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.


How to earn Avios from UK credit cards

How to earn Avios from UK credit cards (June 2024)

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

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

Barclaycard Avios card

Barclaycard Avios Mastercard

5,000 Avios for signing up and an upgrade voucher at £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 famous annual 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 £15,000 Read our full review

You can also get generous sign-up bonuses by applying for American Express cards which earn Membership Rewards points. These points convert at 1:1 into Avios.

American Express Preferred Rewards Gold

Your best beginner’s card – 30,000 points (TO 16TH JULY), FREE for a year & four airport ….. Read our full review

The Platinum Card from American Express

40,000 bonus points and a huge range of valuable 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

10,000 points bonus – plus an extra 500 points for our readers 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 an annual £200 Amex Travel credit 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 (288)

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

  • Patrycja Coz says:

    OTHER TOPIC

    BA started serving proper hot food in Edinburgh lounge from today. They had bacon rolls, muffins rolled in egg and baked beans on top of usual porridge.

    Staff told me it’s their first day of full service.

  • Ed says:

    Now that the IT systems have been configured to calculate Avios according to spend, it seems sadly inevitable that a correlation between tier points and spend will follow in time. Bluergh.

    • G says:

      As I said earlier, SQD (For Air Canada) included Y/YQ charges but basic economy is ineligible …. And it’s 6000 CAD a year for lounge access (£4500 if Sterling doesnt tank any further).

  • Joe says:

    Hmmm might make me reconsider if it’s worth getting GGL next year. We’ll see how it evolves. But might finally be a reason it’s tempting enough to drop my journey to GFL and just focus on another airline

  • Prateek J says:

    I have got 60k avios, and I have barclays avios rewards, hopefully they dont devalue redemptions.

  • Mike says:

    I think Rob has perhaps misunderstood the motivations here, certainly for BA. We know that leisure travellers are not motivated by earning Avios so are largely irrelevant in this conversation. However, business travellers have not returned to BA and they are the cash-cow. I regularly pay £400-£600 for a ticket to 1.5hr Euro destination and earn ~1000 Avios each way. With this new method I’d earn 3000 each way, thus encouraging a differentiator against non-status airlines. Similar on long-haul but I’m often in premium cabin so attracts me to £4k biz class rather than 2k biz class. My corporate tool allows an effective choice by limiting dep/arr times to +/- 1 hour so you can nearly always get the flight you want. I think BA are cleverer than we are giving them credit for.

    • Harry T says:

      Business travel has not returned to 2019 levels and may never do so. One of the most important markets now for airlines and hotels is well-off leisure travellers – these changes are damaging to that demographic in some ways. Nothing BA have done over the last few years has been clever, from sacking loads of their staff to hedging fuel badly.

  • Dubious says:

    Am I the only one to see the positive?

    Finally I will be incentivized to go back to traveling by surface transport instead of by air.

    More train and bicycle riding I come!
    Where that doesn’t work I’ll use other airlines.

    I’ve already decided to deprioritize BAEC and instead focus on other programmes…

    On amore serious note – this direction of travel will only get worse. I thought the Avios wine merchant development was the key warning sign, but it won’t be the last.

    The fundamental structure of Avios has changed. It is no longer about the airline rewarding passengers with access of spare capacity but instead about the airline diversifying its income streams away from simply flying activity.

    I would like to call this killing the golden goose, but as airlines are now targeting the mass market (rather than a niche group of frequent travelers) and the mass market sadly doesn’t perform critical analysis of value when making decisions, it will probably work out ok. It will shift the customer base (of passengers) though, helping to perpetuate the customer base towards those who buy from whichever airline offers the cheapest fare.

    • Harry T says:

      Do you really think the mass market is business travellers buying last minute J or F class to NYC? Cos they are the only people benefitting from this change to Avios earning on BA metal.

      • Dubious says:

        My apologies for the delayed reply – it was hard to re-find my post!

        I may have misunderstand your comment Harry T, I don’t believe the IAG is making this change with the LON-NYC route in mind.

        As much as LON-NYC is lucrative for BA it is not their only market. Nor is it for Iberia.

        If it were neither airline would bother with the rest of their route networks.

  • Harry T says:

    Hey everyone, remember when we thought Alex Cruz was a tosspot and Sean Doyle was going to do nice things?

    • John T says:

      I can’t imagine this was Sean’s idea. More likely someone at IAG suggested it and Sean was too weak to say no.

      • Rob says:

        It was Alex’s idea apparently – BA being BA it took 3 years to execute.

  • Tony says:

    This will cost BA dearly! The other groups must be rubbing their hands in glee. BA deserves to suffer. More decisions from the “work-experience” kid. Maybe this indicates BAs determination to be an all-economy carrier in the long term. Pulling out of the Premium market.

    • Rich says:

      Well it looks like it all started with the work experience kid in Madrid.

    • KevinS says:

      “This will cost BA dearly!”

      I’d bet it’ll make zero difference.

      BA’s profits are above pre Covid even with a 20% drop in passengers.

      The few passengers who get annoyed by this will be a rounding error

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

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