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 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 (May 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 – 20,000 points, FREE for a year & four airport lounge passes 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.

  • QwertyKnowsBest says:

    Maybe time again for a book PE then Avios upgrade to CW article.

  • SGJNI says:

    When will this start, (apart from “in 2023”)?
    Will it apply to existing bookings or only to new ones? I can’t find anything in Iberia to say when they will apply this, (from November?)?

  • Chris Horsfall says:

    Is this another way to earn AVIOS?
    They are earned on the fare, but not taxes and fees. So, will we now earn AVIOS for the carrier-imposed charges on an AVIOS redemption?
    Someone also said earlier that AVIOS spend had not been devalued. I beg to differ. The massive increase in the cash element of a reward flight devalues the benefit of reward flight against cash flight.

    • Mark says:

      I had a similar thought regarding the carrier charges on a redemption. Probably too much to hope for… Regarding whether the increase in fees represents a devaluation, that really has to be considered in the context of the movement in cash fares which haven’t been static. For some it may tip the balance into making partner redemptions (including Nectar points) more attractive.

    • VSCXFAN says:

      Arguably the Avios you already hold and are now redeeming have been revalued – not devalued – since the sunk cost of acquiring them hasn’t changed while the cash saved by booking a reward vs a revenue flight (for a presumably unchanged number of Avios) has increased. If 100K Avios previously saved £1,200 (£700 vs £1,900) per CW r/t LHR JFK, they’d now save £1,700 (£900 vs £2,600). If you “paid” 0-0.8p for them, getting 1.7p is even better than 1.2p. As a Lifetime Gold, OW redeeming opportunities and credit card sign-up bonuses matter far more to me than BA’ “earning opportunities”.

  • Charles Martel says:

    Anyone spending more time in the back of the bus than the front should probably move wholesale over to Qatar Privilege (or other OW scheme). The Avios earn rate will be higher and it looks like the tier/qpoint accrual is the same as a percentage of whats required for Ruby.

  • Niall says:

    I fly a lot with BA (more since EasyJet has seemingly scrapped its flight club). As BA Gold I get 1,250 (/£12.50) avios for a return flight Belfast to London in the lowest economy fare. I get 4,500 (/£45) for London to Tenerife return.

    The avios earnings are probably the biggest factor for me in choosing BA on these routes where BA are generally at least twice as expensive as the LCCs. In my head I add up the value I attribute to all the bits I get with BA vs other airlines. BA is inevitably still too expensive for it to be a completely rational choice, but the avios help me fool myself that I’m not wasting too much money.

    And of course BA being my main airline for domestic and short haul means I irrationally choose them for long haul too.

    I agree this is not my main source of avios and so in that respect it’s not so major. But in terms of how often I think it makes sense and choose to fly BA short haul, it is massive.

    • babyg says:

      Interesting to hear that perspective on short haul Niall, the Avios allure often has me making irrational long haul bookings too (less so now my Avios can be used on Qatar)…

  • Andrew says:

    “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’.”

    Stating the obvious but you’ll now have the opportunity to earn Avios on ancillary products/charges like paid seating, additional baggage etc

    • YoHoHo says:

      If that’s a possibility then why not push more ancillary revenue opportunities? Or raise current ones?

      I use BAEC as a status store – tier points get us OW status, the Avios (mostly earned from the Amex) are applied for short haul redemptions. Long haul we fly whomever has the best deal and fits with our cost /service parameters, sometimes that is BA with a WTP to op-up with Avios. Unless they mess with the tier point requirement we’ll stick with BAEC for the time being, but the amount of Avios earned may mean that the equation won’t shift to BA anymore where its close compared to another carrier, in or out of OW.

    • Rob says:

      Iberia makes no mention of this.

      It’s also unlikely that adding in these factors would leave you earning more Avios than under the current scheme.

      • Andrew says:

        Oh I agree, but it says ‘more opportunities to earn Avios’ not ‘opportunities to earn more Avios’ 😉

        Definitely a negative change but there’s a tiny shred of truth in there I think, ‘unlock’ being the word as the details unfold.

  • Guy Incognito says:

    Surely the majority of small business owners earn the majority of their Avios through AmEx (or similar)?

    I don’t see this as that much of an issue, the ongoing problem is the fees / taxes (and lack of reward availability) which mean that there’s not much point using the Avios anyway when compared to cash fares.

    We now use our points for short hops to Europe in business class, though given the amount we have we’re putting 50k a month into Nectar and will happily use Gold priority rewards (if we can get to Gold) for trips like Australia at Christmas where the cash fares are absurd.

  • Chris Horsfall says:

    I agree.
    As we don’t earn tier points on Rewards flights, I don’t fly enough to get GOLD. And SILVER is not of much use as I always fly CW anyway.
    Now, if they only awarded tier points for Reward flights??? That would be of benefit as I would likely hit GOLD and have more useful benefits.

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