Maximise your Avios, air miles and hotel points

How ‘taxes and charges’ on Avios redemptions from the US got out of control

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The level of ‘taxes and charges’ added to long-haul Avios redemptions on British Airways is always a sore point.

In general, I use a ‘finger in the air’ sum of £550 for the taxes and charges on a Club World or First return redemption from London (£650 for North America) whenever anyone asks what they will be.

That obviously isn’t small change, but it still gives acceptable value for your points most of the time as long as you are redeeming for Club World or First.  The biggest threat to Avios – given BA’s dominant UK position – is not from other frequent flyer schemes but from aggressive sale fares from other airlines.

Avios wing 11

When you have Qatar Airways regularly offering Business Class tickets to Asia for £1,000 in a sale, admittedly starting elsewhere in Europe, for a superior product then it offers clear competition.  It also earns Avios and tier points.

Avios is, of course, under threat from other angles.  You can switch from a BA credit card to a different rewards credit card.  You can convert Nectar points, Heathrow Rewards points or Amex Membership Rewards into a different treat. 

You can only squeeze things so far, and £1 earned by Avios from Sainsburys is worth a lot more – because it is ‘real’ money – than £1 transferred across intra-group from British Airways.  If people stop seeing value in the scheme, IAG Loyalty will stop seeing the money coming in.

But be grateful you don’t live in the US ….

What you might not realise, if you live in the UK, is how reasonable BA’s ‘taxes and charges’ are compared to what a US resident must pay.

The ‘charges’ element of ‘taxes and charges’ is just a made up number, which BA pockets.  It doesn’t actually reflect anything in particular and it has no qualms about changing it on a market by market basis.

Here’s a little Sunday quiz.

The ‘taxes and charges’ on a Club World return ticket from London Heathrow to New York JFK are £675.

(It is worth noting that this number has increased by £140 since I last did this exercise in 2017.  Only North America has seen such increases – taxes elsewhere have remained roughly flat since 2017, adjusting for Air Passenger Duty.)

What do you reckon the ‘taxes and charges’ are on a Club World return ticket from New York JFK to London Heathrow and back?  Here’s a clue – it isn’t £675.

£500?

£600?

£700?

£800?

£900?

£1,000?

No, sorry, you’re still wrong.

The actual figure is an astonishing £1,279 return. 

You can prove this yourself by doing a dummy booking on ba.com.  You need to click through to the payment page for it to recalculate to the exact number.

You should see this:

Why is this?

It isn’t entirely clear why BA treats North America like this.

You don’t see it with other markets.  A return Club World redemption to Dubai is £542.  Book the trip in reverse and you pay £561.  That’s near enough the same, given currency fluctuations.

One view is that, because Avios are so easy to earn in the US (BA has, in the past, given out 100,000 Avios as a credit card sign-up bonus) it tries to create a level playing field with the UK by adding extra charges.  This ‘protects’ UK Avios collectors because it reduces the willingness of US members to redeem on transatlantic flights, with many choosing to use them on domestic American Airlines and Alaska Airways flights instead.  This is only a theory though.

Even if you live in the UK, there is a lesson here

If you are booking Avios tickets to North America, do NOT book them as 2 x one-way tickets.  This is because the ticket from London will attract the lower UK level of ‘taxes and charges’ whilst your flight home, when booked on a separate ticket, will attract the higher US level of ‘taxes and charges’.

For example, as we noted above, a return ticket from the UK to New York has Club World taxes of £675.

Booked as a one-way in each direction, the total taxes are £455 outbound and £523 inbound, for a total of £978.

You should bear this in mind if, for example, you see a special one-way cash offer from a low cost airline from the UK.  Don’t think that booking the outbound flight to the US for cash and then using Avios for the return is a good deal, because you will be paying an inflated level of ‘taxes and charges’ on the flight back.

PS.  Remember that using your Avios to fly on Iberia saves hugely on taxes and, for the US East Coast, Avios.

An off-peak Business Class return from Madrid to New York, booked via the Iberia Plus website to avoid BA surcharges, costs just 68,000 Avios + $180, a huge saving:

You can learn more about redeeming Avios on Iberia here.


How to earn Avios points from UK credit cards

How to earn Avios from UK credit cards (June 2022)

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.

Until 18th July 2022 there is an astonishing special offer on these cards. You get 50,000 Avios on the Avios Plus Mastercard and 10,000 Avios on the free Avios Mastercard. You can apply here. We strongly recommend getting the Avios Plus card whilst this offer is running.

You qualify for the bonus on these cards even if you have a British Airways American Express card:

Barclaycard Avios Plus card

Barclaycard Avios Plus Mastercard

50,000 Avios for signing up (A CRAZY SPECIAL OFFER!) and an upgrade voucher for spending ….. Read our full review

Barclaycard Avios card

Barclaycard Avios Mastercard

10,000 Avios for signing up (SPECIAL OFFER) and an upgrade voucher for spending £20,000 Read our full review

There are two official British Airways American Express cards with attractive sign-up bonuses:

British Airways BA Premium Plus American Express Amex credit card

British Airways American Express Premium Plus

25,000 Avios and the UK’s most valuable card perk – the 2-4-1 voucher Read our full review

British Airways BA Amex American Express card

British Airways American Express

5,000 Avios for signing up and an Economy 2-4-1 voucher for spending £12,000 Read our full review

You can also get generous sign-up bonuses by applying for American Express cards which earn Membership Rewards points.

SPECIAL OFFER: The sign-up bonus on Amex Gold is increased from 20,000 Membership Rewards points to 30,000 Membership Rewards points until 19th July 2022. This card is free for the first year.

American Express Amex Gold

American Express Preferred Rewards Gold

Your best beginner’s card – 30,000 points, FREE for a year & two airport lounge passes Read our full review

American Express Platinum card Amex

The Platinum Card from American Express

30,000 points and an unbeatable set of travel benefits – for a fee Read our full review

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 10,000 Avios.

Capital On Tap Business Rewards Visa

10,500 points bonus – the most generous Avios Visa for a limited company Read our full review

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.

British Airways Accelerating Business American Express card

British Airways Accelerating Business American Express

30,000 Avios sign-up bonus – plus annual bonuses of up to 30,000 Avios Read our full review

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.

Amex Platinum Business American Express

American Express Business Platinum

40,000 points sign-up bonus and a long list of travel benefits Read our full review

American Express Business Gold

20,000 points sign-up bonus and free for a year Read our full review

Click here to read our detailed summary of all UK credit cards which earn Avios. This includes both personal and small business cards.

(Want to earn more Avios?  Click here to visit our home page for our latest articles on earning and spending your Avios points and click here to see how to earn more Avios this month from offers and promotions.)

Comments (47)

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

  • JAXBA says:

    Another theory I heard for BA’s higher YQ ex-USA was to collect more in USD so as to better pay USD denominated costs (e.g. fuel) without currency exchange.

    PS. Thank you for using ‘taxes and charges’ in this article.

  • Dylan says:

    The last time BA increased the carrier surcharges from the US, they then introduced a rebate for BA Chase visa cardholders that roughly offsets the increase for 1-2 tickets per year as an attempt to offer some benefit for the BA Chase card.

    They higher surcharges are particularly harsh on US/based gold and GGL where you might want to use the various upgrade certificates but then cannot take advantage of buying two one way tickets.

    Beyond the Chase credit card reason, I have to assume there’s a disproportionate percentage of members from the US booking club world and first using Avios and BA have been taking advantage of a particularly strong US economy prior to the pandemic.

  • Alex W says:

    £1275 is insane. You can often find cash fares less than that. £1850 openly available now. When the charges are more than double the ‘saving’ by using Avios where is the incentive to earn Avios? People often rave about getting ‘free’ flights, which is near as dammit true for RFS. If you have to rack up hundreds of thousands of Avios to only geta third off your fare, what is the point! OK it’s not really our problem this side of the pond, yet, but if they can get away with it over there then it’s only a matter of time before our redemption fees start to sky rocket.

    • Prins Polo says:

      Not from the US. Pricing of cash tickets from the US is also significantly higher than the same flights bought from the UK. IMHO this generally reflects higher prices that Americans are willing to pay and are used to paying for tickets, and the monopoly of legacy airlines with no low-cost carriers / no competition in the US. For a flight on a long weekend, domestic or to the Caribbean, people are used to the fact that you need to fork up $1,000 for a 3h flight in coach. Tickets do not become expensive closer to the flight – they’re expensive when loaded because revenue management predicts that, surprise surprise, thanksgiving or Labor Day weekend will be extremely busy so people will be willing to pay extortionate prices. Mileage programs are fully revenue based so no sweet spots in the same way you’d have with eg BA’s Gold Priority Reward.

      Yes, more mileage opportunities but BA and a host of other cards which are most attractive from a points collecting perspective are issued by Chase which has a strict 5/24 rule (no new cards if you had 5 personal cards opened in the last 24 months) which also significantly limits churning.

      • Alex W says:

        Yes these are prices from the US. Search Google flights if you don’t believe me!

  • Anna says:

    I’m amazed that Americans use avios at all for BA long haul flights when they can get redemptions on AA domestic and short haul and pay about $6 in charges.

    • tony says:

      But they’re close to impossible to find. Avios redemptions on AA are only possible at the SAAver rate, with AA releasing many more seats to its own FFs at higher price points.

      • Anna says:

        I’ve done a couple of AA redemptions (GCM-MIA and MIA-BOS) and had no problem finding seats for 3 of us. AA First cabin is very pleasant and a bargain on avios!

        • David S says:

          We have done MIA-GCM and MIA-SKB as well as easy to find award availability to MIA on BA and really good value using AA for short flights in the Caribbean. You are talking $600 for a cash fare

      • Chris Heyes says:

        tony I’ve done loads of short haul within U.S. on AA using Avios never had a problem booking them (Always a problem adding luggage though, having to wait until actually in the U.S. to add to flight)

        • Prins Polo says:

          It used to be easy but is difficult since only SAAver tickets can be redeemed using Avios. Most often, the availability will be on a 6 am flight with a 5 hour layover somewhere rather than the direct evening flight you’re looking for.

  • Josh says:

    The excessive surcharges in general are what BA considers a “non-offensive” way to devalue points. Strategy is simple. Make it easy for people to accumulate avios and then constantly devalue them So the liability value on BA balance sheet shrinks.
    It’s exactly the same as taking a loan and Not repaying.
    Most airlines do it to some extent but BA is definitely one of the worst offenders.
    Moral of the story is don’t accumulate points long-term abd don’t overestimate their value .

  • Capecam says:

    I would like to use Avios through Iberia Plus but because i took advantage of the insanely good deal to earn and transfer out of the iberia scheme into BAEC, My Iberia account shows a NEGATIVE balance of 89,000 points. Is there anybody who has been able to get this reset to zero? Obvioulsly i will never transfer into the scheme just to have points eaten up by the negative balance ?

    • roberto says:

      Close the account.
      Wait
      Open a new account

      • KK says:

        Any ideas on how to go about closing the Iberia Plus account. Tried looking at options on the website. Not very obvious

  • Joe Biden says:

    Its about time a British airline recognised its indiginous British passengers. If all of the US airlines wish to reciprocate then fine, but sometimes I do wish that there weren’t so may brash US accents in the front cabins! What is wrong with their own airlines? Surely US crew recognise US needs more readily?

  • Gothbe says:

    Does Iberia do something similar if you book from the US to Spain?

    • lumma says:

      No. One way from USA to Madrid is roughly the same amount of charges

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

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