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 (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.

  • dougzz99 says:

    Confused how BA thinks this works. Avios have been devalued enormously by the ever upward YQ. If Avios earned from flying become more limited then BAEC becomes hugely less attractive to me. Once BAEC doesn’t work for me then BA ceases to become my default choice. BA are an airline where their biggest draw is BAEC, certainly not their service.

    • bafan says:

      But the planes are full so they don’t GAF. I am in the same strain of thought as you BTW, but I get where they are coming from.

      Problem for them is once the recession really kicks in, if you have destroyed the factors that keep people paying extra to fly BA, then Ryanair and Easyjet will have a much easier time attracting those people in the middle (like me). Why pay an extra 50 quid when I don’t earn much etc? Rather have the cash in the bank.

      • KevinS says:

        They’re flying 20% fewer passengers than pre Covid but making the same profit (although less when you adjust for inflation) so it doesn’t really matter

        • Dubious says:

          I don’t think this is a short-term decision. This has been a long time in the making. The Avios Group were split off into a separate entity a while back for a reason. That wasn’t a knee jerk decision.

        • Londonsteve says:

          It will matter in a year from now, the peak summer period over and wallets wilting from the cost of living. I recall that BAEC received a major upgrade during the dark days around 2010 when it seemed like the earth was going to open up and swallow us whole, presumbly due to weak underlying demand. The airlines are laughing all the way to the bank at the moment due to capacity restraints, pent up travel demand and covid savings accumulated by the WFH brigade, it’ll be a very different landscape for travel 12 months from now, especially if the Ukraine war rumbles on in the meantime. BA have gutted their staple product to the level that cash-strapped travellers without status already can’t see a reason to spend even £10 extra to fly with them as they offer no advantages over Ryanair. There’s only so far you can rely on the Home Counties set, as Waitrose is discovering now to its consternation.

  • SM says:

    Backward move in my view, however, Rob – what I can’t understand is your point about rewarding leisure travellers and small business owners, as a leisure traveller and when cost conscious I am not necessarily looking at how many miles I would be earning for a flight, I would be looking at saving vs. BA, route, flight duration and stops rather than miles earning opportunity because on a cheap Y ticket even if flying long haul don’t think one would earn more than a couple of thousand miles OW?

    • patrick C says:

      Well mikes are really designed for upper middle class.
      Basically you fly a bit for work and a few vacations a year where you have optionality. You can afford to avoid the ryanair crowd, but if it’s really.the same service and no upside, why do it?

  • JoeMc says:

    Being a primarily Aer Lingus flier we’ve had this since Avios became our model. There was typically an advantage on short flights for revenue earning (for the flier at least) versus the fixed rate e.g. on the DUB-LHR routes my EI earning would be greater than the BA equivalent.
    But it is an interesting point the article makes about the airline perspective and where rewards should be focused to increase numbers on low % filled flights. Taking that view it is difficult to see how this move benefits them (as the article points out).

  • Chas says:

    I wonder when they’ll introduce the same concept for spending Avios….

    • Nigel Keya says:

      How do you mean? Go on, elucidate. What do you reckon could happen?

      • Chas says:

        What I mean is I wonder if/when will they move to a revenue based redemption chart, like Accor have done for a while, and like Radisson shockingly introduced with zero notice two weeks ago.

        So instead of being able to get some outsize redemption value by redeeming your Avios based on a redemption chart when cash prices are high, your Avios have a fixed value, and that any gamefication is removed.

  • Colin MacKinnon says:

    Strange that the involvement with BA was only a side comment.

    You would have thought BA and Iberia would have announced the changes on the same day?

    • Chas says:

      I haven’t looked at the timings of the announcements, but I wonder if BA were caught on the hop. If they hadn’t expected Iberia to mention them, they could have had to rush out a statement.

  • CamFlyer says:

    Realistically, in any case one often doesn’t earn that many miles on inexpensive economy fares, and in expensive economy fares one may earn more miles. Not that I like it — just that it may not be quite as bad as we all think. However, I have noted that US airlines still offer free bags to status passengers on economy flights. If BA did the same they could still drive paid leisure travel for those with status; many frequent travelers will have lounge access through PP, DragonPass, etc (UK access issues excepted), and priority check in is increasingly less useful as online check in becomes more sophisticated, but a free checked bag is a direct cost savings.

    On some forthcoming domestic US travel, I compared the miles I would earn in UA Mileage Plus (revenue based), with TK Miles &Smiles (distance based). The flights are over peak holiday periods, so more expensive than usual, but not ridiculously so; I would however earn slightly more miles on UA than TK. However, I have *G status with TK, which will also provide a free checked bag (so $80 saved on the return flight).

  • G says:

    Any indication when BA will exactly follow suit?

    This doesnt bode well for loyalty.

  • HAM76 says:

    Lufthansa did the same a few years ago. I would be surprised if IAG IT manages this any better than LH IT. Even years after this has been introduced there have been so many issues and so many cases that just don’t work.

    For instance, if you book an LH flight on the United website, if you upgrade a segment with cash, if you are rerouted, if flight date or times changes with extra payment required, if you have a mixed itinerary, if you cancel part of the ticket on a flexible booking.

    Not including the seat reservation fees is a real bummer. They along with other surcharges make up most of the ticket price.

    • Jack says:

      It’s BAs It and we all know how good that is so likely it will be a disaster from the get go and quickly dropped. I agree about taxes they should be included Ba still get the money from us even if they pay it out why should we need get any Avios for it . Planning to offer 20 Avios on long haul flights frankly is completely ridiculous

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