are the ones BA stands to loose with unattractive Avios pricing.

        • marcw says:

          But these “casual avios collectors”, there’s really no alternative to Avios. BAEC knows that.

          • memesweeper says:

            There absolutely is. Dozens of alternatives for cashing out of Tesco clubcard/t-c-b, and although the number of rewards credit cards is diminishing, there’s plenty of choice in the Amex and non-Amex space. E.g. the Amex c-back and John Lewis Partnership cards are both solid non-travel options.

            AFAIK most Avios do not get issued to frequent flyers for flying, they are issued to partners for promotions, and the vast majority go to credit card partners. These are, on the whole, collected by what I’d call casual collectors who are quite likely getting stiffed by the change in the default offering.

      • Doug M says:

        1 in 12 UK people have an ‘active’ Avios account. That’s hard to believe, or no?

        • Peter K says:

          I don’t think it’s an unreasonable number. Some of those will be there courtesy of family members who do it for them (I do my family’s).
          Others have a a vague idea of what they want and will patiently collect. A friend of mine collected about 1k avios a year via the old TSB mastercard that gave something like 0.2 avios per £ for 8 years or so.

        • Chrisasaurus says:

          It’s very hard to believe imo

          It’s also relevant that the bulk of the redemptions, in terms of seats on planes, are from the 50k and their equivalents, not from the masses. There could well be seven figures of active members with tiny balances that genuinely may never even get redeemed…

    • Mingus says:

      Lots to think about here. There are definitely insider/outsider incentives. For example, it’s advantageous to me that *I* know the tricks, but it’s probably equally valuable that others do not. It’s in my interest that people redeem points for 0.01p, so my 2p of value doesn’t trigger devaluations. It benefits me that _fewer_ people know about the T-355 day rule (I want those seats!). On the other hand, if the majority of casual punters ignore the scheme, all value is lost for the full-time players. Delicate balance: a bit like 3V cards writ large.

  2. jack bloggo says:

    24,000 is worse than 15,000. but the examples just highlight how poor the return is for someone collecting avios the hard way.

    substituting the normal cost for the 24K cost….

    I need 15K to get a flight to Budapest, thats £15000 of amex spend, or £6250 of spend at Tesco, or 120 one-way AMS flights, and for each of them I then need to add £35 . And thenn I need reward availability. If i need to be picky on availability I may as well pick a date when a LLC is doing it for just the £35, and forget about the hassle of collecting avios altogether.

  3. Doug Eaton says:

    Why does your correspondent need to travel Business Class?!

    • A rare one-off treat to herself which she had been planning for some time.

      • But she has 2 kids so unless one of them is under 2 she is relying on 3 CE seats becoming available which may not happen, especially at peak periods. The downside of collecting avios is that you quite often have to take what’s available and may well not be able to use them for your first (or even 2nd) choice of destination.

        • Chrisasaurus says:

          Plus aircraft dependant you may well find yourself in two different rows depending on seat allocation and full or mini middle seat. No mention of age of children but I wouldn’t be leaving either of my youngest in a row on their own!

      • Lady London says:

        And because she probably knows about all the LCC’s that flynto Budapest cheaper in Y. What she wants is ‘luxury’ otherwise she’d be on an LCC. Plus she possibly wants the cachet of flying J if mentioned to family being visited.

        Why else would someone willingly overpay?

  4. I have hundreds of thousands of Avios points that just keep on increasing. I cannot be bothered to jump from one scheme to another. BA flies wherever I want to go in Europe then lets me book a car and hotel. I get a thrill from literally spending nothing [except for £2 for tickets]. BA offers something to everybody. Yes, it is true that I cannot always go exactly where and when I want but then free is free, and free usually involves some small element of sacrifice. Keep it up BA, you are running a great scheme. And whilst BA may not be Emirates, it sure beats WIZZ or RyanAir!

    • Lashious says:

      Hiya Herb, how do you get your thousands of points? I’m more like the correspondant in terms of using mine as a treat, so please give me some clues..many thanks, Lashious

  5. Fraser says:

    I totally agree, if you don’t know how the scheme works they are not making it appear attractive.

    The BA Free Amex still advertises the following;
    9,000 Avios
    One return flight from London to 50 European destinations*4

    25,000 Avios
    One return flight from London to 140 European destinations OR a one-way flight from London to anywhere in the USA, Caribbean or Middle East*4

    *Terms, taxes, fees and carrier charges apply.

    But if you look for a basic London to Paris return in Economy, they quote you 18,000 Avios + £1.

    However, clicking on “other pricing options” not only reveals the advertised 9,000 Avios + £35, but also 5,000 Avios + £95.

    Surely the lowest mileage redemption with highest cash element should be the one to advertise as a benefit of the credit card, eg “One return flight from London to 50 European destinations from as little as 5,000 Avios*” makes it seem much more attainable.

    Of course the detail is in the fine print and there may be an element above or below the £35 which can’t be classed as taxes and surcharges, or we might see dynamic pricing introduce flights from as little as 1 Avios!

    At least the letter writer doesn’t need to pay the same again to connect from elsewhere in the UK to begin with, which doubles the fare.

    • Alex W says:

      That is Amex’s advertising, not BA’s. Amex is not always good at advertising the benefits you get!

  6. Callum says:

    I don’t quite understand the logic behind your simultaneous belief that Avios collectors are generally “smart and well educated” so would mentally calculate the number of Avios earnt per economy flight and translate that into a flights needed per reward flight ratio, yet are generally incapable of reading a list of price options and working out which one is best.

    Surely it’s one or the other?

    • We’re not discussing how BA prices scale, we’re discussing whether highlighting the priciest one is a good idea.

  7. jason says:

    Isn’t the advantage that you have virtually free cancellations

    • Hardly free at £35 a pop

      • Mike P says:

        One advantage that we GGL members have, cancellations are still entirely free. I think that used to be the case for vanilla Golds at one point in history too.

        • Michael says:

          It was free for Golds but that was stopped, allegedly on the basis of mass spoilage of Miles inventory by Golds booking multiple flights / dates and cancelling at the last minute at no cost to themselves.

      • Doug M says:

        £35 is nothing for that sort of flexibility.

        • Fenny says:

          Pretty sure that the lady who wrote to Rob doesn’t care about flexibility, as her leave dates will have to be booked in advance and won’t be that flexible. And £35 per seat cancellation fee for 3 is a big deal.

    • Mikeact says:

      Plus a 23kg suitcase.

  8. Sunguy says:

    Rob,

    I was hoping you might update this to include the £35 canx charge – even if you use the £1 option ?

    • The last few reports say that the £1 cancellation fee is back.

      • memesweeper says:

        oooh, by policy or an IT error? if the former that’s huge news…

        • The Savage Squirrel says:

          It would also be stupid and bad for BA as speculative multiple bookings until dates firm up would hoover up all redemption availability – certainly on short haul – but then be cancelled last minute. End result would be zero reward seat availability yet flying with empty seats. Annoyed Avios collectors AND lost revenue opportunity is basically 100% opposite to what a frequent flyer scheme should be trying to achieve…

          • memesweeper says:

            … makes sense, which implies it’s an IT misimplementation, again.

      • Rui N. says:

        Rob, please do tell… I have 2 flights I wish to cancel, and I’m waiting until the £1 cancellation fee (hopefully) becomes available again.

      • Sunguy says:

        Thats cool; are you able to confirm this in any way ?

        …and Im guessing here – but unless its an “IT Feature” and not actually policy, then if/when it gets fixed – Im back to the £35 per person “avios re-deposit” fee ?

  9. I had been winding down my avios balance – they are becoming increasingly irrelevant with high fees, reduced availability etc. I was finding they were never saving me any money as I couldn’t use them when I needed to go, and when I could there were cheaper tickets available. The ability to convert avios to cash, even at a poor rate, like the above is useful.

    I have temporarily halted this because I have managed to get gold status. The gold reward allowing me to get any flight I want for double avios is genuinely useful and saves me significant cash, albeit at burning through avios quickly.

    • Doug M says:

      Earn and burn is a reasonable strategy, Avios are anything but irrelevant.

  10. Charlieface says:

    What makes me laugh even more is that there is some weird IT bug that shows the taxes on most LH flights as very high on the selection page, it only goes down once you click through. A lot of people will not click through.

  11. the_real_a says:

    You can almost hear the conversation in the waterside marketing department. Ryanair/Wizz headline pricing is £9.99 for a flight. We are advertising 9000 Avios and £35. Why would anyone want to start collecting?

    The “inequality” of Avios collectors means that you have increasing difficulty keeping both the poor and rich motivated and enjoying value.

    • Chrisasaurus says:

      However (though not taking away from that crux of your point that you cannot delight anyone if you wish to attract everyone) it does remain the case that like almost all airline loyalty schemes Avios makes a truckload of cash…

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