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In the points and miles game, devaluations are inevitable, and handling them properly is an important part of maximizing your travel rewards. Today, TPG Senior Points & Miles Correspondent Jason Steele looks at the upcoming British Airways devaluation, and offers some strategies for Oneworld redemptions moving forward.
British Airways disappointed its customers last week when it announced a major devaluation of Avios points set for April 28, 2015. Among the lowlights of the changes are a whopping 50% increase across the board on premium class partner awards, which are the only way to avoid the airline’s outrageous fuel surcharges. However, many breathed sighs of relief upon learning that economy class partner awards (such as those on American, Alaska, and US Airways) were untouched, and remain a tremendous value.
These dramatic changes have left many British Airways customers and holders of the co-branded credit card from Chase questioning their loyalty. So today, I want to look at the value proposition of the British Airways Visa going forward, and whether cardholders should consider cards that earn miles from US Airways and American Airlines instead.
Taking another look at the British Airways Visa card from Chase
This card offers a sign-up bonus of 50,000 points after making $3,000 in purchases within three months. Cardholders earn 3 points per dollar spent on British Airways, and 1 point per dollar spent elsewhere.
Cardholders receive a Travel Together ticket for spending $30,000 on the card within a calendar year, enabling cardholders to book two award seats on British Airways for the price of one. Despite all of the government taxes and ridiculous fuel surcharges imposed, you can generally redeem the Travel Together ticket for business or first class awards, and get those seats at a substantial discount compared to the regular cash price.
Until the recent announcement, there were three outstanding ways to use Avios:
- Business class partner awards with no fuel surcharges, such as flights on Air Berlin, Air Lingus, and LAN.
- Business or first class awards using the Travel Together ticket. The imposition of fuel surcharges was largely mitigated by using half the number of points.
- Short-haul economy class partner awards with no fuel surcharges, such as flights on American Airlines, US Airways, and Alaska Airlines, which start at 4,500 points each way.
After April 28th, British Airways’ premium class partner awards will cost 50% more, making points far less valuable even when you use them without paying fuel surcharges. The Travel Together ticket may still offer decent value for some off-peak dates when the prices are “only” going up by about 25%. Thankfully, the economy class partner awards will remain a great value.
If you’ve been using Avios for premium class rewards on Oneworld carriers, it may be time to look at other options.
The US Airways/American Airlines Card Strategy
Barclaycard is currently offering the US Airways Premier World MasterCard with a sign-up bonus of 50,000 point Dividend Miles after the first purchase and payment of the $89 annual fee. This card offers double miles only on US Airways and American Airlines purchases, and the standard one mile per dollar elsewhere.
As the merger between US Airways and American concludes later this year, these miles will be available for AAdvantage award redemptions, and cardholders will be offered one of the American Airlines Aviator cards. The AAdvantage Aviator Silver card features 3x miles on US and AA purchases, 2x miles on hotel and car rental purchases, 5,000 elite qualifying miles for each $20,000 spent annualy (up to 10,000 EQMs), and 10% of your redeemed miles back (up to 10,000 annually. It has an annual fee of $195.
American Airlines has several co-branded credit card options, but the one most similar to the BA Visa and US Airways card is the Citi / AAdvantage Platinum Select World Elite MasterCard. This card currently comes with a sign-up bonus of 30,000 AAdvantage miles after you spend $1,000 in the first three months. You get 2x miles per dollar on American Airlines purchases, and one mile elsewhere, a free checked bag and Group 1 priority boarding for you and up to 4 travel companions on American Airlines, and a 10% mileage refund on awards (up to 10,000 miles each year).
Comparing the two programs with sample awards:
1. Long-haul on British Airways in business class
British Airways does offer transatlantic service to an exceptional number of US cities, including Denver and Austin (where it has the only non-stop service to London). Furthermore, its award availability on these routes has been fairly decent.
However, an award flight from Denver to London (which is currently 100,000 Avios round-trip in business class) will soon be 125,000 Avios for off-peak travel, and 150,000 Avios during peak periods.
You’d have to spend $100,000 on the British Airways card for off-peak awards, and $120,000 for peak. Using the US Airways card, the same flights can be booked for 100,000 miles, which can be earned through $100,000 of spending. So the advantage that the British Airways card used to have (with its higher earning rate) has now been neutralized. And if AAdvantage and Dividend Miles members have access to British Airways award seats during peak times (which appears likely, but is still unclear at this point), then the AA and US cards will offer a distinct advantage over the BA card even without considering the 2x bonus categories on the Aviator Silver card .
Avios have always been worth less than AA and US miles unless you use them on select partners that don’t impose fuel surcharges (which includes Air Berlin, Aer Lingus, Alaska, LAN, and US Airways and American Airlines flights within the Americas). This devaluation makes Avios even more inferior to AA or US miles.
2. Short-haul partner awards in economy class
British Airways Visa cardholders will continue to get good value out of these redemptions. One-way economy awards for flights under 650 miles are just 4,500 Avios each way, while flights between 651-1,151 miles are 7,500 points. The chart above shows the remaining zones and the respective mileage requirements.
Compared to American, Alaska, and US Airways (all of which price most domestic, economy class awards starting at 12,500 miles), the British Airways program remains superior. For example, there are many round-trips available for 9,000, 15,000 and 20,000 miles that cost fewer points than a standard domestic award on American, Alaska, or US Airways. Furthermore, when crossing a traditional airline award zone (such as flights to Hawaii, the Caribbean, or Central America), these distance-based awards can offer tickets for a fraction of the cost.
A round-trip award flight from Miami to Cancun (531 miles) would cost 35,000 miles on American or US, but just 9,000 Avios. Award flights from the West Coast to Hawaii would be 35,000 American, US, or Alaska miles, but only 25,000 Avios.
This devaluation is a big hit to those who use Avios for premium class awards, but it has no effect on economy redemptions for short-haul flights on American, Alaska, and US Airways (or other partners). If you’re using the British Airways Visa to save for a business class ticket overseas, it might be time to switch to the US Airways card or Citi AAdvantage card when the annual fee comes due. On the other hand, if you travel to or from an AA, US, or Alaska hub, and you can utilize the superior value of Avios short-haul economy awards, then it makes sense to stick with the British Airways card. Avios can even provide high value for short-haul awards on flights operated by British Airways during off-peak travel dates.
Finally, if you want to enjoy the best of both words, consider the Starwood Preferred Guest Credit Card from American Express, which offers transfers to BA, AA, US, and even Alaska at your convenience. And with its 5,000 mile bonus for transferring 20,000 points, it essentially matches the earning rate on the British Airways Visa.
Jason Steele and other travel gurus will be speaking at the Family Travel for Real Life seminar on March 7, 2015 in Charlotte, NC. Check the link for more details.
Starwood Preferred Guest® Credit Card from American Express
|Intro APR||Regular APR||Annual Fee||Foreign Transaction Fee||Credit Rating|
|N/A||15.49%-19.49% Variable||$0 introductory annual fee for the first year, then $95.||0%||Excellent Credit|