How to Value Avios – Part 2

flying piggie logoYesterday I outlined some of the places where many mistakes, in my opinion, are made when trying to determine the value of an air mile. Today, it’s time for me to put my money where my mouth is!

I suggested that you needed to do the following to calculate your own valuation of an Avios.

  1. Decide on a few aspirational destinations / routes for the use of your Avios, and the cabin in which you wish to travel.
  2. Decide how much you would be willing to pay for each of those destinations / routes / cabins.
  3. Calculate how much British Airways Executive Club will charge you for taxes & fuel surcharges for those aspirational destinations / routes.

So, taking my own advice, here’s my answers.

  1. I’m usually looking for business class flights.  I live in Barcelona, my darling nephews and the rest of my family are in Canada, and my girlfriend’s family lives in Argentina.  I also try to take a couple of long haul holidays a year, which are often to Asia or South America.  And occasionally I figure that, if I’m going to be in Argentina or Asia, why not save myself a long haul flight and just fly from South America or Asia to North America, or vice versa…  So my list of routes reflect those likely uses of my Avios.
  2. How much I would pay depends on a number of factors:
    1. Which airline is it?  I’ll usually factor in a premium for BA or another great business class product like Cathay Pacific’s.
    2. How long is the flight?  Although I definitely want to be in business class for an overnight flight, being in that seat for a 12+ hour flight is definitely more valuable than that seat for a 8-9 hour flight.
    3. Do I have to take a positioning flight?  In most cases from Barcelona I do, since there are few direct long haul services, but whereas it is quite cheap to get myself to London or Madrid, it can be quite a bit more expensive to position to Helsinki or Amman.  Sometimes I might have to position on both ends, which makes for a long itinerary and reduces my perceived value even further.
    4. Do I have a direct flight option?  It doesn’t make sense to position to Berlin to take the Air Berlin flight to New York, when I can just take the direct American Airlines flight from Barcelona, so having to connect when I could fly non-stop also reduces my perceived value by more than the cost of positioning.
    5. How much value do I place on the ability to cancel an Avios booking?  This becomes most obvious on a World Traveller Plus booking, where my perceived valuation is higher than the current fare sale prices.
  3. For all of my selected routes, I looked up the taxes & fuel surcharges that BA charges for that route, with the exception of Iberia routes where I looked up the Iberia TFS.

So, after many hours of fighting with the British Airways website trying to find random award availability for my selected routes,  the magic answer is…..  about 1.1 – 1.15 pence per Avios.

value avios

I recommend that you should take some time to perform a similar exercise.  I’ve always used a rough estimate of about 1p per mile and that has suited me fine (although I was probably under-valuing miles in the days before BA changed their award chart and increased their fuel surcharges).  And, of course, my calculation is not that far off, and in fact a bit higher.  But this exercise has corrected a couple of things I used to believe instinctively.

  1. World Traveller Plus awards are appalling value based on my preferences.  I used to think “well, it’s just a 8 or 9-hour daytime flight, I might as well save those 12,500 miles vis-a-vis Club World and fly WTP – I might even get upgraded because of my gold card”.  But in fact, I should be saving my miles for business class redemptions or upgrades and buying WTP fares with cash.  Too high TFS and too many miles available from a cash ticket.
  2. Redeeming on British Airways just isn’t worth it any more.  I used to not mind the higher fuel surcharges and UK taxes on BA reward flights, thinking that the quality of BA’s product was worth paying more to fly non-stop (particularly when I was London-based). But even with placing a premium on BA, it’s obvious I get better redemption value by going to Asia with Finnair / Cathay / Royal Jordanian / Malaysian  and going to the Americas with American / Iberia…

Anyhow, I hope you found this interesting and useful, and I would love to hear from you by email or in the comments section!

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