While I've touched on the value of Avios points in a number of articles here at Thrifty Points, I thought it would be useful if I fully addressed this age-old question - how much are those Avios points really worth? Now what makes this question more difficult to answer is that there are numerous answers depending on where you are traveling to, which airline you would normally travel with, whether you would be willing to pay Economy, Business or even First etc etc .
Due to the many variables I will look at some examples to help you calculate the value of an Avios point for you. Before I do that I would like to highlight why it is so important to understand how much an Avios point is worth and how this can help you save real money over time.
Let's break this post down...
Importance of understanding the value of Avios points
I believe there are three main reasons to understand the value of Avios points.
Get the best value for your Avios points
If you understand how the value of Avios points is calculated, which we hope you should understand by the end of this article, then you will be able to identify the most cost-effective way to redeem your hard-earned Avios points. For example, redeeming for 3.0p (as shown in the example below) would result in 10,000 Avios points worth £300, but redeeming for 0.3p would result in a potential loss of £270 in benefits!
Preservation of value through credit cards
Whilst most people think that the easiest way to earn Avios points is to fly British Airways or any other Oneworld airline, they are wrong. The vast majority of UK residents earn their Avios points through card spending and in particular through some of the exceedingly generous sign-up bonuses that the credit card companies are offering - you can read my last article about thatFind the best Avios credit cards here.
With the ability to earn 1 Avios point for every £1 spent on things like the American Express Gold Card (free for the first year), it's worth calculating whether it's best to keep spending on the card after You've earned the sign-up bonus of 10,000 points (increased to 12,000via this link) or alternatively switch to a cashback card that pays 1%, for example.
I recently wrote an article about the different methods of buying Avios points -found here. As I point out in the article there are occasional examples where you can buy Avios points for less than 1p per point (Groupon offers etc.). In these cases, if the value of Avios points is, say, 1.5p, there is an arbitrage between the buy and (substantive) sell price that generates real value for the individual.
What is the value of an Avios point?
First, let's start with two areas to avoid and why they offer poor Avios point value.
Redeem for experiences
As you may or may not know, the Avios Travel Rewards program closed last July and since then Avios points have been held in your BA Executive Club account. The previous Avios website offered a significant number of ways to spend points. HOWEVER, the vast majority of these offered extremely poor value for Avios points.
An example of one of these bad methods of redeeming Avios points would be an experience at theBritish Airways website. Take the Universal Studios Harry Potter Tour redeemable for 12,800 Avios points. If you go to the official website the same tour can be purchased for £43 as seen below.
In this case, your Avios point value is 0.3p per point (£43 divided by 12,800 points). As you will see below, this is bad and should be avoided in almost all circumstances.
Redeem for hotels
British Airways also offers the opportunity to redeem Avios points for hotel stays. These are generally poor value for money, particularly during school holidays when an additional cash price is usually payable on arrival at the hotel. Let's take a look at a few examples to see the value of Avios points if you were to redeem them for an overnight stay somewhere nice...
Atlantis The Palm can also be booked through booking.com and would cost £404 for the same night as seen below.
Based on the above, saving £404 by using 76,350 Avios points would equate to an Avios point value of 0.5p, which is better than redeeming for the Harry Potter experience but still not great.
Avios Point Value - Base Case
British Airways has introduced the ability to pay for your flight with Avios points. This assigns a value of between 0.55 pence and 1 pence to Avios points. I ran a quick example of a flight from London Gatwick to Edinburgh worth £83 and below are the Avios split payment options I was given.
These correspond to the following Avios point values:
£5 off 500 Avios - Value of Avios points: 1p
£10 off at 1,250 Avios - Value of Avios points: 0.8p
£20 off at 2,750 Avios - Value of Avios points: 0.7p
£30 off at 5,000 Avios - Value of Avios points: 0.6p
£45 off at 8,000 Avios - Value of Avios points: 0.56p
It is clear from the above that the value of Avios points decreases as the number of points you redeem increases. Another point to note is that you actually earn 750 Avios points by taking the flight, as can be seen in the image below. Redeeming 500 of these points would reduce the value of the flight from £83 to £78 (a saving of 6%), leaving a further 250 Avios points. Not a bad save!
Redeem for flights
As I have already mentioned, the value of Avios points can vary significantly when redeemed for flights, with numerous factors ultimately affecting the value of Avios points used. Examples include the destination, the class of travel you're willing to pay for, and whether you're using a 2-4-1 voucher, to name a few.
At this point I thought it would be useful to give a few practical examples to show how the value of Avios points can vary.
Example 1 – Long Haul Economy with BA
This is perhaps one of the worst ways to redeem Avios points. A return flight from London to New York in May would require a total of 26,000 Avios points and £375.32 in taxes. The same flight can be booked through the British Airways website for £397.62. Therefore, the value of Avios points in this case would be worth a horrific 0.1p per point...
In this case (if you absolutely must use your Avios!) you should choose to pay the cash fare but use the 'Partial Avios' option. You should be given the option of £100 off the price with 17,000 Avios. The reduced price of £297.62, which only requires 17,000 Avios points, is clearly a better option than redeeming the flight with 26,000 Avios and paying an additional £375.32 in taxes!
Example 2 - Family travels in Club World at busy times
With British Airways on sale, a number of people are booking family holidays for the year. Heading to the sales page of theBritish Airways website (found here), a family of four could fly to Bermuda for the Easter holidays for £1,796 per person. The same flights would require 120,000 Avios points per person and a further £559.41 in taxes. Saving £1,237 per person would add up to a value of 1p per Avios point.
However, I would like to emphasize that if the family would not normally be willing to pay for business class tickets, they should not base the value on that price. If only they were willing to pay for thrift, then the saving should be based on that price. Whilst there may be some intrinsic value to people traveling business class (flat beds etc), using points in this case does not necessarily offer a real money saving and should therefore be considered.
Example 3 - Couple redeems a 2-4-1 coupon in Business
As regular readers will know, I believe the 2-4-1 coupon is offered with bothBA AmexAndBA-Premium-Amex-Karteis one of the most generous credit card bonuses on the market. If you redeemed the 2-4-1 voucher for a business class flight to Sao Paulo and were normally willing to pay for that class of flight, your total savings could be in the region of £150,000 in Avios points of £3,202. This is calculated as follows:
- 75,000 Avios per person each way equals 300,000
- Reduced to 150,000 Avios with 2-4-1 voucher
- Total taxes £800.04
- Cheapest flights in BA sale £2001 per person
- Total cost of flights £4,002
- Total savings of £3,202 for 150,000 Avios points
In this case, by combining the award flights with a 2-4-1 voucher, you can generate an Avios point value in the region of 2.1p per Avios point.
Example 4 - Individual redemption for First Class
Regular readers will also know that I recently spent 102,000 Avios points on a first class flight to Sao Paulo -You can read my full review here. I have combined this with the 2-4-1 coupon but will ignore this for my calculation. I had to pay a total of £377 in taxes on the flight. Since I wouldn't be willing to pay for a first or even business class ticket, I have to be careful to compare the savings with the price of an economy ticket. In the current BA sale it is possible to book a single flight for £601. In this case the value of my Avios points was in the region of 0.2p using 102,000 Avios resulting in a saving of £224. While that's a terrible rate, the number of brownie points I earned for giving the other half a once-in-a-lifetime first class experience was definitely worth it :).
Example 5 – Last Minute Club Europe Flight
This example actually happened to me a few months ago and was by far my best value redemption of 2018. I flew to Edinburgh from London City for work and booked a Club Europe ticket with cash. At the last minute we decided my other half would join me but the tickets were an extortionate £561.34 for a Club Europe return ticket. Asking Hannah to fly Economy while I flew Club Europe wasn't an option, but I was also reluctant to spend the £561.34 return ticket. Instead I used 15,500 Avios points (with £50 tax) giving a total saving of £511.33. The value achieved in this case was a staggering 3.3p per Avios point.
Example 6 - Short-haul economy
Our last example is about redeeming 2 economy tickets on short-haul flights. I'm going to split this into two parts.
6A– Tom and Jane fly from London to Geneva. Jane flies extensively for work and is a BA Executive Club Silver member. With BA Silver, both Tom and Jane benefit from seat selection at any time, business class check-in, fast track security, lounge access, 2 x 32 kg luggage each and various other advantages. As such, they are happy to pay more when traveling to fly in BA Economy, where they receive the benefits of the Silver Card. A BA return flight to Geneva would cost around £101.74 per person in February. The relevant flight would require 8,000 Avios points and £35 in taxes. So the saving of £66.74 would equate to an Avios point value in the range of 0.8p per Avios.
6b– Sally and Richard are flying to Barcelona for the weekend and would normally like to fly with the cheapest low cost airline. Redeeming points from London to Barcelona would require 13,000 Avios points and £35 tax on British Airways. The 'equivalent' flight on Ryanair would cost £42, a saving of £7. In this case the value of Avios points would be a very poor value at 0.3p per Avios point.
What can we learn from the above?
As we can see above, the value of Avios points can vary greatly depending on the redemption method. Using the new 'Pay with Avios' feature should be your baseline scenario where the value of Avios points varies between 0.55p and 1p depending on the number of points redeemed.
Using Avios points for long haul economy flights is generally a bad idea. Because a significant part of the total price of an economy ticket consists of taxes that have to be paid in addition to the Avios points used. In this particular case, and only if you really have to, you should use the Partial Avios feature, which offers significantly better value for money.
As you would expect, using a 2-4-1 coupon doubles the value of your redeemed points. Where this tends to add significant value is when you're redeeming long-haul flights in either Business or First. However, if you are redeeming Business/First and would not normally pay for it, you should calculate the value of your points based on the price of an Economy (or Premium Economy) ticket you wish to purchase.
What is the true value of Avios points?
As the value of Avios points generally varies between 0.55p and 1.5p (reaching up to 3p in the best case), the current sign-up bonus of 10,000 points is with the (free for the first year)American Express Gold Card (reviewed here)can be worth anywhere in the region from £55 to £150.
You can increase the sign-up bonus to 12,000 points byvia this link.
As always, we hope you found this article useful and please comment below if you have any questions.
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