As T.J. was putting together his closer look at Aeroplan’s intra-zone rewards and comparing against similar redemptions with British Airways Avios, he had stumbled upon a seemingly new phenomenon in which the Avios program appeared to be charging different amounts of Avios from the usual award chart.
Upon further inspection, it looks like the Avios program’s “Avios and Money” feature has been silently evolving in recent times, now allowing members to pay for the taxes and fees associated with their ticket using Avios on select routes.
In this post, I wanted to share some more findings about this feature, both because it’ll be important for Avios collectors to understand why the pricing may not be showing up as they’d normally expect, and because I think there are some interesting parallels to be drawn with the Points + Cash feature in the upcoming new Aeroplan program.
In This Post
- Background: British Airways Avios Award Charts
- Avios and Money: Pay Fewer Avios and More Cash
- Avios and Money: Pay More Avios and Less Cash
- Avios and Money Calculator
- A Harbinger for the New Aeroplan’s Points + Cash?
Background: British Airways Avios Award Charts
While the British Airways Avios program offers fixed price points for different flight redemptions based on the distance flown, it’s important to recognize that there are no officially published award charts for the program. Instead, any Avios award charts you see out there are compiled independently based on searching for flights through the Avios booking engine.
The below Avios award chart is used for redemptions on British Airways, Aer Lingus, Iberia, and Vueling:
For all other partners, the following Avios award chart applies:
Because these charts aren’t openly published, members can only treat them as a guideline for how many Avios their flight is supposed to cost. This lack of transparency gives the program much more leeway to play around with things in the background, should they choose to do so, without much recourse for the customer.
With this context in mind, let’s look at the Avios and Money feature in more detail.
Avios and Money: Pay Fewer Avios and More Cash
You may have already come across the Avios and Money feature when booking flights with Avios in the past.
Most commonly, whenever you select a flight, you’ll at first be presented with the “true” Avios cost based on the award charts above. For example, let’s search for a one-way flight from London to Toronto in British Airways economy class on an off-peak date. London to Toronto spans 3,567 miles, so we look this up against the British Airways chart and arrive at a cost of 13,000 Avios for “Zone 5”.
This redemption would also come with $404.70 (CAD) in taxes and fees, most of which is the UK Air Passenger Duty (APD) but with a fair bit of fuel surcharges mixed in there as well.
Then, you can click on “More pricing options” to reveal your options for paying using Avios and Money. As you can see, all of the options here involve paying fewer Avios and more cash. Essentially, you’re given the opportunity to “buy back” your Avios as you redeem them, allowing you to save those Avios for future redemptions.
We can do some math here to figure out the effective value at which you’re buying back your Avios. We take the difference in cash and divide that by the difference in Avios to obtain the cents per point (cpp) valuation:
As you can see, provided that you’re interested in buying back some Avios, the best deal out of the five options here is at the bottom: to redeem the lowest possible number of Avios and pay the greatest possible cash balance.
That effectively lets you buy Avios at the lowest price point of 1.6cpp (CAD), which is cheaper than you’d be able to buy Avios directly from the program, even during one of their mileage sales. If you were confident of redeeming those Avios for higher than 1.6cpp in the future (which any savvy Avios collector should be), then you’d be coming out ahead.
At the same time, those of us who’d like to travel on points while paying as little out-of-pocket as possible would be probably loath to supplement our Avios redemptions with expensive cash co-pays in this manner.
Perhaps that’s why this feature hasn’t received much attention in the past, but it’s definitely worth keeping this on your radar in case 1.6cpp (CAD) is a price point at which you might consider acquiring Avios.
It’s important to note that the effective valuations we calculated above are not constant; instead, they vary based on the specific redemption you’re looking at. For example, here are the Avios and Money options being offered for a Toronto–Chicago–Miami one-way flight in American Airlines economy class:
If we crunch the numbers on this one, we get the following effective valuations, which are not nearly as appealing:
Avios and Money: Pay More Avios and Less Cash
Now here’s where things get more interesting, but also makes it more important to pay close attention when you’re making Avios redemptions.
In addition to the ability to pay fewer Avios and more cash as described above, the program also seems to be trialling the ability to pay more Avios and less cash on select routes – to the extent of covering almost the entirety of your taxes and fees using Avios instead of cash.
This feature appears to be enabled only on intra-European flights operated by British Airways and Iberia at the moment. The feature may even have been rolled out at different times for different geographies: as a Canadian-registered Avios account, I had not observed this when I was making Avios bookings in late 2019 and have only observed it recently, but it appears some UK-registered Avios accounts have observed this since mid-2019.
Let’s take the example of a London–Zurich flight in British Airways economy class. The distance is 481 miles, so based on the British Airways award chart above, this should cost 4,000 Avios on an off-peak date as part of “Zone 1”.
However, when you click on a flight, the default price that’s displayed is 8,500 Avios + $1. That’s a lot more Avios than I was expecting to pay!
Indeed, you’ll no longer see the “true” price of the Avios redemption as listed in the charts above – unless you click on “More pricing options”, in which case the true price (in our example, 4,000 Avios + $41) is camouflaged as the third of five bullet points!
To be clear, features that give customers more flexibility are definitely a net positive to the program. However, I do take issue with the way that this feature has been implemented, as it only adds another layer of opacity and obfuscation to the award pricing model within the Avios program.
Having already done away with published award charts, British Airways Avios has made another very sneaky move in setting “maximum Avios, minimum cash” as the default – effectively encouraging unwitting members to “sell” or “give back” their hard-earned Avios at a poor value instead of potentially redeeming them for a higher value in the future.
And how do we know the value is poor? Well, just take a look at the numbers.
Here, we show the “true” price of the London–Zurich British Airways economy class flight and calculate the valuations at which you’re effectively selling Avios (when you pay more Avios and less cash, highlighted in red) or buying Avios (when you pay fewer Avios and more cash, highlighted in green):
As you can see, if you went ahead and redeemed 8,500 Avios + $1 for the flight, you’d effectively be redeeming your Avios for a pitiful return of 0.89cpp. And with this option as the default, there are going to be countless unwitting Avios collectors who fall into this trap.
On the green side, the valuations aren’t very attractive either – I’d never be interested in acquiring Avios for 2.5cpp+ when there are so many easier ways to earn them in Canada. In this scenario, the “true” price of 4,000 Avios + $41 is definitely the best option, and it’s a real shame that the program has basically chosen to bury this option among a range of decoy redemptions.
However, just like above, these valuations are not fixed either, and vary from market to market. Take the example of the pricing options on London–Istanbul in British Airways business class:
Crunching the numbers, we have:
I still wouldn’t consider any of the sell-side options, which are equivalent to redeeming Avios at rates between 0.63cpp and 1cpp. Terrible.
But looking on the buy-side, the options here are much more attractive. Given a true price of 17,000 Avios + $56, would I choose to pay 12,500 Avios + $101 instead, thereby effectively buying Avios at 1cpp (i.e., paying $45 more to save 4,500 Avios)?
You bet I would – because 1cpp (CAD) is a pretty fantastic rate at which to acquire any type of points currency, and I’d be very confident of redeeming those 4,500 Avios for more than $45 in the future!
Avios and Money Calculator
As you can see, in both of the above scenarios, the only way to figure out which of the Avios and Money options make sense to you is to go ahead and run the numbers to calculate the effective value. The Avios program is almost hoping that members get lost in the numbers, so it’s important for savvy Avios collectors to calculate exactly how much value they’re getting at all times.
To help with this, I’ve created a quick Google Sheet to show you the effective valuations for any given set of Avios and Money’s price points.
Click here to access the spreadsheet; you’ll need to sign in to your Google account and then you can save a copy for yourself.
There are two tabs, corresponding to the two different types of Avios and Money scenarios we outlined above: one in which you can only pay fewer Avios and more cash, and one in which you may also pay more Avios and less cash (as things stand, this is only enabled for intra-European flights on British Airways and Iberia).
In each case, simply enter the “true” price of your Avios redemption based on the above charts, as well as the five additional price points being displayed. The calculators will then show you the effective buy and sell values (as applicable) to help you choose the optimal price point to fit your needs.
A Harbinger for the New Aeroplan’s Points + Cash?
One of the new features that Air Canada’s new Aeroplan program will be introducing on November 8 is the Points + Cash feature, and there are many similarities to be drawn to the Avios and Money feature.
Air Canada has announced that Points + Cash will offer Aeroplan members a total of four price points for any given redemption (as compared to Avios’s six):
- Regular number of Aeroplan points + regular cash component (i.e., the “true” price)
- All Aeroplan points + $0 in cash
- 60% of the regular number of Aeroplan points + 40% of the points component converted to cash + regular cash component
- Some variable component between 60–100% of the regular number of Aeroplan points + the remaining 0–40% of the points component converted to cash + regular cash component
Air Canada has also confirmed that, just like British Airways, the valuations used to determine the pricing for #3 and #4, as well as the size of the variable component in option #4, will vary based on the specific redemption.
Essentially, just like we’re seeing here with Avios and Money, there will be some redemptions under the new Aeroplan where it’s best to stick with the true price, as well as some markets where it could be in your best interest to go with one of the Points + Cash options.
Either way, we’ll need to calculate the underlying numbers in order to figure out our optimal moves, while knowing that Air Canada has leeway to change these numbers at any given moment. It’s another step in the overall trend towards loyalty programs becoming more flexible and more complex at the same time, allowing those of us who pay close attention to derive significant benefit – but perhaps at the expense of the Average Joe, who’s essentially putty in the airlines’ hands.
However, I do fully expect Air Canada to display the true price of a redemption at all times, while making it clear that the ability to pay for everything in Aeroplan points with $0 in cash is merely one of the three additional choices under Points + Cash. Since Air Canada have committed to clarity and transparency in their launch of the new program, I’d be very disappointed if they stooped to Avios’s level and obscured the true pricing.
The Avios and Money feature within British Airways Avios is a double-edged sword. It can present Avios collectors with the occasional pocket of value, such as when you’re able to “buy back” Avios for the very attractive rate of 1cpp (CAD) when making a redemption.
However, building upon the lack of a published award chart, it also serves to further obfuscate the program’s pricing, making it more difficult for the average member to know how much their redemption is supposed to cost and eroding the value of the program as a whole.
Every Avios collector should strive to have a basic understanding of the Avios and Money feature, and to refer back to the calculator tools here whenever necessary: to capture the occasional pockets of good value, sure, but also to avoid getting ripped off by the program!