Is the new British Airways ‘use more Avios points but just pay £1 of taxes’ policy a big mistake?

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During 2019, British Airways announced a shake-up of Avios pricing on short-haul flights.

Since Avios was introduced, short-haul flights have come with a flat £17.50 one-way / £35 return added on. This was termed ‘Reward Flight Saver’ and is a contribution towards the taxes and charges due on the flight.

Our full Avios pricing chart shows these numbers. A return flight to Amsterdam on a peak day was 9,000 Avios + £35 return. Budapest would be 15,000 Avios + £35.

Under the new pricing system, British Airways cut the headline charges to £1 return. In return, it increased the headline number of Avios needed.

You now see a headline price on ba.com for Amsterdam of 18,000 Avios + £1:

and for Budapest:

Budapest Avios cost

Here is the important bit. The old pricing hasn’t gone away. When you click to the final payment screen, you see a range of options. One of them will be very close to, if not the same, as the original option.

See Amsterdam here:

…. where the 9,000 Avios + £35 option is still there, half way down.

Importantly, you will usually find that the best value deal is the one nearest to the old pricing. The £1 deal is usually a bad deal.

For Amsterdam, for example, British Airways is asking for 9,000 extra Avios (from 9,000 to 18,000) – which I’d value at £90 if used properly – in return for cutting £34 off the taxes and charges (from £35 to £1).

Avios wing 14

Has this wrecked the value perception of Avios?

When BA started offering this, I thought it could backfire. I was sure that pushing up the ‘headline’ price would make Avios look less attractive.

And yet …. people kept telling me that the new pricing was very popular. Perhaps this is true. If it IS true, it simply proves that the average (generally well educated) Avios collector has the maths ability of a gnat, because the £1 deal is a bad deal.

This is why I think there is a problem.

If you are thinking about collecting Avios, the obvious thing to do is to look at some typical redemptions and see what they cost, and whether that is realistic for you or not.

So …. off you go to ba.com and you look up the price of a return Economy flight to Budapest. The headline price you see is the one in the picture above ….. 24,000 Avios + £1.

Your brain then goes …… whoa ……:

“I need to spend £24,000 on the free BA Amex credit card to get one Economy flight to Budapest?”

“I need to spend £10,000 at Tesco to earn 10,000 Clubcard points to get 24,000 Avios for an Economy flight to Budapest?”

“I need to take 192 one-way Economy flights to/from Amsterdam, earning 125 Avios each way, to get 24,000 Avios for a return Economy flight to Budapest?”

You wouldn’t blame someone for thinking like this. British Airways thinks that 24,000 Avios + £1 looks more attractive than 15,000 Avios + £35. I disagree.

To me, 15,000 Avios + £35 appears a lot more achievable than 24,000 Avios + £1.

Avios wing 15

And it’s not just me.

The reason I wrote this article, and the reason I use Budapest in this example, is because of an email I received last week. This person is perhaps not the typical HFP reader in terms of her background, but I think her thoughts are closer to the way that the average person looks at Avios than many of us.

I’m not going to comment on the email, but I’d like you to read it and then decide for yourself if British Airways is making a mistake by focusing on ‘£1 taxes’.

“I hope you are well. I have read a lot of your advice on Head for Points, and I find it really useful. I have now a problem though with BA and their redemption tickets.

I am a single mother on low wages with 2 kids, working hard, converting my Tesco shopping to Avios, using cashback programs to earn Avios, spending on Amex, etc. I even bought some when they offered a 50% bonus.

My family lives in Hungary and we visit them 3 times a year. Unfortunately I am not a businesswoman with Gold status and upgrade vouchers, etc.

Until recently it cost 15,000 miles peak for a business class one way per person. So I collected and collected and now have 40,000 miles, just 5,000 short.

I logged into my account to see availability and other pricing options, and I was shocked to see that it now cost 21,500 per person for a one-way in business class? For 3 people that is a HUGE difference.

I would understand a raise from 15,000 to 17,500 miles, but to over 21,000??? I am now years away from that little treat which was within reach. I am heartbroken, I am devastated.

Is this a computer error, or the result of Covid19 or everybody is after reward tickets to Budapest? I am sure you are busy, but it would mean a lot, if you could look into it. Can you imagine your dreams being shattered in front of your eyes? I know this is a short route, business class is not as fancy as on a long haul flight, but we don’t go anywhere else. A little treat, some excitement to collect for and look forward to. But for 21,500 per person it us no longer worth it. Unachievable.”

How to earn Avios points from UK credit cards

How to earn Avios from UK credit cards (December 2021)

As a reminder, there are various ways of earning Avios points from UK credit cards. Many cards also have generous sign-up bonuses!

There are two official British Airways American Express cards with attractive sign-up bonuses:

British Airways BA Amex American Express card

British Airways American Express

5,000 Avios for signing up, no annual fee and an Economy 2-4-1 voucher for spending ….. Read our full review

British Airways BA Premium Plus American Express Amex credit card

British Airways American Express Premium Plus

25,000 Avios and the UK’s most valuable credit card perk – the 2-4-1 companion voucher Read our full review

You can also get generous sign-up bonuses by applying for American Express cards which earn Membership Rewards points, such as:

American Express Preferred Rewards Gold

Your best beginner’s card – 20,000 points, FREE for a year & two airport lounge passes Read our full review

The Platinum Card from American Express

30,000 points and an unbeatable set of travel benefits – for a fee Read our full review

Run your own business?

We recommend Capital On Tap for limited companies. You earn 1 Avios per £1 which is impressive for a Visa card, along with a sign-up bonus worth 10,500 Avios:

Capital On Tap Business Rewards Visa

The most generous Avios Visa or Mastercard for a limited company Read our full review

You should also consider the British Airways Accelerating Business credit card. This is open to sole traders as well as limited companies and has a 30,000 Avios sign-up bonus:

British Airways Accelerating Business American Express

30,000 Avios sign-up bonus – plus annual bonuses of up to 30,000 Avios Read our full review

Click here to read our detailed summary of all UK credit cards which earn Avios. This includes both personal and small business cards.

(Want to earn more Avios? Click here to visit our home page for our latest articles on earning and spending your Avios points and click here to see how to earn more Avios this month from offers and promotions.)

Category

British Airways and Avios

This article is closed to new posts. Discussion continues in the HfP Forums.

Tim says:

13 Jul13 July 04:57

Slightly out-of-touch London blogger hears of a ‘…heartbroken and devastated’ millenial for the first time. 🙂
- Rob says:
  
  13 Jul13 July 09:06
  
  This is an article about marketing, user experience and customer perception. I just use this example to make a point.
  - pixielott46 says:
    
    13 Jul13 July 09:52
    
    why do you always have to be the smartest person in the room?
    
    “if you think it’s a good deal you have the maths ability of a gnat”… proceeds to post word for word email from single mother who can’t recognise the best deal.
    
    Just reply to her in private and call her stupid. No need to inflate your own ego further by publicly doing it, highlighting the superiority of your own intelligence level
    
    Regards,
    Another Low IQ reader.
    - J says:
      
      13 Jul13 July 11:18
      
      @pixielott46: She’s literally saying it’s not a good deal! It’s quite the stretch to link these two separate parts of the article together in the way you have.
      - Andrew says:
        
        13 Jul13 July 11:35
        
        Not really. She’s literally saying it’s the only deal!
      - J says:
        
        13 Jul13 July 11:37
        
        @Andrew: “But for 21,500 per person it us no longer worth it”
    - Paul74 says:
      
      13 Jul13 July 12:31
      
      I don’t think Rob has done what you suggested here atall. Whenever I’ve emailed him privately he’s always replied and when I’ve asked him a question in those emails, he’s always answered helpfully.
Coume says:

13 Jul13 July 05:15

It also makes it more difficult with Gold Priority rewards. The last few times I used it, they offered to do it on the 1GBP pricing as standard… It proved very difficult to get it through the old pricing @ 50GBP return.
- Alex W says:
  
  13 Jul13 July 06:25
  
  Crikey. Istanbul in a reclining, no-legroom seat for 106,000 Avios each? No thanks!
Waribai says:

13 Jul13 July 06:28

But the 15k price is still there, you just need to click to the next page…..Also, with two kids in tow. I’d rather use the avios for a RFS in economy than a one way in CE….especially in the school holidays.
- Andrew says:
  
  13 Jul13 July 07:33
  
  Yes I hope you did some expectation management about CE Rob and that it’s hardly the stuff of dreams! I think I would be more upset about that – you save and save and save your Avios and then you get a Pret salad in a box and a mini bottle of wine and a plastic cup.
  - Rhys says:
    
    13 Jul13 July 08:48
    
    When the alternative is Ryanair, Wizz Air or easyJet, Club Europe is a nice treat. Luggage, lounges, a (small) meal on board…
    - Mark says:
      
      13 Jul13 July 09:45
      
      Don’t forget the well worn refreshing hot towel!
  - Doug M says:
    
    13 Jul13 July 09:51
    
    I think HfP readers can be a little jaded towards CE, analysing each component and missing the point for a lot of travellers. That point being Wow, I’m in business class, I was in the lounge, and now I’m having champagne on the plane. I’ve bought Avios RFS tickets for friends and family, and often get them CE ones. Without exception they’ve all raved about it. I travel in economy myself not caring enough for what I get over status anyway on a short haul flight. But for the majority of people CE is still a nice treat and something to be looked forward to.
    - Harry T says:
      
      13 Jul13 July 10:32
      
      @Doug M
      I agree – my girlfriend had never travelled in business class before she met me. She really got a kick out of drinking champagne on a plane. Though she did prefer Qantas domestic business to BA CE, she still appreciated the thrill of boarding first and being given a posh meal and drinks. Most of my family will never be able to afford business class, and I look forward to treating them in the future. For a lot of people, even being in business class is unimaginable luxury.
      - BJ says:
        
        13 Jul13 July 12:57
        
        Spill the beans @Harry, did you first fly business class before or after discovering HFP? Curious what your motivations were 🙂
      - Doug M says:
        
        13 Jul13 July 13:41
        
        @BJ. I can answer that for me. I first flew long haul business class in 2000ish, AA to Los Angeles, £2K for a recliner, pretty much Premium Economy to be honest. That was as a result of a one-off payment from one the Building Societies becoming a bank, or maybe Scottish Widows being bought, decided to treat myself to something never previously done.Thought it was a huge waste of money, and reverted to economy and slumming it. At some point I decided to up to PE, and thought this is good, but was often paying £900 to £1K for USA east coast. Then discovered FlyerTalk, and ex-EU, after that it was business all the way, still never flown a proper first class, but not that bothered, more than happy in business. I remember in maybe ’17 AA were selling lots of smaller destinations for around £1K ex-Manchester, not repeated since as far as I know. I like HfP and have learnt a lot here, but in terms of BA and One World Flyertalk is the place to be, and I suspect many here are also there.
      - BJ says:
        
        13 Jul13 July 14:12
        
        @Doug, my first premium flight was also AA to LAX. It was as a 13 year old travelling alone so I got a free upgrade so they could keep an eye on me I suppose. I don’t know if it was First or Business, I just recall it being amazingly comfortable. Also got to spend a while upfront with the pilots too 🙂 it would be years later when I started collecting miles as a PhD student that I next got the chance to fly business on United.
      - Harry T says:
        
        13 Jul13 July 22:22
        
        @BJ my first business flight was SQ LHR to Darwin in J after using MR from UK and Australian amex cards. This was after I first started reading HFP but a while before I started commenting. A friend introduced me to the site!
      - Louie says:
        
        14 Jul14 July 00:39
        
        My first short haul business class was on BA, having flown long haul business class on several airlines. My immediate reaction was “why on earth would anyone pay a single penny extra for this?”. I haven’t flown BA CE short haul since. I then flew Qantas short haul business. Chalk and cheese. A real treat.
Alex W says:

13 Jul13 July 06:30

A heartwrenching story Rob, I hope you booked her the tickets!!
There is only so much that BA can rely on the unsuspecting punter. When they realise their dreams are being shattered they won’t bother.
I wonder how this has affected the number of redemptions made (pre CoVid) and the seat availability.
- Rob says:
  
  13 Jul13 July 09:04
  
  For clarity …. as the pricing has NOT gone up, nothing has changed for her. She just THINKS the pricing has gone up because of the way BA is now presenting it.
  - BJ says:
    
    13 Jul13 July 13:58
    
    It was an interesting article generally, but all the more so for two reasons. Firstly, because you left it hanging on that email. By doing so I assume that although you guessed at it, you retained an open mind as to the general consensus of feedback in the comments and the extent of variation in them. I find them a bit disappointing to be honest, readers have been a bit quick to jump to possibly the wrong conclusion regarding the person who emailed you which brings me to my second point. I got the sense from the email of a person who is sufficiently astute to join all the dots and arrive at the right conclusion regarding RFS, and was a bit surprised that she did not do so. However, even the most experienced amongst us at this game are prone to the simplest of schoolboy/girl errors now and then so it is hardly befitting us to criticise this reader. She is clearly an active as opposed to a passive avios collector and in that respect alone, I do not see her as typical of the wider avios membership whom I believe will collect them more passively and from fewer sources. I hope if she is reading this today, she will continue to do so and I think we should all be encouraging her to join in the discussions and help her get the answers she needs to achieve her goals in a way that is practical for her. This is not unrealistic, quite many of the regular contributors here would be quite happy to acknowledge that their success was largely built on what they learned here at HFP. Insofar as the avios collectors that generally fall for this pricing issues, I think they are more likely the same subgroup that largely rely on nonspeciali high street travel agent chains to do stuff for them that they should be doing themselves.
Yawn says:

13 Jul13 July 07:10

Anyone knows how this affects legacy Lloyds Avios vouchers? I got mine back so have until November to book somewhere new. (Not that it looks like we’ll be able to escape Europe anytime soon, but I was hoping for enough points to Thailand or Vietnam, rather than the original booking to Tenerife…)
- Andrew says:
  
  13 Jul13 July 07:17
  
  Used mine a few months ago. They should price under the original (higher taxes but lower avios) model but prepare for some confusion from the operator so work out in advance what you expect it to cost.
  - Barry says:
    
    13 Jul13 July 16:49
    
    Yep, I booked using my voucher last week and by default they used the old pricing model. I wasn’t even offered the different Avios/cash pricing options.
    - Iain says:
      
      13 Jul13 July 21:34
      
      +1
Andrew says:

13 Jul13 July 07:13

Think it works both ways. Under the old structure there’ll have been a group of casual collectors annoyed at the fact that they had to pay money for their ‘free’ flights. That was the main criticism when the old Airmiles scheme was retired so BA offering us more choice is a good thing.
- Andy S says:
  
  13 Jul13 July 07:48
  
  Yes I always thought it seemed wrong having to still pay cash when redeeming “free” flights, to me it’s like doing your shopping in sainsburys, paying with nectar points and then being asked to pay the VAT in cash.
- Rhys says:
  
  13 Jul13 July 08:50
  
  I don’t think anyone is arguing that more choice is bad – simply that having the highest Avios number as the default might give the wrong first impression!
  - @mkcol says:
    
    13 Jul13 July 12:01
    
    Exactly – it’s how BA present the initial option is the issue IMHO.
Andrew says:

13 Jul13 July 07:16

My view is that it’s poor maths ability to book long haul premium cabins with Avios and yet everyone goes crazy ringing up on the day seats are released at midnight to bag them. Such poor value due to the huge taxes and charges. My approach is to book a cash ticket in the sale which doesn’t come with the availability restrictions of an Avios ticket, then reduce by Avios – you earn a load of Avios back and tier points. And then yes I book Europe flights for £1 because there’s something about getting something for nothing.
- Ian McDowall says:
  
  13 Jul13 July 07:33
  
  I see where you’re coming from, but in all the times I’ve used avios for long haul I’ve had a companion voucher. This means that using avios and paying the tax is always better than waiting for a sale price. Usually taxes have been circa £1200 for 2 people but business class seats even in a sale are rarely below £1200
  - Paul says:
    
    13 Jul13 July 07:57
    
    Which is fine if you get your Avios ‘for free’, but if you’re collecting through a card, which could be changed to a cash back instead, when you add in the cost of, let’s say 125,000 Avios, the differential suddenly changes completely. An ethereal £1,250 worth of Avios plus the fees doesn’t feel quite the bargain anymore…
  - Doug M says:
    
    13 Jul13 July 09:54
    
    I think that’s when long haul Avios redemptions work, when you have a companion voucher.
- Alex W says:
  
  13 Jul13 July 07:57
  
  @Andrew if you work out the value achieved in pence per Avio then long haul redemption usually works out better than Part Pay With Avios. The latter is usually less than 1p. Excluding vouchers, the best pence per Avio is often a cash ticket which is then upgraded using Avios.
  - Andrew says:
    
    13 Jul13 July 08:04
    
    When chasing status then the tier points earned with part-pay do represent a significant value. But agree, upgrade with Avios is the sweetest spot – particularly on a bargain WT+ to JFK which always has CW availability – still earn 180TP and fly CW for less than the cash taxes and charges of a full CW redemption and of curse a fraction of the Avios.
  - Secret Squirrel says:
    
    13 Jul13 July 08:51
    
    I always research BA sale prices but when booking for 2 x people using 241 & avios I have never found anything on our chosen routes which even come close.
  - Sundar says:
    
    13 Jul13 July 09:38
    
    Do the upgrades earn the higher rate of avios back as well as the luggage benefits ? Some airlines allow the upgrades but the earning/luggage benefits is at the lower cash-booked rate, which is not helpful.
    - Mawalt says:
      
      13 Jul13 July 10:06
      
      Upgrades only earn the Avios and TPs of the underlying (pre-upgrade) fares but WTP TPs are not bad.
      - Sundar says:
        
        13 Jul13 July 18:16
        
        ok, thanks. Would have been nicer to earn the higher thresholds.
- Anna says:
  
  13 Jul13 July 08:11
  
  Clearly you aren’t limited to travelling in school holidays when the price of even an economy ticket to NYC or Florida can be £1000! You’ll never convince me it’s not worth using avios and a 241 instead of paying £3k + for a CW seat.
  - Andrew says:
    
    13 Jul13 July 08:25
    
    Luckily I don’t have any kids, so no I’m not limited in that respect. I also usually travel alone so a 2for1 isn’t of any use.
  - AJA says:
    
    13 Jul13 July 08:58
    
    Anna if you have enough Avios to redeem for several CW seats that’s great, better value when using a 2-4-1 but when you dont have a 2-4-1 the economics of paying for WTP and upgrading using Avios is often a better option. WTP often only costs a bit more than that economy seat and you use fewer Avios to upgrade to CW and any seat in WTP is upgradeable. Obviously not so useful when restricted to school holidays but I am another one who doesn’t have children so not as restricted as you are.
    - Anna says:
      
      13 Jul13 July 09:58
      
      Yes but we generate 2 companion vouchers per year which is perfect for our current travel pattern. When we’re travelling as a couple again it will be very different – first trip will be QR to SEZ for 560 tier points for starters!
- Alan says:
  
  13 Jul13 July 08:13
  
  Buying a WTP ticket and upgrading using Avios (albeit with Cw redemption availability restrictions) is normally even better value IMHO.
  - Anna says:
    
    13 Jul13 July 08:18
    
    It’s been worked out for my usual route on this forum, and it isn’t!
  - AJA says:
    
    13 Jul13 July 08:43
    
    +1
    - AJA says:
      
      13 Jul13 July 08:50
      
      That +1 was to Alan, buying WTP and upgrading to CW using Avios is a very good plan.
  - Secret Squirrel says:
    
    13 Jul13 July 08:53
    
    Agree Alan if you can find CW availability on your flight. Maybe they had all Bern snapped up 365 days out by avios users! 😉
  - Optimus Prime says:
    
    13 Jul13 July 09:46
    
    One thing to bear in mind though – Your CW avios ticket is fully flexible whereas cash WTP upgraded to CW with Avios is not, is it? That difference has become more important in these covid-19 days…
    - Andrew says:
      
      13 Jul13 July 10:25
      
      All tickets are now flexible under ‘booking with confidence’
      - Optimus Prime says:
        
        13 Jul13 July 11:15
        
        But do you get your money back or a future travel voucher? Because I’d rather have the former.
Mikeact says:

13 Jul13 July 08:02

I’m really struggling on this one…..you really mean that people think they have to spend £10000 in Tesco etc., to get to Budapest… I find that really hard to believe. And as for the headline..a big mistake, I’m really surprised.
As you say, the ‘old’ pricing is still there, so where’s the problem… if the multi million Avios users can’t see that, then we do have a problem.
And as for CE to Budapest or anywhere else around Europe generally… you must be joking using Avios, unless you are top heavy with millions maybe.
- Andrew says:
  
  13 Jul13 July 08:06
  
  I think Piers Morgan is guest editing today.
- memesweeper says:
  
  13 Jul13 July 08:35
  
  > As you say, the ‘old’ pricing is still there, so where’s the problem…
  
  The *default* pricing should be the most attractive. Otherwise BA are shooting themselves in the foot. Most points collectors do not analyse the best ways to spend them; and would probably expect all the options offered at the checkout to price up roughly, if not exactly, the same.
  
  It’s attractive to BA to offer bad redemptions as they are selling their Avios for more than the value they internally account for them at — a ‘profit’. However, Rob’s point is this can be brand-damaging for Avios long term, as people spend Avios, look at the value they received, and decide they are not worth collecting any longer.
  
  High taxes/fees/charges on BA have done the same with me and long haul, even though I often travel in business which is less bad value than economy. I’ll still collect Avios from retailers where there’s no alternative points to collect, but my credit card earned transferable points are going to airlines and hotels that give me real value for free, or close to free.
  - memesweeper says:
    
    13 Jul13 July 08:42
    
    Incidentally, I believe that internally the change to lower-value-per-Avios £1 award flights was internally flagged within BA as a ‘devaluation’ of Avios. Clearly they expected a significant number of people to take the worse-value £1 default option, and I imagine they were right.
    
    Making your product more profitable and less attractive to the market is risky. The existing holders of Avios are a captive market, in so far as they will have to spend them, so the increased profits will flow for a while. The sale of Avios to credit card holders, and retailers looking for incentives, is absolutely not captive. The lag between the perception of Avios being worth less and the ‘sale’ of Avios is long, but the brand damage can be very sticky in the long term.
  - Andrew says:
    
    13 Jul13 July 08:57
    
    I think it’s arguable as to which pricing is most attractive. Many people will see the free (well £1) option as the most attractive. I see the casual collector as being someone who will collect avios for a few years in the hope of getting a free flight rather than someone who collects for a shorter period in the knowledge that they’ll have to put some cash towards their ‘free’ flight.
    - memesweeper says:
      
      13 Jul13 July 12:22
      
      If you gain many Avios from flying — so many you can’t use them all — that might be true. But given the huge disparity in value that the different options sometimes provide, I’d *definitely* offer the best value option as the default. You could probably put an algorithm in place that would switch to defaulting to the £1 option for users with very large balances/Gold status. For occasional users the default should be the sensible choice.
      
      Incidentally, I’ve never understood why the BA flight search doesn’t just flag Avios availability in regular search results. I’m sure that would trigger more redemptions, more interest in collecting Avios, and thus more profit. Would be a far more sensible change to the UI than defaulting to the £1 option.
      
      @Rob when you next catch Alex C. on the DLR be sure to mention all of this 🙂
- AJA says:
  
  13 Jul13 July 08:38
  
  I think it’s the other way around; people don’t cotton on to the fact that it costs so much money to get a “free” flight.
  
  These loyalty schemes are not run for our benefit; they are money raising schemes for the company that build in incumbency and make you use their services rather than just seeking out best value.
  
  That shiny card gives you access to lounges and bungs a few more Avios your way as a thank you. But if you just buy a ticket in business or first class you get the lounge anyway.
  
  I think that’s not the only reason to hold the card though, it definitely helps when things go wrong as they will prioritise helping you over Joe Blogs who travels once a year in economy. And if you’re flying anyway why not get something back?
- Sundar says:
  
  13 Jul13 July 09:44
  
  Hick’s law ?