Stuffed #3: How British Airways closed off low-tax Avios loopholes last week

We’ve now had time to digest the changes to long haul Avios pricing launched last Wednesday.

As more examples come to light, it is clear that this is a major devaluation.

It has been disguised by giving a (roughly) 15% discount to UK members who use a ‘new style’ Amex 2-4-1 voucher and who can afford to use the maximum number of Avios. Strip these people out and there are some serious underlying issues.

On Friday, we looked at how Avios members outside the UK and US now need 45% to 60%, and up to 92% in some cases, more points – with no saving in taxes. On Monday we looked at how holders of ‘old style’ BA Amex 2-4-1 vouchers now need 45%-60% more Avios.

Today we’re going to look at how BA closed off various low tax loopholes – and, where it couldn’t, it simply whacked up the Avios required instead.

Before we get into this, you need to understand one point. Everything else follows from this.

Before last week, the cash element of an Avios redemption directly reflected Government taxes, fees and BA surcharges. There was an exact breakdown of each element available.

Today, the Reward Flight Saver fee is meant to approximately repay British Airways for the Government taxes, fees and BA surcharges. It is NOT based on the ACTUAL taxes and charges incurred – it is just a rough and ready number which replaces them.

You will see why this makes a difference.

Example 1: the end of low tax redemptions from Inverness and Jersey

Jersey (because it is outside the UK for tax purposes, but inside the UK for BA purposes) and Inverness (because it has special status) are exempt from Air Passenger Duty, even when connecting to a long haul flight in London.

This is a big saving. From April 2023, long haul Business Class Air Passenger Duty will be £191 or £200 per person, depending on distance. A family of four could have saved up to £800 if they started their Avios redemption in Inverness.

(Obviously this was easier said than done for most people, but it is a sum which focuses the mind.)

This saving has now gone away because the Reward Flight Saver fee does NOT actually represent the actual tax and charges paid any longer.

Here’s an example:

Inverness to New York in Club World last week:

• 120,000 Avios plus £695 taxes and charges per person (peak date)

Inverness to New York in Club World today:

• 120,000 Avios plus £850 taxes and charges per person (peak date)

The cost of this flight has gone up by £155, because BA is no longer charging you the actual taxes and charges, which are lower from Inverness.

Other cash and Avios mixes are available but I’ve used 120,000 Avios for easy comparison.

The same applies to redemptions from Jersey.

Example 2: the end of low tax redemptions from Dublin and other EU starting points

Back in September 2021, British Airways and American Express unveiled a new benefit for the 2-4-1 companion voucher on the Premium Plus credit card.

You could now start your trip outside the UK.

One reason for this was to allow people to book one way flights home, if they had travelled out on a cash ticket or a non-BA reward ticket.

The other reason, which may or may not have been deliberate, was to allow you to start your 2-4-1 redemption from Dublin, Amsterdam or another EU starting point. This not only let you drop the Air Passenger Duty but also let you benefit from lower BA surcharges.

Here is an example using data from this article in March using the ‘most Avios, least cash’ option:

Dublin to New York in Club World in March 2022:

• 152,500 Avios plus £288 taxes and charges per person (peak date)

Dublin to New York in Club World in December 2022:

• 212,500 Avios plus £293 taxes and charges per person (peak date)

or, to match the old Avios requirement more closely:

• 146,500 Avios plus £817 taxes and charges per person (peak date)

This is a ludicrous devaluation, irrespective of which of the two December 2022 options you use as a comparison.

Example 3: increasing Avios requirements where the law stops you increasing the cash rate

In Hong Kong and Brazil, local regulations forbid flights tickets from including any sort of ‘fake’ charges. (In theory the Hong Kong rule has gone, but British Airways still acts like it hasn’t so there may be some small print we don’t know about.)

This doesn’t impact you if you book a return from London, since the ticket is issued in the UK. Book a one-way flight from Hong Kong or Sao Paulo, however, and nothing can be added on.

The rules meant that British Airways couldn’t implement Reward Flight Saver from Hong Kong or Brazil.

Surely the pricing should therefore be unchanged from last week? No. Since it couldn’t increase the charges, British Airways just increased the Avios required instead.

Hong Kong to London, Club World, one way off-peak

• Last week: 75,000 Avios + £38
• Today: 100,000 Avios + £38

Sao Paulo to London, Club World, one way off-peak:

• Last week: 75,000 Avios + £8
• Today: 100,000 Avios + £8

Note that you need to call BA to book São Paulo for the lower taxes level as the website reprices when you come to the payment screen. Alternatively, book via the avios.com platform if you have an Aer Lingus AerClub or Vueling Club account.

In further parts of this series, we’ll look at the impact of the Avios devaluation on holders of Barclays Upgrade Vouchers and – bizarrely – how BA chose to wreck the Gold Upgrade Vouchers given to higher earning Gold and all Gold Guest List members of Executive Club.

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How to earn Avios from UK credit cards (April 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:

There are two official British Airways American Express cards with attractive sign-up bonuses:

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.

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.

SPECIAL OFFER: Until 12th May 2024, the Capital on Tap Business Rewards Visa card is offering a bonus of 30,000 points, convertible into 30,000 Avios. You must have a Limited Company to apply. Click here to learn more and click here to apply.

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.

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.

Click here to read our detailed summary of all UK credit cards which earn Avios. This includes both personal and small business cards.