Is the ‘use more Avios but just pay £1 of taxes’ pricing policy a mistake?

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• John says:

  8 Feb8 February 05:40

  This is about ‘free as in beer’ for many people. It is not about the exact value you are getting.

  You engage in a certain behavior (like, choosing BA as your airline and crediting flights to BA, or, using a BA co-branded credit card) and that behavior is eventually rewarded with a freebie.

  If the co-payment is just one pound, i.e., negligible, it is a clean way to reward and reinforce a certain behavior. There are no strings attached to the reward.

  I think you gotta look at this like behavioral economists do. The vast majority of people won’t consider opportunity costs in detail. And they might put awards in a complete different category mentally, not connecting them in an exact manner (computationally) to what they had to give up to get it.

  Sure, rule changes (as the ones you describe) can lead to confused program members. And confusion might interfere with the carrot-stick system you got in place. But there are always some people that dislike changes, no matter what they are. (Just look at what happens when you change the UX on headforpoints.) As long as BA does not change the rules too frequently, I do not see any deeper issue there.

• TimM says:

  8 Feb8 February 05:49

  Strange article with no conclusion.

  I would rather hark back to the days when there were no ‘taxes and fees’ to pay.

  • BuildBackBetter says:

    8 Feb8 February 07:29

    Avios would have to be devalued massively if taxes have to be removed.

    • Chrisasaurus says:

      8 Feb8 February 08:05

      Which coming circle is essentially what’s happened and what the article is about – it’s now the default option with the original model still available

    • TimM says:

      8 Feb8 February 10:50

      Yet you can still buy flights for less than £10 including taxes.

      • Rob says:

        8 Feb8 February 10:58

        Well indeed.

        There were some routes where NOT using RFS is better value than using RFS – the snag being that there is no way of opting out of RFS if you’ve earned an Avios in the past year. Not sure if this is still the case.

        • yorkieflyer says:

          8 Feb8 February 15:18

          Book on Iberia?

        • Lady London says:

          8 Feb8 February 15:34

          I paid far more in avios+RFS fer for a flight last year than I could have paid as a pure cash flight.

          But cash was my scarcer resource and I preferred to conserve it.

        • Michael says:

          8 Feb8 February 22:19

          I think these routes defaulted automatically from the RFS fee to the true taxes, fees and charges if lower. This usually only happens on single trips to London, as on trips from London the APD and Heathrow fees are more than £17.50.

          On a return there was often no benefit, as the Heathrow fees and APD could be close to or exceed £35 and then there’s the departure fees at the other end to add.

          Singles ex-Dublin were often very cheap, with no APD and low airport fees of just a few Euros.

          Belfast used to be an odd one. There was APD in both directions, but Belfast City airport had an arrival fee rather than a departure fee so the TFCs ex BHD were just APD of £13 or whatever, while ex LHR there was two sets of airport fees!!

          I haven’t looked at this in detail in a while though, so above may be out of date.

          These days I often redeem in CE for a treat as availability better. I find the second least Avios option works out cheaper than the old RFS pricing. Using Rob’s valuation method it often means getting CE for the same cash outlay as an economy ticket with a few extra Avios thrown in.

• Polly says:

  8 Feb8 February 06:13

  Like now, people possibly have a glut of avios. So the idea of the £1 plus avios is an ok currently. Normally, we are using 2 x 241’s a year in F or J to Asia, only once since we got back from HKT March 2020. Used x 1 To SIN in F 241 last Nov.
  So yes, unbelievably against HFP common sense, have just used the £1 to fly kids down to Bergerac in August, plus couple of ow Bordeaux and Dublin til June. Better value v August peak prices. Actually, Ryan air one way on some of the Dublin trips, £10pp.
  Crazy, l know, but still get avios from HSBC. MR’s go to Marriot atm.

  So nice, this lady can get her treat trip, thanks to you clarifying the options for her.

• Gumshoe says:

  8 Feb8 February 06:20

  If you’ve got millions of Avios to burn, as many frequent flyers surely have, why give BA any more of your money than you have to, even if you’re not getting the best deal?

  • lumma says:

    8 Feb8 February 08:20

    Because you could get better value spending them at Sainsbury’s, Argos or eBay?

  • Elnur says:

    8 Feb8 February 13:37

    I do have millions of Avios, in many years NEVER booked Europe flights at £1 tax option. I am not fool to save £34 (or £49 in case of Club Europe) by spending Avios at 0.3p value when I am able to spend those Avios at other routes at up to 3-5p value!

• patrick C says:

  8 Feb8 February 06:26

  This is really about whether the population can do math…

  • Sunguy says:

    8 Feb8 February 09:57

    …..but is it ?

    Im reasonably well educated, have been “playing” with points, airlines and other rewards for a number of years….and have university level maths….

    But sometimes, just like Polly mentions above, either I choose to be “stupid” money wise with the points or I just get some feelgood factor using points collected with a specific goal in mind on that goal rather than something else….yes, the maths says do this and spend cash on what you actually wanted to get, but the reward centre says….”meh….”

    ….and of course in the spirit of the article, there are going to be others – the vast majority – that simply dont go far enough into detail and think these £1+avios tickets are all you can buy….(or they heard from a guy down the pub this was the case…)….

    • John says:

      8 Feb8 February 17:05

      There is a lot of empircal support for what you are writing.

      Often times, your qualifications and expertise don’t do much to improve your personal-decision making.

      Nobel price winner Richard Thaler has an interesting book full of examples on this (his 2015, popular scientific book “Misbehaving. The Making of Behavioral Economics”).

      My favorite is his anecdote on the chair of economics department at his alma mater (supposedly an expert of rational-decision making), a wine lover and collector whose valuations on wine are irrational and contradictionary.

      Many people will go for the lowest co-pay option and be more happy about it instead of worrying that they get poor value.

      It’s probably just more unlikely that somebody writes Rob about that great RFS redemption s/he just did with as little as GBP 1 co-pay. Instead, people with issues or problems are much more likely to get in touch.

• His Holyness says:

  8 Feb8 February 06:27

  We’ve been telling you this for ages, Rob. For those outside of London, when BA ditched the free domestic on RFS the value disappeared overnight. The prospect of 19k Avios and £70 to Brussels is terrible, terrible value but it’s been worse in Business, which is what most people save Avios for because they otherwise may as well fly Ryanair or easyJet direct.

  Before your Zone 1 was £50 plus 18,000 then it went up to £100 plus 36,000. £200 and 72,000 to Prague in Business Class for a couple.

  As you write, the £1 option looks like 120,000 Avios for a couple… to Prague.

  Spend £120k on the free Amex and get a free flight to Prague- fantastic.

  Nothing was done to correct the imbalance when domestic business was introduced and overall, you’re still left with stupid fees for flights where the LCC fly for pennies.

  What a con.

  • TimM says:

    8 Feb8 February 10:48

    +1

  • Alex Sm says:

    8 Feb8 February 15:27

    The long-term damage from the tenure of Alex Cruz as CEO with his short-termist cost-cutting at any cost mentality will be felt for years…

  • Alan says:

    9 Feb9 February 09:24

    Indeed. With RFS being gutted it also means there’s no point putting up with LHR connections for them and thus little point in pushing for Gold – when flying long haul I’ll still have lounge access as in CW and the extra economy availability from Gold is now pointless in economy if I’m flying direct via LCC. All made me much less likely to fly BA.

• Ls says:

  8 Feb8 February 06:46

  This was an attempt to provide a route for the ‘free means free’ brigade. Those who do not expect the £1k in ‘taxes’ on their business class flight. So it is genuinely (almost) free in cash but significantly more in avios.
  But really doesn’t seem to work, now more so than ever. As avios have a ‘floor’ of 0.8pm via nectar, it really does not make sense to spend your avios to knock cash off here, you are far better spending it via nectar. By a factor of 2 or more.

• Nathan says:

  8 Feb8 February 06:49

  Herein lies the rub, whilst I sympathise with the lady and I really do, a frequent flyer programme should be designed to reward, er?, Frequent Flyers and not incidental collectors (like me these days) and neither gamificators.

  Incidentally, this particular aspect of BA pricing can, or at least did, work to one’s advantage; shortly before Christmas on MUC>LHR the Money + Avios option was pricing up at 1p = 1.3 Avios i.e. more than I paid for them.

  • Mike says:

    8 Feb8 February 09:54

    Frequent Flyer Programme – is it ? – Avios bills it self as a method of “Turn your everyday spending into exciting travel rewards – collect Avios on flights, hotels, car hire and online shopping” I am a frequent collector (1.8 M AVIOS) but certainly not a frequent flyer, nor have ever been – I only fly with BA using AVIOS never cash fares.

    • yorkieflyer says:

      8 Feb8 February 16:09

      and this, you’ll find relatively few BA frequent flyers in t’ regions for short haul, we are served by Ryanair and Easyjet…….

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