Maximise your Avios, air miles and hotel points

Whoa …. British Airways to move to ‘Avios per £1 spent’ in 2023, Iberia to switch now

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Iberia Plus, the Avios-based loyalty scheme for British Airways’s sister airline Iberia, has announced a massive overhaul of its Avios earning structure.

The Avios you earn will no longer be based on the cabin you fly and the distance you travel

From November, the Avios you earn will be based exclusively on what you spend and your elite status.

Iberia has also announced that British Airways will move to the same model in 2023.

British Airways to change how you earn Avios

Full details can be found on this page of the Iberia website.

The British Airways announcement is in the official press release:

Ian Romanis, Head of Retail and Customer Relationship Management at British Airways, said: “We congratulate our colleagues at Iberia for introducing this change and we look forward to joining them in 2023. More announcements will follow about what this change will mean for our Executive Club programme, which will unlock even more opportunities for our Members to earn Avios when they fly.”

I challenge anyone to give an example of how these changes ‘will unlock even more opportunities for our Members to earn Avios when they fly’. When you have to resort to peddling claims like this, which literally don’t make any sense, you know you’ve lost the argument.

We’re getting ahead of ourselves, however.

What is changing with Iberia Plus?

It is, at least, simple. The number of Avios you earn per Euro is based on your status in the Iberia Plus programme.

A base level member earns 5 Avios per €1, whilst an elite member will earn up to 8 Avios per €1.

Take a look here:

Importantly, the fare calculation used to calculate Avios is based on “your net spending, not including taxes or carrier charges.”

Or is it?

When Iberia’s website went live earlier today, it did indeed feature the wording above.

This has now changed. It now says “your net spending, not including taxes or fees”.

If carrier charges are not included, you would only earn 10-16 Avios on a return Economy flight to New York if BA adopted the same earning rates. This is how a typical ticket looks:

Base fare £2.00
Additional Charges (Adult) £397.96, of which:
Air Passenger Duty – United Kingdom £84.00
Passenger Service Charge – United Kingdom £56.06
Passenger Civil Aviation Security Service Fee – USA £4.80
International Transportation Tax – USA £17.00
International Transportation Tax – USA £17.00
Animal & Plant Health User Fee (Aphis) – USA £3.40
Immigration User Fee – USA £6.00
Customs User Fee – USA £5.60
Passenger Facility Charge – £3.90
Carrier imposed charge – £200.00
ba.com booking fee – £0.00
Total £399.76

Based on the original Iberia rules published online (Avios on base fare only, nothing awarded on carrier charges or taxes), and assuming that British Airways goes with a similar 5-8 Avios per £1 spent, you would earn between 10 and 16 Avios for flying on this ticket.

If carrier charges ARE included, you have a base fare of £202. This means you would earn between 1,010 and 1,616 Avios for a return flight.

Elite bonuses have been quietly cut

Whilst it isn’t immediately obvious from the numbers in the image above, Iberia has cut its elite tier bonuses.

At present, you get a bonus of 25%, 50% or 100% of Avios earned based on your elite status.

If you do the maths on the numbers above, working from a base level of 5 Avios per €1, elite status bonuses have been cut to 20%, 40% and 60%.

British Airways to change how you earn Avios

Is this model of awarding miles a good one?

This model of earning Avios has been used by other airlines and is generally agreed to be a dud. The only exceptions are Finance Directors, who can easily understand how the cost of miles is linked to the money coming in and so like the idea.

Those who think more carefully about these things usually don’t agree. This is because you are rewarding the wrong people most highly.

The people who are flying on £10,000 fully flexible business class fares to New York are the ones who are laughing all the way to the mileage bank. However, with few exceptions, these are corporate travellers whose choice of airline is made by their employer. You could give these people zero miles and it wouldn’t impact the money that their employer spends with the airline.

Similarly, it is (duh) the fullest flights which charge the highest prices. Because these flights are ALREADY full, it makes no sense to spend most of your loyalty budget rewarding the people who fly on them. Those seats would sell anyway, multiple times over.

On similar logic, fares are higher on routes where there is no competition – but on routes where there IS competition, and where fares are lower, the lure of Avios is more important. Weirdly, you will now be rewarded more for flying expensive routes where only British Airways could have got you there. You will earn fewer Avios on competitive routes where you can choose between carriers.

It should all be about the marginal Euro (or Pound)

The secret for an airline is to attract marginal spending. This means:

  • attracting the leisure Euro, from self funding passengers who often won’t have status (and so, in this structure, earn just 5 Avios per £1)
  • attracting small business travellers and the self-employed, who do an important job of filling your aircraft at off-peak times, but who are now given less incentive to do so

The bottom line is that you don’t make money by getting more people to travel on full flights, because this isn’t possible. You make more money by filling seats on cheaper, off-peak flights which would otherwise be empty, and this is where your loyalty budget should be focussed.

This model quietly ignores huge corporate rebates

There is one other factor which is generally ignored when thinking about the link between Avios and money spent.

I would be surprised if Iberia has any big corporate contracts where there is not a massive rebate paid at the end of the year. These are generally along the lines of ‘if you spend £2,500,000 with us during this calendar year, we will pay you £500,000 back at the year end’.

What this means is that the traveller on a notional £10,000 ticket, and being ‘over rewarded’ with 8 Avios per £1, isn’t even spending £10,000. A large chunk of that money is coming back to their employer at the end of the year.

An SME traveller choosing to spend £8,000 – with no corporate contract to rebate 20% of the fare – is spending the same net amount but earning fewer Avios. This is also the traveller who is likely to have a choice about which airline to fly with.

So …. the bottom line tends to be that this model of mileage earning:

  • over-rewards corporate travellers who have no choice over which airline to fly and whose published ticket cost is highly inflated due to rebates, whilst
  • under-rewarding small business travellers and leisure travellers, who have 100% control over which airline they use and who pay the full sticker price
Avios earning changes

Other key points about the Avios changes

The way you earn status is not changing

For clarity, there is no change to how you earn status with Iberia. There will be no linkage, at all, with spending.

The existing system of Elite Points remains.

We can guess that British Airways will also retain the existing tier point system.

It is likely that Avios earning with partners will not change

Due to IT complexity, it is highly likely that flights from airline partners will continue to earn Avios based on a combination of cabin class and distance flown (eg 125% of miles flown for discounted business class). This is because partner airlines do not receive fare data from the operating carrier.

However, British Airways will be moving to ‘Avios per £1 spent’ earning on transatlantic flights on American Airlines, Finnair, Iberia and Aer Lingus. This is possible because it does see the underlying fare data on these flights due to the joint venture in place. Other flights operated by these carriers will continue to earn Avios based on the standard charts.

Of course, if you don’t like the British Airways changes in 2023, you could credit your flight to Qatar Privilege Club (assuming you don’t need the tier points) or even a non-Avios programme.

And, of course, ‘earning from flying’ is not that important these days

The writing was on the wall for earning Avios from flying when British Airways reduced its minimum earning rate from 500 Avios to 125 Avios per flight.

For a number of years now it was likely that, if flying discounted economy, you would earn more miles from your credit card spend when you buy the ticket than you earn from actually flying it. Nothing announced today will change that.

You can find out more about the Iberia changes on its website here. We will no doubt be returning to this topic in the future.


HFP-Barclaycard-Avios-Card

How to earn Avios from UK credit cards (December 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 with a bonus of up to 25,000 Avios. You can apply here.

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

25,000 Avios for signing up and an upgrade voucher for spending £10,000 Read our full review

Barclaycard Avios card

Barclaycard Avios Mastercard

5,000 Avios for signing up 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 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 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.

American Express Preferred Rewards Gold

Your best beginner’s card – 20,000 points, FREE for a year & four airport lounge passes Read our full review

The Platinum Card from American Express

30,000 points and unbeatable 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 10,500 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

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.

American Express Business Platinum

40,000 points sign-up bonus and a £200 Amex Travel credit every year 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.

Comments (289)

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

  • Steve says:

    Being a collector of American Airlines miles, I’m loathe to redeem on BA from the UK if I can at all help it – BA charges and fees area TOTAL RIP OFF.

    Here’s a (random example).Flying economy LHR to LAX on 10/01/23 RETRUNING 15/1/23

    Using AVIOS
    AA 137 Out & AA 134 Return= 51,500 Avios + £437.76 in charges/fees

    Same flights using AA Aadvantage points:
    45,000 AA miles and £159.86

    So 6,500 less points/AVIOS and £277.90 less in fees – multiple that out for a family of 4 and the savings are astronomical – BA are a rip-off!

    • babyg says:

      couldnt agree more…

    • Chris Horsfall says:

      I agree the cost comparisons show the cost of AVIOS redemptions are higher in almost every case I have seen than with other airlines.
      However, for me, earning AVIOS via all the routes explained by Rob in other articles (Economist, credit cards, transfers from other loyalty schemes etc) seems easier than other airlines. And no 2-4-1 companion tickets which I can, as a basic member, use in CW. Also, some of the routes I need are only flown by BA as direct flights eg LHR to BWI.
      I think there will come a time when fares come down again, and the effort of collecting, and then finding Reward flights will no longer be worth it for me. But I am not quite there yet.

    • Charles Martel says:

      Good point on redemptions, the earn rate looks better on Aadvantage too. A BA economy (O) fare of £419.76 (24/02-27/02) earns:

      AA: 3,451 miles x 25% x 2 = 1725 miles
      BA: [£22 fare + 397.76 charges] = 22 x 5 = 110 Avios.

      • Charles Martel says:

        ^ thats LHR-JFK. I need an edit button or the realisation I can’t multitask.

      • Steve says:

        Its the ‘fees and charges’ that get my goat. BA hide behind this description as if they are government and airport authority mandated charges when some of them are not. In Rob’s example, £200 – Carrier imposed charge – that’s a fare cost by stealth – and a fare they are unwilling to pay or treat as part of the base fare.

        It’s time they were called on on this and the playing field leveled.

        • Terry1968 says:

          I booked an Air France business class flight to Asia last week via Virgin points who took £425 in taxes and fees . Yet booking on Air France’s own website the taxes and fees come to Euro 260. Brazen act of robbery by Virgin

  • Nigel Keya says:

    yep – it was possible to convert 50K Avios to Nectar on consecutive days 🙂

    You’re a conversion success story!
    Conversion direction:Avios to Nectar
    Amount converted:50000 Avios
    Your points have just been converted so they’re now ready to be turned into adventures.

    Please note that you will see Avios debited from your British Airways Executive Club account, and you will see the Nectar points credited to your account 10 days later.

    • Nigel Keya says:

      My wife did her November 50K conversion as well just now – so that’s 200K Avios—> Nectar yesterday and today. Eat my shorts, Glesga kiss, BA 🙂

    • Thywillbedone says:

      We’re missing you already Nigel…

      • Nigel Keya says:

        So how do you think my Nectar points (ex-Avios) will be turned into ‘adventures’?

        Turned into iPads, maybe.

        Some dumbo just programmed in the same message (when your conversion completes) which might make marketing sense converting Nectar to Avios but hardly has the same resonance in the reverse direction.

  • vol says:

    Well what else to say except:

    • Their loyalty programmes, their rules
    • My money, my rules

    It’s opportunity and incentive to look at other companies flying to the same destinations for lower prices.

  • Christian says:

    I’m slowly going off the whole thing. There’s never avios seat availability when I want it and if by some miracle you can find a pair of premium seats in both directions, the fees and charges are so massive (and in some cases so close to a cash fare with much better availability) that it just doesn’t feel worth it any more. Doing the whole “call USA at midnight 183 days ahead” is just a pointless faff. I’ve got two 2-4-1 vouchers left, I’ve wasted one by not using it in time, if I don’t use these two then I’m switching to something else. My loyalty to airline schemes is not guaranteed, permanent nor immutable particularly when every change to the program is to my detriment.

  • Toby says:

    They’ve just devalued Avios to Nector as well.

    • Ryanfozzie says:

      Where are you seeing that? For me, it’s the same 250 –> 400.

      • mgv says:

        They’ve just sent an email, from 16 Nov it becomes 300 Avios -> 400 Nectar. The reverse direction is unchanged: 400 Nectar -> 250 Avios

    • HH says:

      What do you mean? I don’t see any change.

      • TGLoyalty says:

        Will change to 400 nectar for 300 Avios from the 16th. Emails being sent out today.

        • Lady London says:

          Oh dear.
          Do you think BA reads HfP?

          Despite one particular exuberant poster on this thread yesterday, this has happened much quicker than I thought.

          There is still a way to hit the exit and fix that Nec… value quickly if you’re holding lots more avios than you wanr to keep after this grab by BA….. a bit of creative thinking, but you’ll have to do it fast

          • TGLoyalty says:

            I’m sure it’s been in the works for a while … I’m sure they have other devals in the wings.

            I decided to move 50k last month and 50k this after transferring 320k HSBC points @ 20%. Happy with that over Xmas.

          • Nigel Keya says:

            Go on? Clues?

            Doubt it was exuberance: must have been planned for weeks. They might have hit the button earlier after seeing how people reacted to revenue/ status new method.

  • ADS says:

    “When you have to resort to peddling claims like this, which literally don’t make any sense, you know you’ve lost the argument.”

    British Airways will have modelled how many Avios they will award under the new regime – both with existing behaviours, and with amended behaviours based on the new incentive for passengers to spend more of their employer’s money on the same flights.

    Please ask BA what percentage reduction in Avios will be awarded in each scenario ?

  • Adrian says:

    Yes, the Avios to Nectar devaluation is a real blow, i was happy with 0.8p, 0.67p not so much.

    • Lady London says:

      Go! Go! Go!
      If you move fast, you can rush for the exit.

      Earning in future will be a different game.
      And you think BA isn’t going to cut off tier point earning for all except their precious corporate customers?

      • Jack says:

        They could never do that because of their links with one world people who bought code share tickets expecting full teir points would be in outrage . Surely they would rather a fuller plane then resorting to frankly ridiculous measures like stopping teir points which they could never do easily no airline has stopped it fully for anyone

      • Nigel Keya says:

        I bow to your clues 🙂

  • SydneySwan says:

    I didn’t need another reason to avoid flying BA but I appreciate them finding one anyway.

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

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