Stuffed #4: Holders of Barclays Upgrade Vouchers who don’t have a large Avios pot

Over the last week we’ve been looking at the losers from the changes to long haul Avios pricing launched 12 days ago.

It’s a long list – all Avios members outside the UK, US and EU, anyone with an ‘old style’ American Express 2-4-1 voucher, anyone with a Gold Upgrade Voucher (we will come to this later in the week) and anyone who took advantage of the various low tax loopholes.

The only winners we’ve identified so far are those who use a ‘new style’ Amex 2-4-1 voucher and who can afford to use the maximum number of Avios when redeeming it. These people save around 15% on the cost of a redemption. Holders of ‘old style’ vouchers win if they can afford the new Avios levels but are stuffed otherwise as they cannot revert back to the old pricing.

Today I want to look at the situation regarding Barclays Upgrade Vouchers. Let’s see if they are winners or losers.

There are three ways of earning a Barclays Upgrade Voucher:

• you receive one every 12 months when you sign up to Barclays Premier Banking with Barclays Avios Rewards

• you receive one every card year if you spend £10,000 on the Barclaycard Avios Plus Mastercard

• you receive one every card year if you spend £20,000 on the free Barclaycard Avios Mastercard

This article looks at the core benefits of the Barclaycard Avios Plus credit card.

To learn more about the cards, read our Barclaycard Avios Mastercard credit card review here and our Barclaycard Avios Plus Mastercard credit card review here.

Each voucher allows a solo traveller to upgrade both legs of an Avios reward flight. Alternatively, a couple can upgrade one leg.

However, there is one thing you need to know.

The Barclays Upgrade Voucher is NOT an upgrade voucher.

In practice, it lets you book an Avios ticket and pay the Avios requirement of the next lowest class.

If you book a Club World business class Avios seat to New York, for example, you pay the World Traveller Plus Avios requirement but the Club World taxes and charges.

On short haul, Reward Flight Saver makes Barclays Upgrade Vouchers fairly useless

Before we look at the long haul changes, it is worth remembering that Barclays Upgrade Vouchers offer little value on short haul flights.

This is ENTIRELY due to how ba.com prices them up.

On short haul, the ‘most Avios, least cash’ option is never the best value choice. This is unfortunate, because you are forced to take it when using the upgrade voucher.

Here’s an example. To Amsterdam, a Club Europe redemption using a Barclays Upgrade Voucher costs 18,500 Avios (the usual cost of Economy) + £1. However, if you don’t use a voucher, you can choose the best value Club Europe option of 17,000 Avios + £50.

Using our ‘1p per Avios’ valuation, using the voucher means you are ‘paying’ £186 (18,500 Avios x 1p + £1). Not using the voucher ‘costs’ you £220 (17,000 Avios + £50). You’re only getting £34 of value from your voucher in this case.

The situation is different on long haul, because the Reward Flight Saver option is not the worse value option.

How is the Barclays Upgrade Voucher impacted by the long haul Avios changes?

The saving grace here is that the Barclays Upgrade Voucher was never valid for First Class travel. This means that it avoids the worst of the problems with the new Avios pricing scheme.

(You’ll see what I mean when you read the next article on Gold Upgrade Vouchers!)

The situation is very similar to what we discussed last week for holders of ‘old style’ American Express 2-4-1 companion vouchers.

It has always been the case that, when you redeem a Barclays Upgrade Voucher, you do NOT get to choose from a mix of Avios and cash levels.

You are presented with the ‘headline’ price, take it or leave it.

This is an issue now, because the ‘base’ price requires 45%-60% more Avios than it did.

Here is an example:

New York

The ‘headline’ price for a return off-peak Club World flight to New York is now 160,000 Avios plus exactly £350 if you live in the UK.

Before the changes were announced, it was 100,000 Avios + £853.

How does this price with the Barclays Upgrade Voucher? Let’s remember how the voucher works:

• you pay the Avios required for the next cheapest class of travel

• but you pay the taxes and charges of the class you actually travel in

Cost today of an off-peak New York Club World flight using a Barclays Upgrade Voucher:

85,000 Avios + £350 – ie:

Where does this number come from? 85,000 Avios is the cost of a return World Traveller Plus ticket to New York off peak.

What do you save using the voucher? 75,000 Avios (160,000 – 85,000)

What’s the implied cost if you value an Avios at 1p? £1,200 (85,000 x 1p + £350)

Cost two weeks ago of an off-peak New York Club World flight using a Barclays Upgrade Voucher:

52,000 Avios + £853

Where does this number come from? 52,000 Avios was the cost of a return World Traveller Plus ticket to New York off peak.

What do you save using the voucher? 48,000 Avios (100,000 – 52,000)

What’s the implied cost if you value an Avios at 1p? £1,373 (52,000 x 1p + £853)

This is actually a good result IF you have 85,000 Avios in your account. Last month, using your Barclays Upgrade Voucher to fly to New York in Club World cost you 52,000 Avios + £853. Today, you need 85,000 Avios + £350. The latter is definitely better value BUT you need to have the points.

Barbados

Some routes come out of these changes better than others. Let’s look at Barbados instead.

The ‘headline’ price for a return off-peak Club World flight to Barbados is now 180,000 Avios plus exactly £450 if you live in the UK.

Before the changes were announced, it was 125,000 Avios + £718.

Cost today of an off-peak Barbados Club World flight using a Barclays Upgrade Voucher:

95,000 Avios + £450

Where does this number come from? 95,000 Avios is the cost of a return World Traveller Plus ticket to Barbados off peak.

What do you save using the voucher? 85,000 Avios (180,000 – 95,000)

What’s the implied cost if you value an Avios at 1p? £1,400 (95,000 x 1p + £450)

Cost two weeks ago of an off-peak Barbados Club World flight using a Barclays Upgrade Voucher:

65,000 Avios + £718

Where does this number come from? 65,000 Avios was the cost of a return World Traveller Plus ticket to Barbados off peak.

What do you save using the voucher? 60,000 Avios (125,000 – 65,000)

What’s the implied cost if you value an Avios at 1p? £1,368 (65,000 x 1p + £718)

For this route, it’s a clear loss. You now need 30,000 more Avios when using a Barclays Upgrade Voucher, and even if you have them, the reduction in taxes and charges – £268 – means it is a bad trade-off.

Let’s be clear – if you have a lot of Avios, these changes are positive on some routes

As the numbers above show, the Avios changes are actually GOOD NEWS on some routes if – and only if – you have a lot of Avios.

Last month, using your Barclays Upgrade Voucher to fly to New York in Club World cost you 52,000 Avios + £853. Today, you need 85,000 Avios + £350. That’s a good deal.

However, last month using your Barclays Upgrade Voucher to fly to Barbados in Club World cost you 65,000 Avios + £714. Today, you need 95,000 Avios + £450. This ISN’T much of a deal.

However, if you don’t have 85,000 or 95,000 Avios in your account, it is a moot point.

As I said last week in another article, British Airways believes that all Executive Club members are rolling in Avios. If they’re not, they can simply take out another US credit card and pick up a 100,000 points sign-up bonus overnight.

This is far, far from the case. Outside the United States – which means for the vast majority of Avios collectors – Avios are hard to pick up at scale.

How the majority of non-US Avios collectors work is that they pick up a few here, a few there. If they are lucky (and with a bit of credit card bonus churning) they can earn enough each year for a premium cabin redemption.

Imagine how Barclaycard Upgrade Voucher cardholders are going to feel when they realise that, overnight, the number of Avios required for the New York flight has gone up by 63%.

They don’t even know that the Avios requirement has gone up.

These changes would have been more acceptable if the HfP reader sitting on 52,000 Avios and a Barclays Upgrade Voucher had been given a few weeks notice to redeem a New York ticket at the old rate.

Surely you can just buy the extra Avios you need?

When I wrote a similar article last week on how old-style American Express 2-4-1 vouchers were impacted, some people replied that it didn’t matter because ‘you could just buy the extra Avios you need’.

This is true for some routes, like the New York example above, but it misses a key point.

In our example above to New York, the Avios requirement has gone up by 33,000 points. However, your ‘taxes and charges’ bill has dropped by £503. As it happens, you can buy 35,000 Avios for £575 at standard BA rates.

You are still worse off if you buy the additional Avios but admittedly only by £50 or so. However, that’s not the key issue. The issue is that the £575 cost of the Avios becomes a ‘sunk cost’. If you cancel your flight ticket, you’re not getting that £575 back.

Yes, you’ll get back the cost of the flight – 85,000 Avios + £350, less the £35 cancellation fee – but there’s no refund for the additional Avios you were forced to buy in order to have enough to make the booking in the first place.

On routes like Barbados, you CAN’T buy the extra Avios you need using your taxes saving. You need 30,000 more Avios for your ticket than you did two weeks ago, but the cost of buying those is £495. Your taxes and charges payment has only come down by £268.

Barclays will soon let you trade your voucher for an Avios lump sum

Barclays recently announced that, from 2023 (not clear when), it will be possible to accept an Avios lump sum payment instead of taking a Barclays Upgrade Voucher.

Details are very sketchy. It was implied that the lump sum will not be fixed and could be personalised based on your value to the bank, although it wasn’t spelt out this clearly.

It also wasn’t clear if this offer will be open to everyone or just people who get their voucher from a certain product (Premier only?) or perhaps even only those who hold Premier and a credit card and so would earn two vouchers. All will become clear as 2023 progresses.

Conclusion

I’m not trying to claim that these Avios changes have completely trashed the value in the Barclays Upgrade Vouchers. They haven’t.

In fact, if you’re ‘Avios rich and cash poor’ then you are better off on many – but certainly not all – routes.

The key idea behind all of these articles, however, is that most Avios collectors in the UK are NOT ‘Avios rich and cash poor’. You certainly can’t put many Barclays Premier customers in this category.

In the US, of course, where you can be a college student and pick up 100,000 Avios or its equivalent from a different credit card sign-up bonus every few months, it is a different story. These people have lots of Avios but little cash. BA has made a decision that the needs of US credit card holders are now the driving force behind how the Avios programme is structured.

PS. As I said last week, this is not hyperbole. The head of Air France KLM’s Flying Blue programme said the same thing at a conference I attended in September and repeated the claim in a podcast last week. To quote:

“for us, we’re really trying to improve our proposition …. to make it more attractive for Americans to earn miles both in our co-brand card with Bank of America, as well as to transfer miles from the US banking partners into Flying Blue and redeem via Flying Blue …. because like I said, that’s where the money is.”

---

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.