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DEVALUED: Avios to Nectar points conversion rate cut (again) from 11th March

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In a ‘surprising but perhaps not surprising’ move, British Airways has announced a further devaluation of the ‘Avios to Nectar’ exchange rate.

This is the second devaluation since the partnership was launched three years ago.

This is NOT a two way devaluation. The ratio from Nectar TO Avios is not changing.

What this means is that you will now take a substantial loss if you move Avios back and forth between the two schemes.

Avios to Nectar conversion rate devalued

What is changing?

Emails announcing this change went out to auto-converters yesterday. It is not yet reflected at ba.com or nectar.com.

When the partnership launched, 250 Avios converted into 400 Nectar points.

Since a Nectar point has a fixed redemption value of 0.5p, it meant that there was a floor value on the value of your Avios. 250 Avios got you 400 Nectar points worth £2, so 0.8p per Avios.

If British Airways or partner flight redemptions started to look like bad value, it didn’t matter. You could move your Avios to Nectar and guarantee yourself 0.8p. To be honest, you struggle to get 0.8p of value on many flight redemptions, especially in long haul Economy, and for many HfP readers transfers to Nectar became very attractive.

From November 2022, the transfer rate moved to 300 Avios = 400 Nectar points.

To save you getting your calculator out, the floor value of an Avios dropped to 0.67p as 300 Avios = £2 of Nectar points.

And now …..

From 11th March 2024, the transfer rate will move to 400 Avios = 400 Nectar points.

The floor value of an Avios drops to 0.5p, as 400 Avios = £2 of Nectar points.

The rate is unchanged in the other direction

The rate when you transfer Nectar points TO Avios remains at 400 Nectar points = 250 Avios.

This means that you can no longer move your Avios backwards and forwards without penalty. You will effectively be losing a percentage if you reverse a transaction:

  • 2,000 Avios = 2,000 Nectar points
  • 2,000 Nectar points = 1,250 Avios

You will lose 37.5% of the value of your points if you end up moving your Avios to Nectar and then back again.

Avios to Nectar conversion rate cut

Why has this happened?

It doesn’t take a genius to point the finger of blame at IAG Loyalty / Avios and not Nectar. There are two issues, I think.

Too much money was flowing out of IAG Loyalty

When Avios moved from Tesco to Sainsbury’s, the aim was to increase the amount of money coming into IAG Loyalty from the supermarket niche. It wanted to become a major partner of a retail loyalty scheme, rather than being a bit part of the Clubcard universe.

Did it work out that way?

When you transfer Avios into Nectar points, IAG Loyalty has to pay real cash out to Sainsbury’s, which owns Nectar.

Because some IAG partners are paying close to 0.8p for their Avios, IAG isn’t making much money on many Avios partner transactions if it pays Sainsbury’s 0.67p per Avios sent over.

This wouldn’t be a problem if people were choosing to spend their Avios on flights. However, it is becoming increasingly clear to many people that this isn’t something they want to do. Cashing out to Nectar made sense.

It is also logical that, with the economy not in great shape, saving some cash by converting Avios to Nectar to pay for your weekly shopping makes sense. It is a lot better for your budget than paying out taxes and charge for two ‘free’ business class flights to North America.

It is also likely that Sainsbury’s shoppers, when facing a choice between redeeming Nectar points for hard cash or turning them into speculative Avios, were voting for the money.

I suspect that the contract between IAG Loyalty and Nectar has an ’emergency break’ clause if too much cash flows in one direction compared to the original plan, and that the break has now been activated again.

Avios to Nectar conversion rate cut

It is now easier to devalue the Avios programme

The other issue is that the 0.8p transfer rate meant that British Airways had to remain ‘honest’. There was a limit to how much it could tinker with Avios because any negative changes would lead to a dash to the (Nectar) exit.

This 2nd factor is now key. Moving from 0.8p to 0.67p to 0.5p of Nectar points per Avios gives BA a LOT more wiggle room to leg you over.

It would be fascinating to know what Sainsbury’s makes of this. It will now see a lot less money coming in, as people decide not to convert Avios to Nectar, but will still be paying IAG when people convert into Avios.

What should you do?

If you were planning on moving any Avios to Nectar, you should do it now. Make sure that you are firm in your decision, as you will lose 37.5% of the value if you later convert back.

Today, 50,000 Avios – the monthly cap – gets you 66,666 Nectar points, worth £333.

After 11th March, 50,000 Avios will only get you 50,000 Nectar points, worth £250.

(And, of course, back in 2021 50,000 Avios got you 80,000 Nectar points, worth £400. That’s some devaluation in three years.)

Conclusion

The two-way simplicity of Avios to Nectar transfers was the real charm of the scheme. The two schemes could operate symbiotically as one.

This has not been the case since November 2022, when the transfer rates started to deviate, and is definitely not the case after 11th March. You will only transfer to Nectar if you know that you have a firm plan to spend them, since transferring back to Avios will see you incurring a loss.

More importantly, converting to Nectar is now no better than any other ‘pseudo cash’ Avios redemption, such as using points for seat selection or ‘Part Pay With Avios’. From 11th March, you will be getting 0.5p per Avios either way.

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Category

British Airways and Avios, Sainsbury's and Nectar

Comments (145)

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

  • Erico1875 says:
    27 Feb27 February 06:39

    I think the team are going to have a fair bit of editing to do

  • Jonathan says:
    27 Feb27 February 06:46

    Although ‘Part Pay With Avios’ isn’t entirely great by HfP standards, (in very rare circumstances it is, depending on reward seat availability, the amount of Avios one has, if they’re already transferring the maximum amount of Avios to Nectar already allowed, then it can make sense to do higher amounts) it’s a good way to ensure you get 1pence per Avios point, although the amount you can actually use to get this value is heavily limited, it’s still better than the other Avios programs. We don’t know what Finnair Plus will look like when it starts using Avios very soon, although the HfP team have almost certainly got some idea, that they won’t be allowed to share until everything is live

  • Mike says:
    27 Feb27 February 06:53

    Since moving from the south east to the north west, Avios have become pretty much useless for flying unless I want to change in London or fly via the Middle East.

    I’ve found it very liberating to siphon as many as possible to Sainsbury’s and just shop around for flights that are both convenient and cheap.

    Once you get over the initial feeling of unease, Ryanair flights are surprisingly efficient at getting you from A to B for astonishingly low amounts of money….

    • Jonathan says:
      27 Feb27 February 07:05

      You’ve however got to ensure your bag dimensions are exactly what they say, otherwise your costs can easily go up…

      Just about all of HfP readers are lucky that we don’t get our bags assessed when getting the plane, although saying that I personally try not to go too overboard on hand baggage, and will put just everything I can into the hold

      I’ve seen many people with very large luggage they take with them hand baggage, the only real advantage is not needing to wait when you arrive, bandits working in baggage at the airports isn’t a problem like it was many many years ago

    • Throwawayname says:
      27 Feb27 February 07:17

      The problem with that approach is that FR may have 2 flights a week to your destination and the timings may be less than ideal. Avios or Virgin points can be useful for the odd redemption, but flying AFKL or LHG with a connection but a huge array of timing and destination options is clearly the sensible choice for anyone who is based in the UK but outside London and travels at least semi-frequently- e.g. Flying Blue silver needs exactly 5 returns in short-haul Y and gives you an extra piece of luggage on all SkyTeam travel.

      • Jonathan says:
        27 Feb27 February 07:20

        LHG ? ?

        • Greenpen says:
          27 Feb27 February 07:44

          Lufthansa Group which is Lufthansa, Swiss, Austrian and probably a few others.

      • Mike says:
        27 Feb27 February 09:55

        I take your point for smaller regional airports, but frequencies from Manchester to most short haul destinations are generally good – for the most popular destinations probably several times daily.

        Re the bag size point – if you always use the same bag / case, you can travel safe in the knowledge that you will have no problems.

        Don’t get me wrong – when I lived near London I would never have dreamed of flying anything other than BA (often using Avios).

    • Paul says:
      27 Feb27 February 07:31

      Yesterday flew back from Budapest and the departure time was exactly the same as a Ryan Air flight to Edinburgh. BA arrived a good 10 minutes before the Ryan Air plane but left after it. If I lived up north I do what you do.

    • Chris R says:
      27 Feb27 February 09:11

      I honestly don’t understand why this topic keeps coming up. I’m north of the border and it generally makes zero sense to choose flying BA short haul, unless I can genuinely save money by using Avios. Throwing in the inconvenience of connecting in LON, plus the risk of delays to flights and baggage for practically the same economy product as EZY or FR just doesn’t stack up for me.
      Long Haul on the other hand is a different story – that’s what I save up the Avios for.

      • His Holyness says:
        27 Feb27 February 11:33

        The short haul redemptions are heavily marketed on the partner credit cards ads “plus £1” but from anywhere except London, the amounts required are stupendous.

  • Tony says:
    27 Feb27 February 06:58

    More BA dirty tricks…totally untrustworthy!

    • BJ says:
      27 Feb27 February 07:18

      Won the HfP award for best FF scheme if I recall, and will likely win the next too.

      • Ken says:
        27 Feb27 February 07:42

        For most people in the UK it would be first in a field of 1.

        Or 2 if you are happy to fly Virgins limited routes.

        • BJ says:
          27 Feb27 February 08:10

          Most HfP readers are in the UK so we obviously value it. But I would go further and say it’s the best FF in the world at the moment while at the same time recognising that it’s horses for courses. My sister in law fir example generates over a million Etihad Guest miles every year so obviously that’s her first choice.

        • Panda Mick says:
          27 Feb27 February 09:09

          This rhetoric needs to stop: when you factor in KLM and AF, then the world really does open up, especially from the provincials, which are poorly served by BA

          • BJ says:
            27 Feb27 February 09:39

            I would love to use more but have difficulty collecting the miles. Burning compares unfavourably to AY and QR, and to BA, particularly whrn using a voucher. Value I see in FB is on short flights within Europe

    • BBbetter says:
      27 Feb27 February 08:09

      ‘Dirty’ would’ve been not giving any notice period.

  • Charlie says:
    27 Feb27 February 07:08

    Is the monthly limit on conversion per calendar month or 31 days from your last manual conversion?

    • Ryan says:
      27 Feb27 February 07:12

      Calendar month AFAIK

      • George says:
        27 Feb27 February 08:39

        If the transfer limit is based on calendar months, I assume I could transfer 50000 Avios to Nectar today and another 50000 on March 1?

        • Rob says:
          27 Feb27 February 08:45

          You could also set up autoconvert and do 25k for this quarter, which is outside the 50k cap.

          • Dan says:
            27 Feb27 February 11:51

            My wife and I both have Avios accounts. I have circa 75k and she has over 150k. What’s the most efficient way to convert as many nectar as possible on either?

            Can I do a 50k then auto convert this month and then link the nectar card to get account next month? Would this work?

          • Rob says:
            27 Feb27 February 11:53

            You can do 50k each this month, 50k each next month plus 25k via auto-convert (the quarterly cap).

            This means you can empty yours and your wife can move 125k of hers.

          • Dan says:
            27 Feb27 February 14:46

            I can’t rely to your comment below do I’ll write it here. I made a typo. We only have one nectar card. Can I do 75k on my card this month, link hers to do the same this month and repeat for next month?

            Thanks.

          • Rob says:
            27 Feb27 February 17:04

            Get another Nectar card! Load it, spend it, chuck it.

          • Dan says:
            27 Feb27 February 18:47

            I’ll try and pick up one today or by tomorrow then. Thanks!

          • Dan says:
            27 Feb27 February 20:04

            How does the 25k limit for auto conversion work? It says up to 25k over 3 months but every monday, which is circa 13 weeks. So does that mean it can only auto convert around 2k per week? That leaves around 4k points before the deadline.

          • Patrick says:
            29 Feb29 February 06:18

            Hi, how is it possible to do the full 25k by autoconverting please? I assumed autoconvert would just convert any new avios earned weekly once switching this on, is that incorrect? Thank you

          • Rob says:
            29 Feb29 February 07:34

            I don’t know how it works, to be honest. All I know is that there is a 25k per quarter cap on it.

  • BJ says:
    27 Feb27 February 07:11

    Try convincing a couple that fly from HKG to Uk in J, or F if it returns, that BAPP is a dud.

    • executiveclubber says:
      27 Feb27 February 07:17

      Ha, we’re flying out in J and back in F for 27 flying hours at a cost of just 155k Avios + £550… BA PP is the best flying product ever.

    • Jonathan says:
      27 Feb27 February 07:18

      BAPP isn’t for everyone, if it was then the UK credit card market would be dull…

    • dst87 says:
      27 Feb27 February 07:39

      It might not be for everyone but it’s hardly a dud. Plenty of people get exceptional value from the BAPP 2-4-1 voucher, and that makes the earning rate for spend even more appealing too (because your Avios go further).

  • NigelHamilton says:
    27 Feb27 February 07:23

    A £40 online shop at Sainsburys gets 80 avios . On these valuations it’s better to pay cash online than converting right?

  • wacca-wacca says:
    27 Feb27 February 07:44

    can see what happens next.. redemptions for flights will increase in avios points needed

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

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