1 million Avios – what are they worth?

I would argue you need to add a depreciation factor too. If you are not planning to redeem the million immediately, then that £6700 of nectar becomes at risk of devaluation. Maybe that reduces the floor price by 10% or 20% or 30%, depends on how long you want to hold the balance for and how lucky you are.

Earn n burn!

It also depends on what you intend to do with them. At one extreme you could use them to book the most expensive flights you could find avios availability for, which could easily run into 5 figures for cash.

I mentally value them at the Nectar rate, that’s my floor. Nectar works at Ebay and a number of large retailers including electronics, toys, and white goods stores have ebay outlets. Therefore they’re as good as cash and many of us could use a decent 4-digit £ amount of them doing Christmas, birthdays, and incidental purchases over a year. There are also ebay-to-cash(like) routes, for example purchasing Amazon vouchers or similar on ebay.

Over a million avios in the BA “bank” is about the point where I’d start to think about cashing out rather than leaving them in; even doing a long-haul holiday with a family of 4 (seldom possible due to school holidays etc) we’d probably not “need” that many for flights within a 12 month period. Depends on how fast you accumulate them.

I wouldn’t want to deplete them below say 200k because if a need to travel at short notice, combined with lucky redemption availability, appears then they can be worth several pence each to me as an individual.

There are some patterns of use which make them really highly valuable and if you fall in to one of those patterns you probably already know – for example long-haul “commuting” several times a year with unknown dates, where you can redeem to book a load of refundable journeys in advance and then cancel the ones you don’t need nearer the time. It’s sort-of unfair to compare the redemption price (which is a refundable ticket with full baggage allowance) with the discounted non-changeable cash fare.

Your tax position might be a significant factor as well; if redeeming the points for either goods/ebay or travel saves you from paying yourself taxable income out of a company you control as either dividend or PAYE, then the value of your points is multiplied. The tax tail is always wagging the avios dog to some extent.

TooPoorToBeHere wrote:

To add a caution – there is non-zero risk in holding an Avios balance (BA might confiscate it, your account might get hacked, BA might change the scheme or go bust) but there is a *substantial* risk in holding a Nectar balance. Nectar is riddled with fraud.

If you’re converting to Nectar, get it spent (or converted to ebay vouchers) ASAP.

Risk-reward is crucial. There’s ALWAYS disproportionate ‘risk’ to continuing to hold a large balance than there is ‘reward’ to continue accumulating unspent points. I consider BAEC as risky as Nectar because (1) it’s easy to make a fraudulent redemption given you can book for anyone and there’s no 2FA, (2) devaluation always seems imminent one way or another, (3) they have a history of shutting down accounts for nebulous reasons and as ‘power users’ we’re more likely to be on their radar.

OP, unlike others on this site I value my Avios based on ‘how many pence off the cash fare can each point save me’, irrespective whether I’d have ever been willing to pay that cash fare or not. On this basis, I never redeem Avios at below 1.5p/A, and it’s often >2p/A. So I’d say £15k-20k is what a million are worth to me today, though as others noted the floor is just under £7k (and I certainly wouldn’t buy them for more than £8k).

If assuming I had just retired and had my tax free lump sum and BA did a special deal where 1,000,000 were for sale for £10,000 I would not buy.

£ 7,500? Maybe. Probably in fact.

So my “buy” price is a little above the Nectar exit value.

A few years ago I valued them somewhat more highly.

The last estimate was $78,000.

I value Avios at 1p each when looking at redeeming them. That would make 1m Avios worth £10k. I compare against the cost of paying for a cash fare in the same cabin realising of course that in reality you should compare against a flexible cash fare. If my 1p per Avios valuation plus taxes, fees and other BA charges is less than the cash fare I think I am getting
decent value.

That said combined with an Amex BAPP companion voucher they are even more valuable. Yesterday I redeemed 220,000 Avios + £1,200 in taxes/other charges together with a 2-4-1 voucher (valued @1p meant I spent £3,400 for 2 people ie £1,700 each) for a return trip to Singapore in Club World. Cash fares for the same dates on the same flights were £4,200 each meaning I “saved” £5,000 using my Avios and a voucher. I think that’s decent. The cash fare would earn a chunk of Avios and TP so perhaps I should deduct those Avios valued @1p to determine the overall saving I’ve made.

Anything between £6,700 in Nectar Point or £38,000 based on £700 domestic flights from City on a Friday evening.

Base value = £6,700
My Saving Rate = £11,000 (based on being willing to use 56,000 points to avoid a £616 fare to Munich)
BA’s Arbitrary Value = £17,600
My Cost Avoidance Rate = £45,000 – £75,000 (based on most of my redemptions being achieving 0.45 – 0.75p per Avios).

My valuation of Avios tends to decrease the more I have. Once I am over 250,000 (enough with a Companion Voucher to get most places in Club), I am willing to use “My Saving Rate” above. Below 250,000 I need a redemption to be hitting “My Cost Avoidance Rate”.

I always work on 1p/point, so £10k. I am happy to buy at this rate from BA (or slightly less), as you can usually get better than this with “Cash+Avios” redemption. Though in reality I’d be spending them with an AMEX 241 voucher long-haul in Club or First. If you’re flexible (on dates and destination) it’s not so hard to get great value.