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How ‘taxes and charges’ on Avios flight redemptions from the US got out of control

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The level of ‘taxes and charges’ added to long-haul Avios redemptions on British Airways is always a sore point.

In general, following recent rises, I use a ‘finger in the air’ sum of £700 for the taxes and charges on a Club World return redemption from London (£850 for North America) whenever anyone asks what they will be.

That obviously isn’t small change, but given current cash prices it still gives acceptable value for your points most of the time as long as you are redeeming for Club World or First Class.

Avios taxes and charges from the United States

The biggest threat to Avios – given BA’s dominant UK position – is not from other frequent flyer schemes but from aggressive sale fares from other airlines.

Avios is, of course, under threat from other angles.  You can switch from a British Airways credit card to a different rewards credit card.  You can convert Nectar points, Heathrow Rewards points or American Express Membership Rewards into a different treat. 

You can only squeeze things so far, and £1 earned by Avios from Sainsburys when you convert Nectar points is worth a lot more – because it is ‘real’ money – than £1 transferred across intra-group from British Airways.  If people stop seeing value in the scheme, IAG Loyalty will stop seeing the money coming in.

But be grateful you don’t live in the US ….

What you might not realise, if you live in the UK, is how reasonable BA’s ‘taxes and charges’ are compared to what a US resident must pay.

The ‘charges’ element of ‘taxes and charges’ is just a made up number, which BA pockets.  It doesn’t reflect anything in particular and the airline has no qualms about changing it on a market by market basis.

Here’s a little Wednesday quiz

The ‘taxes and charges’ on a Club World return ticket from London Heathrow to New York JFK are £850.

What do you reckon the ‘taxes and charges’ are on a Club World return ticket from New York JFK to London Heathrow and back?  Here’s a clue – it isn’t the £850 you would pay flying UK – US – UK. If you go US – UK – US, would you pay ….

£950?

£1,250?

£1,500?

No, sorry, you’re still wrong.

The actual figure is an astonishing £1,801 return for a Club World Avios ticket from New York JFK to London Heathrow. 

You can prove this yourself by doing a dummy booking on ba.com.  You need to click through to the payment page for it to recalculate to the exact number.

You should see this:

Avios taxes and charges from United States

Why is this?

It isn’t entirely clear why BA treats North America like this.

You don’t see it with other markets.  A return Club World redemption to Dubai is £716.  Book the trip in reverse and you pay £813.  That’s near enough the same, given currency fluctuations.

One view is that, because Avios are so easy to earn in the US (BA has, in the past, given out 100,000 Avios as a credit card sign-up bonus) it tries to create a level playing field with the UK by adding extra charges.

This ‘protects’ UK Avios collectors because it reduces the willingness of US members to redeem on transatlantic flights, with many choosing to use them on domestic American Airlines and Alaska Airways flights instead.  This is only a theory though.

Even if you live in the UK, there is a lesson here

If you are booking Avios tickets to North America, do NOT book them as 2 x one-way tickets.  This is because the ticket from London will attract the lower UK level of ‘taxes and charges’ whilst your flight home, when booked on a separate ticket, will attract the higher US level of ‘taxes and charges’.

For example, as we noted above, a return ticket from the UK to New York has Club World taxes of £850.

Booked as a one-way in each direction, the total taxes are £555 outbound and £774 inbound, for a total of £1,329.

You should bear this in mind if, for example, you see a special one-way cash offer on a low cost airline from the UK.  Don’t think that booking the outbound flight to the US for cash and then using Avios for the return is a good deal, because you will be paying an inflated level of ‘taxes and charges’ for the flight back.

PS.  Remember that using your Avios to fly on Iberia saves hugely on taxes and, for the US East Coast, Avios.

An off-peak Business Class return from Madrid to New York, booked via the Iberia Plus website to avoid British Airways surcharges, costs just 68,000 Avios + £220, a huge saving even after factoring in the cost of getting to Spain.

You can learn more about redeeming Avios on Iberia here.

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Category

British Airways and Avios

Comments (96)

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

  • John says:
    16 Nov16 November 06:06

    The implication? Diversify, don’t fall into the home bias trap!

    There are many programs with no surcharges at all on TATL flights originating in North America.

    • BJ says:
      16 Nov16 November 11:33

      Agreed! I’m contemplating a total refresh of my FF strategy, just awaiting the outcome of the full Alaska MP OW award chart next month before deciding on it. If I go ahead with it then it will be a huge departure from my avios-dominated strategy of the last decade.

  • JB says:
    16 Nov16 November 06:19

    I book flights for my in-laws, who live in the US, to visit the UK. They earn Avios easily on the BA Visa so I usually make a cash booking and discount with Avios as it ‘feels’ like better value – it probably isn’t but they are happy with it

  • Ian says:
    16 Nov16 November 06:19

    I have no issues with this policy.

    Seats are hard enough to get.

    • AJA says:
      16 Nov16 November 08:13

      Except that the same thing is slowly happening in the UK too. It’s getting to the point where it’s just cheaper to buy a cash ticket which you reduce with Avios. That’s easier to do as well as it doesn’t require reward seat availability.

      • BJ says:
        16 Nov16 November 11:43

        A lot hinges on the value people attach to the flexibility of avios reward flights but I get that for most the answer is not much. I wonder what would happen if BA offered a cheaper nonrefundable reward option or one with higher change penalties.

        • Dubious says:
          16 Nov16 November 15:37

          I wonder if you’ve hit on something there. Do North American flyers more likely to cancel/ chop and change their flights at short notice versus UK based flyers?

          If so, I wonder if BA attach a greater premium as a result?

  • Rand says:
    16 Nov16 November 06:29

    The idea that this is to “protect UK Avios collectors” is laughable. BA is not in the business of protecting anyone, but maximizing revenue. If they can get away, just like with increasing the amount of surcharges in general (they generally spiraled out of control over the past decade), they will.

    • Paul says:
      16 Nov16 November 07:36

      Indeed, and some governments have stepped in and either banned or capped them. It’s time this happened here given BAs dominance in the U.K.
      I’d also agree we need to change the wording and description of these charges. BA themselves call them taxes as a general catch all ( this is based on calls I have made to makes or change bookings and agents refering only to taxes)
      Other airlines are not doing this! I have a booking to South America next year where charges were less than $400 for 2 people return. I also have a miles trip to Australia where charges were around €200 return. This was booked using Amex points. In May this year a one way JFK LHR via IST cost 90000 points and $250 for 2, however I am unable to replicate that now on TK

      • Rich says:
        16 Nov16 November 08:36

        IMO the only way our government should step in is to pull their finger out and approve a third runway. Competition will sort price and service out. Imagine 5th freedom rights being granted to Emirates on a DXB>LHR>USA routing. The US might not allow it (they’re protectionist at heart) but I can but dream.

        • Phillip says:
          16 Nov16 November 08:45

          Yes but for the government to approve the third runway, Heathrow need to actually put in the planning application, which they have currently put on hold. I imagine they’re waiting to recoup some of their Covid losses and then get back onto the third runway.

    • BJ says:
      16 Nov16 November 11:54

      No, I don’t believe you can say it is laughable. It is not near as simple as maximising revenue from customers flying with them. It is about maximising revenue across the whole spectrum of Avios Group partnerships. Despite the USA credit card market I would imagine that the majority of Avios Group income is generated in the UK given the home base, large numbers of both customers and partners. For this reason keeping the UK-based membership engaged is vital otherwise the whole thing could collapse like a house of cards.

  • meta says:
    16 Nov16 November 06:50

    We should actually not call it ‘taxes and charges’ at all, because the taxes element is just a fraction. They should be called BA charges and taxes. Once the language changes, then it might make BA do something about it.

    • KevinS says:
      16 Nov16 November 08:30

      “then it might make BA do something about it.”

      When you say make BA do something, do you mean reduce the charges? Zero chance of that happening

    • BJ says:
      16 Nov16 November 11:58

      They’d probably just reduce the BA Charges and increase the number of avios required. Or worse…

  • Erico1875 says:
    16 Nov16 November 07:05

    I assume US collectors can still get excellent value spending Avios elsewhere, i.llle internal flights , Carribbean, Sth America etc?

    • tony says:
      16 Nov16 November 07:19

      Only if they can find availability… AA have this multi tier approach to redemption prices and only the very cheapest can be booked using BA.

      It certainly used to be a great deal, but not so sure now.

      • BJ says:
        16 Nov16 November 12:03

        Yes, I was lucky to get our domestic AA and Alaska flights booked whilst still in the grip of the pandemic. By this spring options had evaporated, seats were few and far between.

  • Joshua Parker says:
    16 Nov16 November 07:16

    The lower taxes was why I choose to earn miles with American Airlines the taxes in business is £260 for a return from Heathrow on an AA Flight but £572 on a BA Flight.

    The only issue now is its much harder to to earn AA Miles since the credit card has gone.

  • Gingertravel says:
    16 Nov16 November 07:43

    I’m sitting on a bunch of Virgin points plus a 2 for 1 voucher, but the taxes on my dummy booking to NY are over £1,000 per person in Upper Class! Premium is a more reasonable £540. Have I done something wrong? I thought BA and Virgin were similar when it came to taxes and charges.

    • CarpalTravel says:
      16 Nov16 November 09:46

      I’m in the same boat. Virgin have been progressively increasing their prices yet only relatively recently added availability. As their miles offer less options over Avios I’ve stopped collecting them and dumped their credit card.

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

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