Understanding why the companion voucher doesn’t save money in some cases
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Hi,
I’m hoping someone can help and explain simply why in a a few of the cases I’m looking at it’s more expensive to use the voucher.
I have the BA Amex Premium Plus card
I have a voucher to use before August
I have over 60,000 avios on my accountToday I was looking at flights, off peak, and saver for two people to go to Iceland, business class November. The Avios they’re asking for a 48500 +£2, which to buy would cost around £800 to buy (if i went to purchase avios).
Not using my voucher and booking the same flights with them would cost me £626, why is it more expensive to use the Voucher?
I’ve tried a few other destinations, all with the same outcome, where not using the voucher is cheaper.
I’m not sure if i’m thinking about it correctly, and would appreciate some help/advice.
If you buy Avios as a one off purchase from BA, you will pay between 1.77p and 2.45p per Avios.
Avios aren’t usually worth that much, and people making one off purchases will normally be buying a small quantity because they are slightly short of what they need for a specific redemption.
But that is just one price.
If you buy Avios on subscription, you can get 200000 a year for just less than a penny each.
And if you buy using the new Balance Boost, you pay 0.92p
If you exchange Nectar points to Avios, you are effectively paying 0.8p per Avios.
If you earn Avios on a BAPP card, you are effectively paying 0.66p per Avios if you consider the opportunity cost of using your BAPP instead of a card that would give you 1% cashback (Chase Debit for example).
Some Avios are genuinely free. The ones you would earn for paying for a flight, or taking a flight that your employer has paid for.
I even value some of my Avios at a negative cost, where an Amex cashback offer is is worth more than 1%.
My personal cost per Avios is less than 0.3p, but I would expect to get at least a penny per Avios when redeeming.
If you value your Avios at a penny each, then your Iceland flight is costing £487 instead of £626, and you are getting a return of 1.29p per Avios. Not a bad return if you have paid a penny each for them or less. You are also getting a ticket which you cancel for a very small fee if you change your mind.
Also you’re only citing the highest avios option on a RFS booking which is generally agreed to be a very poor use of them. I tend to still book RFS at the rate nearest the old standard one which I find gives better value.
Alex G – thank you that does help actually with the breakdown, since i also use BA rewards and the subscription service. I appreciate the perspective – much needed.
Anna, I hasn’t realised the highest avios option is poor use – is there some best practice on this I can look at?
@Emma, if you read Rob’s avios on the new-style vouchers, IIRC he uses the example of paying 18k avios plus £1 to fly to AMS in CE. This would be a poor use of the 241 where a cash ticket could be fairly cheap.
Where are you looking at going?
One thing to factor in is not all Avios are the same.
The Avios you earn on card spend has the opportunity cost of 1p, as in you could’ve received a penny on the pound, 1%.
But Avios from SUB, referrals, supp cards, retention offers, and eStore are are free.
To do a true value assessment – one must strip up the “free” Avios from the card spend earned Avios.
There are other considerations to weigh, the flexibility for changes and refunds of Avios flights versus cash flights. Flight dates and times. Tolerance of stopovers. If you are cash poor Vs Avios rich – relatively speaking. Your ability and rate of earning Avios. And so on.
That’s overthinking it, IMO. I consider my avios to be free unless I’ve bought them, e.g. as a “boost”. I get hung up enough about the value I get from redemptions!
@Emma I use a valuation of 1p per Avios when looking at redeeming vs buying a cash fare.
Also, as has been pointed out, the option you’ve presented above is one of several. You don’t have to accept paying £2 and a lot of Avios. There should be several options to pay more cash and fewer avios on the next page of the booking process.
Is the cash price of £626 for two passengers or is that what you’d pay for 1?
If it’s for 2 then I’d say just buy the cash fare bearing in mind you also earn TP and Avios on top.
But if you can pay fewer Avios and more cash and get something similar to the cash fare using the voucher then that seems a reasonable use of the voucher.
https://youtu.be/SxpokFks4Bw?si=5-nF13_o10jHDaIO
Watch this. Great explanation from Matt Jones.
That’s overthinking it, IMO. I consider my avios to be free unless I’ve bought them, e.g. as a “boost”.
they are mostly not free, though, as you have forgone another benefit to earn them in most cases, including:
– not using a cashback card like the Amex cashback or chase, and instead using BAPP
– not using a cashback portal like TCB, and instead using BA estore
– converting from MR to Avios instead of to another points schemeAlso, even the free Avios have a value outside of BA, via Nectar, I think the calculated rate is 0.68p each.
Given the above I’m working on 0.8p each — if I get a better redemption valuation, I’ll take it. There’s no circumstances where it is wise to value them at less than 0.68p, even if they were completely free to obtain (via flying, for instance).
Thanks @northernLass, I’ll check out the article you mentioned.
And @ash that really helps because i do have avios coming from lots of sources some which i pay for even if it’s to justify the cost of my annual card fee. I also hadn’t paid to attention to this, and this has been really helpful in the last week when i’m looking at boost etc.
@AJA, thanks yes it was the cost for two, the thing is i have two vouchers to use so my trouble is finding routes, where it’s the best use of them.Cheers @Royback, will give this a watch now.
(still need to watch the video)
but i am frustrated a little with how much due diligence you need to do to find out if your deal is a good deal.
For instance for two people to go from London to New Delhi in business in May 2024, booking direct for two people is £3998.
Using my voucher for two on the same flights are:
360000 Avios + £ 900.00
More pricing options
You can select when paying
304000 Avios + £ 1,181.92
250000 Avios + £ 1,472.20
216000 Avios + £ 2,352.00
180000 Avios + £ 3,271.20
125000 Avios + £ 3,792.60with a penny a avios, none seem worthwhile? unless i take into account some avios are free (which they are) but i also subscribe and my card costs me £250 a year.
@Emma, I think you might be doubling the avios required for 2 people there, if you’re using a 241? One person would be 180k avios return, off-peak, plus £450 surcharges at the RFS rate. Using the voucher, for 2 people, the total cost would be 180k avios plus £900.
Also – the video is from before RFS was introduced so the pricing explanation doesn’t make a lot of sense now!
Ah, the old “I consider Avios are free” line. You may well consider this to be true but they are not. Opportunity cost and all that.
That’s overthinking it, IMO. I consider my avios to be free unless I’ve bought them, e.g. as a “boost”.
they are mostly not free, though, as you have forgone another benefit to earn them in most cases, including:
– not using a cashback card like the Amex cashback or chase, and instead using BAPP
– not using a cashback portal like TCB, and instead using BA estore
– converting from MR to Avios instead of to another points schemeAlso, even the free Avios have a value outside of BA, via Nectar, I think the calculated rate is 0.68p each.
Given the above I’m working on 0.8p each — if I get a better redemption valuation, I’ll take it. There’s no circumstances where it is wise to value them at less than 0.68p, even if they were completely free to obtain (via flying, for instance).
I see your point of view but I don’t necessarily agree. By your argument, there is no free Avios. Even flying, you are essentially sacrificing earning miles on another airline which have a certain value.
I’m not being difficult here, just an observation.
I must say, I see all my Avios as free unless I buy them.
@Emma, I think you might be doubling the avios required for 2 people there, if you’re using a 241? One person would be 180k avios return, off-peak, plus £450 surcharges at the RFS rate. Using the voucher, for 2 people, the total cost would be 180k avios plus £900.
That’s what was given on the page when i select two passengers and go through book with avios and select my voucher, if it was 180K avios, i would be more understanding.
I must say, I see all my Avios as free unless I buy them.
Free or not they are worth 0.67 or somesuch if you “sell” them to Nectar — if you don’t value them at all you are missing a trick.
I think you might be doubling the avios required for 2 people there, if you’re using a 241? One person would be 180k avios return, off-peak, plus £450 surcharges at the RFS rate. Using the voucher, for 2 people, the total cost would be 180k avios plus £900.
That’s what was given on the page when i select two passengers and go through book with avios and select my voucher, if it was 180K avios, i would be more understanding.
Those are most definitely the prices WITHOUT factoring the 241. It could be a BA IT issue or something but the actual cost with voucher will be what @Northernlass states. If they website doesn’t show you this you may need to call.
@Emma, I think you might be doubling the avios required for 2 people there, if you’re using a 241? One person would be 180k avios return, off-peak, plus £450 surcharges at the RFS rate. Using the voucher, for 2 people, the total cost would be 180k avios plus £900.
That’s what was given on the page when i select two passengers and go through book with avios and select my voucher, if it was 180K avios, i would be more understanding.
Those are most definitely the prices WITHOUT factoring the 241. It could be a BA IT issue or something but the actual cost with voucher will be what @Northernlass states. If they website doesn’t show you this you may need to call.
@Emma – try selecting the 241 first, from your BAEC account home page – there is a “redeem” button next to it – and see if you then get the correct price.
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