How do *you* decide what an Avios point is worth?

[tf81]

I suspect most people are aware of Rob’s fantastic article on the value of an Avios point. If not, check it out! It’s an article I’ve been back to multiple times, and it nicely illustrates that the value of an Avios point can often be very subjective.

That said, when faced with multiple cash + Avios options, I personally find it hard to decide which one offers the best value. I recently made an Avios redemption booking on IB (via the Iberia website), and the method I used to calculate the value I was getting from the Avios I used meant I was getting £41 per 1000 Avios! This is clearly an amazing return on the Avios I redeemed, and so I would be interested to know if anyone agrees with the logic I employed in my calculation, or if I am missing something? Let me explain:

I was presented with six different combinations of Avios + cash:

76,500 + £303
66,150 + £393
51,900 + £473
41,200 + £533
28,700 + £647
16,300 + £737

To assess the “value” of each of these options, I compared each one against the cash value of the flight I would otherwise have purchased, which was £1400. Using this figure, here are my cash savings and the “value” I would be getting from the Avios used (£/1000 Avios).

£1097 – £14
£1007 – £15
£927 – £18
£867 – £21
£753 – £26
£663 – £41

Have I understood everything correctly? Is it really the case that I am getting over 4p per Avios if I go with the option using the lowest number of Avios?! If I’ve done my sums correctly, there is a HUGE difference here between the various options.

[VALittleRed]

Yep, This is one way of measuring the value of your avios and always worth taking into account cash price when doing a redemption imho. Always make sure the redemption is worth it against the cash value.
Also note that we tend to measure it per avios as opposed to per 1000 avios but fine either way.

An alternative is to take the assumption that an avios is worth 1p when calculating the avios redemption price. Then you could compare against the cash price. 1p is an easy figure to use and people have redeemed for more and less. 4p per avios is very good just note no TPs or avios earned from redemptions.

[masaccio]

Me personally I don’t look at it like that at all. I only use Avios for CW/F and can count on one hand how many times I’ve paid cash for CW (I’ve never paid cash for F).

On that basis, Avios/£ is meaningless for me as when faced with CW for (say) £2500 or WTP for £1200, I choose WTP.

The one exception is short haul economy where prices have gone bonkers. I used Avios for an AA redemption to Roatan which would have cost >$400 pp. Had that not been available, I’d most likely have chosen a different routing for less $.

TL;DR: I never calculate it. Avios let me fly classes/routes I am too cheap to pay for.

[rams]

The new pricing options also need you to consider how many Avios you have and whether it is worth saving some for future trips to make best use of any 2 for 1/upgrade vouchers

[alig4th]

Also from a “would I actually pay that price” perspective:

I just got flights to Europe in Club for the family. Cash price of the flights I booked: over £2175. What I paid was £175 + a 241 Voucher + 36000 Avios.

In pure cash terms, you could say I got:
(2175.00-175.00)/36,000 Avios = 5.6p/Avios value
or
(2175.00-175.00-195.00 [annual fee on old AMEX card]) / 36000 = 5p/Avios

And that £2175 price isn’t even a fully flex ticket like the Avios one!

(This is how I sell it to my wife).

But do you take the extra 0.5 Avios earned/£ on the fee paying card over the free card into account and deduct their value from the cost of the card?

Or do you consider the fact I spent 4 hours playing around with the BA site to find availability that works for us, checking against other commitments, rather than just picking a date/time of flight we’d prefer to have flown, reduces the intrinsic value? And would the flights we have booked independently been cheaper or more expensive than the ones we went with?

Or do you consider the fact we’d NEVER pay £2175 to fly a 2hr flight; so is it worth comparing the value to – for example – economy tickets on the day you’d prefer to have flown (which, without Avios, you would have booked)? Say £400 in my case.
So:
(400.00-175.00-195.00)/36000 = 0.08p/Avios! On a less suitable day/time than we’d have chosen, but with the added perk of flying Club and on a more flexible ticket.

[jj]

@tf81, your logic is approximately correct, but there are a few caveats.

First, you need to be willing to pay the cash price; otherwise the saving is meaningless.

Second, you are not considering the value of Avios forgone that would have been earned with the cash ticket. That would.normally be Avios earned on the cash flight and Avios earned via your credit card. You should add those Avios to the denominator in your final equation.

Third, Avios tickets are not the same as cash tickets. They are worth more, as you can cancel with only a small penalty, but they are worth less as you don’t earn tier points. You should adjust the cash price to reflect the value, if any, of those features to you.

@masaccio, the logic still works for you if you are rational. I am sure that you have a strik-price where you would be willing to pay for Club if BA were kind enough to offer it.you should estimate that price and plug it into the equation. Otherwise you should rationally extract value from Avios through a different means.

[masaccio]

jj wrote:

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@masaccio, the logic still works for you if you are rational. I am sure that you have a strik-price where you would be willing to pay for Club if BA were kind enough to offer it.you should estimate that price and plug it into the equation. Otherwise you should rationally extract value from Avios through a different means.

I do but it’s unrealistic in the post-pandemic mayhem. Last cash fare I paid in CW was £1400 LHR-JFK. Before that pretty much all my cash business class has been <£1800. As for F, I honestly don’t value it much more than CW so only bother if it’s available on a redemption and I am Avios rich at the time.

Us tight northern lads don’t change their ways easily.

[Andrew.]

jj wrote:

@tf81, your logic is approximately correct, but there are a few caveats.

First, you need to be willing to pay the cash price; otherwise the saving is meaningless.

Which cash price though?

I’m a regular domestic traveller. The Avios price is fixed for economy and business for as long as there are the Avios allocation of seats available. The cash price for domestic is hugely dynamic. Anything from £75 to £700 for an economy return fare.

So the reason I don’t waste 9,000 Avios + £35 on a flight that costs £75, is because I could potentially use 9,000 Avios + £35 on a flight that costs £700 in the future.

[No Longer Entitled]

Easy.

I look at my Avios balance. I look at my bank balance. I use whichever is healthier at the time.

General principle: If you are sitting on lots Avios the value is meaningless. You can’t cash them out. They are open to devaluation. Burn them.

Cash I find to be significantly more useful in everyday life.

[Hbommie]

I’m in the ‘I don’ts’ camp.

I look at where I want to go long haul in Business or First, if I have enough Avios and a voucher and there is availability then that will do. If not I’ll look at the best paid option, an example is a trip I’m planning to Oz and the Far East. Out to BKK on Finnair(cash), back from SYD on Qatar(Avios), so not the easiest of redemptions.

[AJA]

I use an Avios value of 1p as suggested by @VALittleRed and then add that to the cash paid for the taxes and fees and compare that in total versus the cash fare. I ignore TPs and Avios earned from cash fare but you could deduct that from the cash saving to really work out whether you’re getting a good deal. I also don’t take into account the fact that Avios tickets are more flexible than a cash fare.

Using my methodology I work out the following and would choose either of the two last options depending on whether I have more Avios to spend. (I hope my formatting holds when I hit submit) Edit – no it didn’t!

£ Avios Avios in£ Total Cash fare saving

303 76500 765 1068 1400 332
393 66150 661.5 1054.5 1400 345.5
473 51900 519 992 1400 408
533 41200 412 945 1400 455
647 28700 287 934 1400 466
737 16300 163 900 1400 500

[StanTheMan]

alig4th wrote:

Also from a “would I actually pay that price” perspective:

I just got flights to Europe in Club for the family. Cash price of the flights I booked: over £2175. What I paid was £175 + a 241 Voucher + 36000 Avios.

In pure cash terms, you could say I got:
(2175.00-175.00)/36,000 Avios = 5.6p/Avios value
or
(2175.00-175.00-195.00 [annual fee on old AMEX card]) / 36000 = 5p/Avios

And that £2175 price isn’t even a fully flex ticket like the Avios one!

(This is how I sell it to my wife).

But do you take the extra 0.5 Avios earned/£ on the fee paying card over the free card into account and deduct their value from the cost of the card?

Or do you consider the fact I spent 4 hours playing around with the BA site to find availability that works for us, checking against other commitments, rather than just picking a date/time of flight we’d prefer to have flown, reduces the intrinsic value? And would the flights we have booked independently been cheaper or more expensive than the ones we went with?

Or do you consider the fact we’d NEVER pay £2175 to fly a 2hr flight; so is it worth comparing the value to – for example – economy tickets on the day you’d prefer to have flown (which, without Avios, you would have booked)? Say £400 in my case.
So:
(400.00-175.00-195.00)/36000 = 0.08p/Avios! On a less suitable day/time than we’d have chosen, but with the added perk of flying Club and on a more flexible ticket.

Using 36,000 avios and a 241 to save 225 quid on the exact economy flights for a 2 hour journey is a stinker IMHO.

[alig4th]

StanTheMan wrote:

Using 36,000 avios and a 241 to save 225 quid on the exact economy flights for a 2 hour journey is a stinker IMHO.

Exactly. That’s why we booked Club. Also, the 241 was expiring and we wouldn’t be able to use it long haul.

Again, all down to how you define “value”.

[StanTheMan]

alig4th wrote:

StanTheMan wrote:

Using 36,000 avios and a 241 to save 225 quid on the exact economy flights for a 2 hour journey is a stinker IMHO.

Exactly. That’s why we booked Club. Also, the 241 was expiring and we wouldn’t be able to use it long haul.

Again, all down to how you define “value”.

Book 2 CE with avios, and pay £200 for the other 2 in economy. That would be better value !

[alig4th]

StanTheMan wrote:

alig4th wrote:

StanTheMan wrote:

Using 36,000 avios and a 241 to save 225 quid on the exact economy flights for a 2 hour journey is a stinker IMHO.

Exactly. That’s why we booked Club. Also, the 241 was expiring and we wouldn’t be able to use it long haul.

Again, all down to how you define “value”.

Book 2 CE with avios, and pay £200 for the other 2 in economy. That would be better value !

Not sure my 1yo and 4yo would fair too well on their own down back… Or my wife for that matter!

Plus this way we all get fast track, lounge access, food and drink on the plane, etc.

As I say, “value” on something like this is so subjective and dependant on so many factors. If the 241 had more time on it would we have done this now? Maybe not. If we didn’t have to travel somewhere suitable for the kids would we have picked another (“better value”) destination? Probably.

[tf81]

VALittleRed wrote:

An alternative is to take the assumption that an avios is worth 1p when calculating the avios redemption price. Then you could compare against the cash price.

So, are you saying that, using this method, if a redemption costs 76,500 Avios + £303 taxes, you would treat it as though it’s costing you £765 in Avios + £303 cash = £1068 in total?

I can see why one might use this method, as it’s a very easy method to use, and you are directly comparing the different options with each other (I believe it’s the method that Rob advocates, too), but in a scenario where you *would* purchase a cash ticket if a redemption seat wasn’t available, then aren’t you missing something if you don’t compare the various options to the cash price?

In my example in post #1, it highlighted to me that I would get 4.1p value per Avios if I went for the option with the highest cash element, but only 1.4p per Avios if I went for the option with the lowest cash element.

[tf81]

masaccio wrote:

TL;DR: I never calculate it. Avios let me fly classes/routes I am too cheap to pay for.

Yes, good point. I’ve also used Avios for CW in the past, and you’re right that calculating £/Avios in those scenarios doesn’t make a lot of sense if you wouldn’t be paying for CW in cash. I believe one of the scenarios in Rob’s article on the value of an Avios point mentions something like this.

However, there are occasions where I need to use Avios for an economy ticket where I would pay the cash alternative, and so in those situations, if I am presented with 6 variations of a cash + Avios price, I want to understand which represents best use of my Avios.

[tf81]

alig4th wrote:

Also from a “would I actually pay that price” perspective:

I really enjoyed reading this! 🙂 The points you raise really do highlight how difficult it can be assess the value you are getting per Avios, and how the value can vary wildly depending on what factors you choose to take into consideration!

My scenario was somewhat simpler though, as it didn’t involve a 241 voucher nor a comparison between Business and Economy. Also, I needed the flexibility of a redemption booking, so even though I’d have paid the cash price, I had already decided it would be a redemption booking. So, really, all I wanted to calculate was which of the 6 options represented the best value, and that’s when I started to wonder how everyone else crunches the numbers when faced with the different options.

[alig4th]

tf81 wrote:

I really enjoyed reading this!

You’re welcome.

tf81 wrote:

So, really, all I wanted….

Oops. Sorry 😛