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Last week, the ONS reported that the cost of air travel has risen by 41% over the past year. I think this was the highest rate in the basket of goods included in the calculation of CPI.
Despite Rob’s recent Stuffed series of articles, Avios redemption rates have remained broadly unchanged, so an Avios should be now worth 41% more than a year ago. But redemption rates are geared by cash surcharges, so the true value of an Avios should have increased more rapidly. And general inflation means that it’s now easier than ever to earn Avios on credit cards and shopping: if prices rise by 10%, all other things being equal, most of us will earn 10% more Avios per annuum.
My last few redemption bookings have seen >2p value per Avios, so anecodotal experience stacks up. Is it time to recalibrate the 1p/Avios rule as 1.4p/Avios?
It was already running at 40.3% in August 2022, but was then falling. The actual rate in December was 44.1% as reported here on a couple of threads last week.
Thanks for the correction, @JDB. As someone who works with numbers, I really should have done better.
I avoided mentioning the compounding effect of inflation as being needlessly complex. If you look over a longer period, the expect will be more like 2x than 1.4x. Either way, points collectors are doing well.
Don’t forget that redemption fees have increased substantially over the past year and a half. A lot of people were talking about that as a devaluation, whereas in reality that goes some way to offsetting the inflation on cash fares in terms of relative value.
Also, there’s the question of what you would be prepared to pay, especially when redeeming in premium classes.
E.g. if you had the choice of paying £4K for a business class flight or £1K+100K Avios would you say you are getting 3p/Avios in value even if you’d never pay the £4K and would otherwise travel in economy/PE instead? In that case, how much you value the benefits of travelling in business class should really drive the Avios valuation. If you could travel in PE for a £1K cash fare and consider that business class would be worth an extra £500 to you, you’re only getting 0.5p/Avios value (assuming the use of no vouchers and that everything else is equal).
So really it is a personal assessment depending on factors that are specific to you.
My opinion is its just a temporary boom in travel due to post-pandemic rush to spend on having fun, combined with airlines struggling to get back to full capacity either with shortage of staff or aircraft or airport constraints.
Will be interesting to see the trend with inflation and interest rates starting to take full effect on spending this year.I’ve hit 2.5p/avios but it hardly felt realistic with the weird Club prices.. I wouldn’t jump to generalise yet as well.
I’ve taken plenty of business cash flights but apart from a flight to Oz where I could only get one reward seat, I’ve never paid more than £1800. So it’s really unlikely I’d personally pay £3k+ for a business class seat. Instead I’d be more likely to fly premium economy or, if I could be confident of a seat with good legroom, economy. But plenty of others won’t blink at the recent fares. I’m just a tightwad.
I’m finding it harder to get value. My internal valuation dropped from 1p, to 0.8p, to 0.75 on my spreadsheet over the last 18 months.
It all depends on route and travel preferences. If you can jump on a hard-to-buy flight at T-355 you might be looking at better value than ever.
I’m still getting outsize value – CW to GCM and DXB this year at peak times, but managing to get seats on BA off-peak dates. Also CE to AGP when cash fares are over £650.
How do you all factor in the value of TPs from Cash fares that aren’t earnt on Avios fares in your calculations or decisions? Or do you value them at zero and aren’t bothered about them?
How do you all factor in the value of TPs from Cash fares that aren’t earnt on Avios fares in your calculations or decisions? Or do you value them at zero and aren’t bothered about them?
Don’t really value them as I don’t value Gold. It’s nice but I honestly don’t care that much. I expected to lose it last renewal but BA gave me TPs for reward flights through IT snafus, so I get to use First checkin for another year. I suppose choosing seats is nice too, but much lower status gets you that.
How do you all factor in the value of TPs from Cash fares that aren’t earnt on Avios fares in your calculations or decisions? Or do you value them at zero and aren’t bothered about them?
The fact that the Tier Point fairy has been quite liberal with TP awards on Avios flights over the last couple of years makes this even harder to value…
Well I’ve now got Silver till August 2024 and I do really like the lounge access and seat selection, so I’ll probably plan a couple of trips in the autumn next year to get the 600 TPs for another (nearly) 2 years of status. But once you’ve got that, you might as well use avios where you can get good value.
How do you all factor in the value of TPs from Cash fares that aren’t earnt on Avios fares in your calculations or decisions? Or do you value them at zero and aren’t bothered about them?
Don’t really value them as I don’t value Gold. It’s nice but I honestly don’t care that much. I expected to lose it last renewal but BA gave me TPs for reward flights through IT snafus, so I get to use First checkin for another year. I suppose choosing seats is nice too, but much lower status gets you that.
I don’t. I am unintentionally Gold at the moment (holidays double tier points, reduced threshhold, tier point fairy and re-routed flights lifted me well over the hurdle), but I always prefer to travel in a premium cabin so most benefits are moot.
More important is the Avios earning potential of revenue flights, and I always include the foregone Avios as a cost in my calculations. I value an Amex 241 voucher at £250, and my other important assumption is that I value the cash equivalent fare only at a price I would be willing pay were no redemption flights available.
Even with these assumptions, I have consistently been above 2p/Avios in all recent redemptions (CE and CW). In part, that’s possibly because my need to manage time off work means I often need to travel on expensive dates.
I’m certainly coming to the view that, for my travel patterns, an Avios is actually worth rather more than Rob’s 1p rule-of-thumb.
How do you all factor in the value of TPs from Cash fares that aren’t earnt on Avios fares in your calculations or decisions? Or do you value them at zero and aren’t bothered about them?
Personally I normally don’t, mainly because I normally never stand any chance of achieving any status. I do value Silver status, and we both managed to achieve it last year through a single BA Holidays trip (booked as PE, upgraded with Avios but they erroneously credited us tier points and Avios for Club, with the Club tier points doubled by BA Holidays).
It still took me until November to actually gain the Silver status due the 4 BA revenue flight requirement. However the BA Holidays trip took place later in my wife’s membership year so she already had them. So we had the benefits much earlier anyway when travelling together, including the short haul economy trip that we did to finally gain my Silver status. Between us that got us 2 years of Silver, plus a further year’s downgrade to Bronze (which I do also value for the 7 days pre-flight seat selection).
How do you all factor in the value of TPs from Cash fares that aren’t earnt on Avios fares in your calculations or decisions? Or do you value them at zero and aren’t bothered about them?
Interesting question. I’m almost certain to loose my Silver later this year.
I don’t find myself wanting to book cash fares for TPs.
I would, I think, be doing more carefully timed/placed redemptions if (like Virgin) BA awarded TPs on award flights. But, as Rob always points out, moving MRs to Avios and using them *is* a form of cash. In my head, though, it’s not.
To answer your question: I don’t factor in a value; but if I could retain status for free or with Avios, I would try a bit harder to keep it!
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