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

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• James says:

  27 Feb27 February 07:55

  Flying business for a grand during the RWC in Japan was worth every minute of my 1am phone call!

• Bernard says:

  27 Feb27 February 08:13

  Is this a signal that yet another Avios devaluation is on the way at BA?
  The way you earn has been devalued, especially for Golds.
  BA inflated taxes and add ons then created £1 avios tickets with a far higher increase in Avios.
  Side partners avios worth keeps being devalued like this.
  It all feels like a monopolistic company deciding it doesn’t need ‘loyalty’ any more.
  Any thoughts on where the safest place to store avios ‘value’ now is, when BA seem determined to turn avios into pesos

  • Qrfan says:

    27 Feb27 February 09:49

    I’m not sure your position is coherent. The way that *you* earn as a gold on (presumably) non flexible leisure fares may have been devalued, but the avios earned on fully flex fares is an absolute bonanza. 52k on a return transatlantic is ridiculous and a big increase.
    Also, the devaluation already happened in the form of the increased taxes you mention. There’s never been a safe place to store avios, hence the recurring “flexible points are worth more” articles. Earn and burn is the only way for an avios balance.

  • Rhys says:

    27 Feb27 February 10:02

    Transferring to Nectar at 0.8p was always an outlier, though. This change just means it now matches other poor value redemptions such as Avios hotels etc. It is not lower than the previous floor.

    • Peter K says:

      27 Feb27 February 12:48

      I loved the 0.8p level. Moved out at least 200k to nectar. I regularly shop at Sainsbury’s so it was a good deal for me. No risk of devaluation for what is already spent.

• john says:

  27 Feb27 February 08:13

  I would caution against holding high Nectar balances; I had £500 worth of Nectar points which got spent by fraudsters. It’s very easy and seems to be a common theft. Luckily Nectar re-instated quickly, at which point I spent some and transferred the rest to Avios.

  • mkcol says:

    27 Feb27 February 09:15

    And here’s how it’s done!

    http://www.kiphakes.com/2024/01/how-we-had-our-nectar-points-stolen-and-this-is-how-yours-will-be-too

  • Rich says:

    27 Feb27 February 09:20

    I had a similar amount stolen last year. Had them back in a new Nectar account within an hour, with minimal fuss.

    • Qrfan says:

      27 Feb27 February 09:57

      I had to get a new account and a new card setup, and whilst not the end of the world, it wasn’t minimal fuss.

      • Spurs drive me mad says:

        27 Feb27 February 10:02

        Same here £600 stolen took a week to sort out. It was a pia and certainly not stress free.

        • cin4 says:

          28 Feb28 February 02:44

          Also same experience here. A very stressful morning and having to set up a new account everywhere…

• Andyf says:

  27 Feb27 February 08:40

  The conversion are getting devalued yet the prices for the cards earning them are ever increasing. Rob it would be super interesting to read a post on the devalued nature of Member Rewards or Avios earning cards. Probably MR more so…
  Why haven’t Amex increased the earn or transfer rates on their cards? The prices are increasing for quite useless benefits. ( I look at my gold card). Yet with the schemes devaluing and the rewards transfers staying exactly the same. At what point do they consider increasing it? Surely and at no loss to them as it would balance out to the original rate. For example Radissons shouldn’t they have increased the rate to 1:4? A three article spread on MR points would be great. I’m sure its something here… albeit quite complicated.

  • Rob says:

    27 Feb27 February 08:45

    We did such an article after the last Nectar devaluation and may do another.

    • Andyf says:

      27 Feb27 February 08:54

      I must have missed it, what do I search for?
      The analytics is really interesting and I imagine a lot of people would be interested. Have Amex in the past couple of decades ever increased their conversion rates? In the past decade, I can’t remember anything changing?

      • HarryHightower says:

        27 Feb27 February 09:22

        Remember with inflation the points you earn on credit cards are also ‘inflated’. If everything costs 5% more than a year ago, you’ll also be earning 5% more points from credit card spend for the ‘same’ goods you were a year ago (for your real income to remain the same your pay has to increase by 5% to match inflation – if that happens in real terms you are as well off as you were a year ago plus get 5% more points from your spend). Many redemptions have ‘fixed’ prices so in this scenario a 10,000 point redemption is now 5% ‘cheaper’, or easier to earn, than it was a year ago.

        There’s an interesting HfP article about this tension here https://www.headforpoints.com/2023/10/10/what-makes-the-best-loyalty-scheme/ Lots of hotel loyalty programmes have spend based earning as the article says (ie. so earning also increases with inflation), so makes sense a lot of them have also switched to a revenue based reward chart (ie. so redemption ‘prices’ increase in line with inflation too).

        Now that BA have switched to spend based earning even for flights, Avios earning from flights and credit card spend will grow with inflation, which presumably puts pressure on the redemption chart….

        • Andyf says:

          27 Feb27 February 09:39

          Yes, but I think you missed my original example. Radisson gutted the scheme. I had 150k points which were turning from 0.33p a point down to 0.2p per point. ( If remember Robs original valuation correctly) MR transferred 1:3 so I was getting almost 1p for my MR point. Yet after that change Amex continued the same rate and instead only gives me 0.6 per point, then increased the fees. In reality for it to remain the same they should have increased the rate adding an additional point and would still earning a slice from the top. at 0.8p per MR point. So I understand inflation etc but this wasn’t my original point. Amex conversion are getting worse. This is not due to inflation but scoring wins from other providers devaluations.

        • Rob says:

          27 Feb27 February 09:45

          Not sure you can blame Amex for this though. Radisson wants people converting and so Radisson should adjust their rate. Same with Eurostar who, if they ever fix the conversion IT issue from Amex, will find that no-one is converting now anyway.

  • Bill_B says:

    27 Feb27 February 09:22

    Well, money devalues continuously due to inflation but the earning rates stay fixed. So we should expect either the card terms or the transfer rates to worsen over time.

• memesweeper says:

  27 Feb27 February 09:17

  “It would be fascinating to know what Sainsbury’s makes of this”

  They should simply not have allowed it — they don’t with any other partner. if BA’s right to do this was baked into the contract they shouldn’t have signed it. It is very common for partners of Nectar see a net flow out to Sainsbury’s, that, in turn, is why so many partners leave (and in turn why consumers like it — it means you have a sensible exit for your loyalty with any participant).

  This will be now well known, and Sainsbury’s will struggle with holding the line with future contract negotiations that the buy and sell rates must be equal with consumers able to cash in/out at will. It’s terrible for Nectar users in the long term IMO, not just Avios holders.

  • Rob says:

    27 Feb27 February 09:39

    Ever tried getting your boss to agree to a contract you’ve negotiated which has open-ended and uncapped financial exposure for you?

    • Axel says:

      27 Feb27 February 10:07

      Thats how the public sector works I thought

    • memesweeper says:

      27 Feb27 February 10:08

      The other partners did/have — and they have a breakpoint (X years), thus they are not entirely open ended. Also the exposure is (at maximum) the amount of loyalty points you generate, which should be linked to sales and thus profits! Thus it’s not 100% uncapped.

      What happens is everyone signs thinking the flows will net off, and they don’t. This has happened time and time again — why did BA think they would be “special”?

      If BA got a concession from Nectar that other partners haven’t that is bad for the scheme.

  • WillPS says:

    27 Feb27 February 09:47

    I’m not sure there’s been a situation pre-BA partnership where Nectar was partnered with a company who continued to use their own currency but allowed 2 way conversion?

    All the other partners (Sainsburys, Vodafone, Barclaycard, Debenhams, BP, Homebase, Argos, Ebay, Viking, Dulux Decorator Centres) adopted Nectar points as their own loyalty currency. They were permitted to change the ‘earn’ rate but the basic burn rate has always been static @ 500 points = £2.50 worth.

    I’m in two minds about where I think it goes from here. I doubt there’s any further room to devalue the Avios -> Nectar exchange rate. Maybe it’s a rate everyone can be happy with? BA are selling Avios at ~0.8p, exchanging them for Nectar points at ~0.5p, that arbitrage is worth something, even in the worst case of a ‘no interest in BA products/services’ customer such as myself. Sainsburys still get to market Avios redemptions to attain the desired higher class of customer they presumably sought.

    On the other hand, I can’t get away from thinking there might be a 5 year deal with brake points at the 1/3 and 2/3 windows – and if true BA has now pulled both of them – doesn’t bode well for it going beyond its term.

    • Rob says:

      27 Feb27 February 10:14

      The Nectar model for companies not owned by Sainsburys is flawed which is why partners ALWAYS pull out. Why? It’s obvious (if you’re commercially minded):

      *everyone values a Nectar point at 0.5p and yet partners pay MORE than 0.5p to cover the costs of the scheme – so a business has the choice of offering, say, a £5 cash discount on a product or £4.50 of Nectar points (which costs them £5 with the management fee). Where’s the attraction?

      *people value Avios at well over 1p, in general, but partners buy them for under 1p, in general – so a business has the choice of offering, say, a £5 cash discount or 625 Avios which I’d value at £6.25+

      This is why Avios are very attractive to businesses as rewards but Nectar points are not.

      • WillPS says:

        27 Feb27 February 10:47

        “partners ALWAYS pull out”
        Amex have been on board for almost 20 years.
        Ebay have been a partner now for 12 years.
        BP lasted over 15 years. AIUI Nectar dropped them because they made a better deal with Esso.
        Homebase was also on board for over a decade (none of which were under JS ownership), and only left because their new owners were tearing up everything about the company had bought. I’m told the new owners have tried to reinstate the partnership but Nectar don’t want the risk..

        I mean, nothing lasts forever but these are some pretty impressive partnership durations if you ask me.

        “This is why Avios are very attractive to businesses as rewards but Nectar points are not.”

        I bow to your superior knowledge, but in terms of average consumer awareness Nectar is a far stronger proposition than Avios on account of the fact they’ll actually know what it is…

        • Rob says:

          27 Feb27 February 12:05

          Alex Naisby is a good contact of ours, and was at the last Summer party I think. Doesn’t mean we need to agree on every aspect of their model though.

        • RussellH says:

          27 Feb27 February 13:46

          DFDS (+ P&O Ferries) are both listed as partners under Nectar Travel – DFDS @ 7 pts / £1, P&O @ 6 pts /£1. Click through to book and earn points.
          However…
          Booked on P&O this morning for £53, while DFDS were quoting ~£170.
          Nectar site says I shall get an e-mail from Nectar confirming the points – but no sign yet…

      • Andrew says:

        27 Feb27 February 14:03

        *everyone values a Nectar point at 0.5p

        Do they? That might be the value you get for 90% of redemptions but I suspect that, in their heads, most people value 100 nectar points at something much closer to £1 rather than 50p

        • Rob says:

          27 Feb27 February 14:04

          You’d need to be pretty dim to do that I think!

          I mean …. you open the app and it says in big letters ‘you have xxx points – that’s at least £y.yy to spend’ at the top of the home page.

        • ADS says:

          27 Feb27 February 20:13

          i know that I can convert my Nectar points to Avios … and redeem (last minute short haul flights) at over 1p per Avios

          so yes, despite what Nectar says – I too value Nectar points at over 0.5p

  • Matarredonda says:

    27 Feb27 February 15:10

    How about it was all in the original contract?

• Deek says:

  27 Feb27 February 09:26

  There’s extraordinary value to be had in long-haul premium when using a BAPP. If you’re restricted to short-haul economy then I’m sure it’s a lot less appealing.

• John says:

  27 Feb27 February 09:41

  Anyone else having issues performing the conversion from avios to nectar today?
  I keep getting stuck on a ‘parachuting’ stick figure that says I am not allowed to land.
  My accounts are still showing as linked, but I can’t get to the page where I’m allowed to send avios to nectar

  • Don says:

    27 Feb27 February 09:57

    yes, same here

• DTraveller says:

  27 Feb27 February 09:43

  Is this correct in thinking about what happens in terms of potential lost value if you convert avios -> nectar -> avios ? Moves from 6.7% avios loss from conversion today and up to March 11th, to a 37.5% avios loss post March 11th ?

  Today:
  50,000 avios -> 66,666 Nectar; (300 avios = 400 Nectar)
  66,666 Nectar -> 41,666 Avios (400 Nectar = 250 avios)
  (6.7% loss)

  Post March 11th:
  50,000 avios -> 50,000 Nectar; (400 avios = 400 Nectar)
  50,000 Nectar -> 31,250 Avios (400 Nectar = 250 avios)
  (37.5% loss)

  • louie says:

    27 Feb27 February 11:17

    That should be 16.7% current loss.

    • DTraveller says:

      27 Feb27 February 11:39

      ah yes of course – thanks!

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