What is an Avios point worth?

I am often asked for my thoughts on how to value an Avios point.

In our articles we use 1p as a ball-park figure, and it is the value I use myself, but the real world is more complicated.

I thought it was time to take our annual look at the numbers.

What is an Avios worth TO YOU?

The value of an Avios point to you is based on numerous factors:

• where you fly

• what cabin you fly in

• whether you normally use a British Airways American Express 2-4-1 voucher or a Barclays Upgrade Voucher, and (the one rarely considered)

• what class and/or airline you would pay for if Avios flights were not available

You need to know how YOU value an Avios because it impacts on what you are willing to pay for them.

We occasionally see offers which allow you, indirectly or directly, to pick up Avios for 0.75p to 1p each.  Should you jump in at these prices?  You can’t be sure unless you have valued your Avios for your personal circumstances.

You need to be sure that you are getting substantially more for an Avios than your cost price to make it worthwhile.  This is especially true because you are substituting something very liquid – cash – for something that is not very liquid at all.

The same goes for Avios-earning credit cards.  Once you’ve got your annual British Airways Premium Plus American Express or Barclaycard Avios Plus Mastercard voucher in the bag, you need to know whether 1.5 Avios per £1 is a better deal than a cashback credit card.  If not, your British Airways Amex or Barclaycard Avios card can go back in the drawer.

Here are six different Avios scenarios – which is right for you?

Instead of answering the question of Avios value directly, I devised six scenarios for an Avios redemption.  As you can see, each puts a different value on an Avios point.

Before we start, remember that Avios points have a ‘floor’ value of 0.5p.  This is what you will get if you transfer them to Nectar points at 1:1 and spend them in Sainsbury’s, Argos etc.  Do not redeem your points for flights if you get less than 0.5p.

Here are some potential Avios redemption scenarios.  Which one matches your travel style?

1. Andrew takes two long-haul Business Class holidays a year with his wife and two children, requiring four Club World tickets per trip.

Let’s assume these are 160,000 Avios per seat Club World redemptions (eg Dubai, Boston). The Reward Flight Saver fee is £375 per person per return ticket.

One of the two holidays uses the 2 x British Airways American Express 2-4-1 vouchers which Andrew and his wife earn each year.

Andrew is financially well off.  He redeems on leisure routes (Middle East, Caribbean etc) where in a British Airways or other airline sale a Business Class cash ticket during the school holidays would cost around £1,750 return.  He can afford to pay cash if necessary.

Total Avios spent per year for two holidays = 960,000 for eight people across two trips (6 x 160k, adjusting for the 2-4-1’s).  This assumes that all the flights are at off peak pricing periods and that Andrew uses the ‘most Avios, least cash’ pricing option.

Value received: £1,750 per flight if paying cash – £375 taxes on Avios tickets = £1,375 per seat x 8 tickets = £11,000, for a cost of 960,000 Avios.

Value received per Avios = 1.14p

1.14p is a ‘real’ saving since Andrew would pay cash in a sale for Business Class seats if necessary.  There is intrinsic extra value from the ability to cancel the Avios seats if needed. However, the calculation ignores the miles and tier points that cash tickets would bring.

The annual fee for the two British Airways Premium Plus credit cards is not factored into this analysis.

2. Jez and Louise live in the South East and use their Avios to do European short breaks, flying Economy from Friday to Sunday. They do not spend enough to be able to generate a BA Amex 2-4-1 voucher, and do package holidays for their ‘main’ vacation.

Avios required for an Economy flight to Prague: 10,000 Avios plus £35 taxes based on a half-peak / half off-peak weekend in late June.

I have used the ‘mid point’ pricing because this is the best value of the various ‘cash and Avios’ combinations offered by BA. On short-haul, you should not take the ‘£1 taxes’ option unless using a 2-4-1 voucher because it requires a disproportionately high number of Avios.

British Airways cash price: £250 per person for a shoulder season ticket on a ‘hand baggage only’ fare, booked two months in advance.  Whilst Jez and Louise would typically use easyJet from Gatwick as an alternative, it is actually more expensive – £300 – for the weekend in late June being priced here.

Value received per Avios = 2.1p

This is a ‘real’ saving and there is extra value from the ability to cancel the Avios ticket.

The value goes up if they take checked luggage, since Avios tickets allow one free suitcase per person but the cash price above is based on ‘hand baggage only’.

3. Glynn and Sarah live in Yorkshire and use their Avios to do European short breaks, flying Economy via Heathrow. They do not spend enough to be able to generate a BA Amex 2-4-1 voucher, and do package holidays for their ‘main’ vacations.

Avios required for an Economy flight to Prague from Manchester via Heathrow: 20,000 plus £70 taxes on a half-peak / half off-peak weekend in late June

(As in the second example above, I have used the midpoint Avios and cash price because the ‘£1 charges’ option is poor value.)

BA cash price:  Not comparable as they would fly direct on easyJet from Manchester if they could not use Avios.  Typical easyJet cash price for a late June weekend – two months in advance at the time of writing – is £300 with only a small item of baggage.

Value received per Avios = 1.15p

Historically this example would turn out to be poor value, but the steep rise in European air fares since the pandemic has changed that. The Avios option is even better than it looks because it includes a full size cabin bag and a checked suitcase.

However, do Glynn and Sarah really want to transfer in Heathrow and add two hours to their travel time to avoid paying £300 per person in cash? It would make more sense to save their Avios for a long haul redemption which can’t be done from a local airport.

4. David is single and happy to take an odd routing if necessary. He only flies Economy when using his own money but is happy to fly Business Class when using Avios. He would normally spend around £400 on a holiday flight to New York in spring.  He lives in the South East.

David flies Iberia in Business Class from Madrid to New York for 68,000 Avios + £240 in taxes and charges return, based on an off-peak date. It also costs him 14,500 Avios + £35 for a British Airways Economy flight to Madrid from Heathrow to position.  His total cost is 82,500 Avios plus £275.

Value received per Avios (based on £400 cash for a direct Economy flight): Not clear, given he is flying in Business   

David has spent £125 less in cash than the cost of an Economy cash ticket, and gets to fly in Business Class instead, but he has also used up 82,500 Avios. 

The real value, of course, is that he is flying Business Class and not Economy but he would never pay for Business Class.  How should he judge the value?  

He knows that he giving up £412.50 of Nectar points by choosing to use 82,500 Avios for the flight – plus the Avios he would have earned back from the cash alternative – so presumably he must value the upgrade at least this highly.

5. Alex and Nicky earn enough Avios per year for one long-haul redemption to California in Club World, using their BA Amex 2-4-1 voucher. They would be willing to pay £2,250 each for a cash ticket in a British Airways sale or flying BA ex-Europe.

This is potentially the most likely scenario for a Head for Points reader without children.  You use one BA Amex 2-4-1 voucher per year for one major redemption for a couple.

Alex and Nicky spend 200,000 Avios (with the BA American Express 2-4-1 companion voucher) and pay £950 (£475 x 2) of Reward Flight Saver fees. This assumes they travel in a peak period.  The cash alternative would have been £4,500 for two.

Value received per Avios: 1.8p

This is a ‘real’ saving because they would pay cash otherwise. They also gain cancellation flexibility which a cash ticket would not have, although they lose out on the Avios and tier points earned on a cash ticket.

The value increases to 2.0p if they travel to California in an off-peak period for 180,000 Avios, assuming that the £2,250 cash alternative is unchanged.

The annual fee for the British Airways Premium Plus credit card is not factored into this analysis.

6. Charles and Vicky also do one long-haul redemption each year to California in Club World. They earn fewer Avios than Alex and Nicky, so prefer to ‘Upgrade Using Avios’ a World Traveller Plus ticket to Club World.  They expect to pay £1,000 in a BA sale for their WTP ticket and would pay up to £2,250 for Club World.

The ‘miles for upgrade’ cost of this ticket would be 50,000 Avios per person during a peak period. This saves them £1,250 per person on the cost of the Club World ticket.

However …. BA will charge an additional £580 in surcharges for the upgraded ticket. This reduces the value of the upgrade sharply because they are paying £1,580 in total plus 50,000 Avios for a £2,250 seat.

Value received per Avios: 1.3p

This is a ‘real’ saving because they would pay for Club World if necessary.

If Charles and Vicky travel off-peak, the value per Avios point DROPS to 1.1p.  This is because the cost of upgrading World Traveller Plus to Club World is higher – at 60,000 Avios – during off-peak periods.  Weird but true.

What about First Class?

You will notice that none of these people flies in First Class. That is because very few of us would pay cash for First, even if we would pay cash for Business Class. The additional Avios you spend for First over Club World give you intrinsic satisfaction and perceived value, but do not translate to a hard cash saving.

(In the last example, if Charles and Vicky would never pay £2,250 for Club World but would pay £1,000 for World Traveller Plus, then the 1.3p valuation per point is NOT ‘real’ because they would never have spent the extra money for Business Class in the first place.)

If you earn your Avios for free by flying, the value you get per point is not a concern. However, let’s assume you earn your miles via an American Express or Barclaycard credit card.  There is a cost to these ‘free’ Avios because you could earn a different reward from other credit cards if you wished – let’s say at a net cost of (say) 0.5p per Avios.

Whether the extra cost for First Class is good value is down to you – but if you’ve paid for the Avios, either directly or indirectly (by not using a cashback credit card, for example), you need to understand the choice you make.

What about long-haul economy redemptions?

You will notice that none of these people flies British Airways in long-haul economy.  This is generally a poor use of Avios points because of the charges which BA adds.

However, the guaranteed availability of eight Avios seats per flight at peak periods may lead to times when economy redemptions do offer value.

As an example, an off-peak redemption to San Francisco in World Traveller / Economy is 60,000 Avios plus £150.  Any Economy cash price of over £600 would see you getting 0.75p+ per Avios of value, although a quick look at BA’s Low Fare Finder tool shows that prices are usually lower at around £500.

We’re not putting value on flexibility

Except for those examples above where we are upgrading a cash ticket, all of the ‘100% Avios’ options above are flexible. Pay £35 per person and you can cancel your booking, getting your Avios and taxes back.

This is not the case with cash bookings. Cancel and you lose your money, except for a small refund of the Government taxes. This should have some impact on whether you use cash or Avios and the value you place on an Avios booking.

How should you value your Avios?

How YOU value an Avios is totally dependent on how you use them.

As I have shown above, there are good deals to be had in the right circumstances.  It is, easily, possible to get over 1p of value per Avios point.