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TPG reader Mike emailed me to ask about award ticket pricing:
“Even with the lowest level British Airways awards going away, their short-haul flights seem like an excellent deal. For example, New York to Miami is still just 15,000 Avios round-trip versus 25,000 Advantage miles for the same flight. Why is there such a hefty discount?”
In October, British Airways announced plans to drop the lowest level of its award chart for travel within North America. Until February, you can still book economy flights less than 650 miles for just 4,500 Avios each way. Beyond that date, those awards will price at the current second tier, which is 7,500 Avios for flights up to 1,150 miles each way. As Mike points out, that’s still a bargain and why British Airways offers such a good deal on short-haul flights is a bit of a metaphysical question about the nature of award travel.
As I illustrate in my monthly valuations, points and miles are not created equal. If loyalty programs were all identical, there wouldn’t be much long-term incentive to choose one airline or hotel over another. The sweet spots offered by different programs set them apart and help make the travel rewards game so lucrative.
Getting back to Mike’s example, Avios offer better value than AAdvantage miles for short-haul economy flights like New York to Miami or LA to Denver. On the other hand, flying from Miami to Fairbanks (on American and Alaska) would cost just 12,500 AAdvantage miles, but would likely run you 27,500 Avios since there’s no nonstop service along that route and British Airways charges by the segment. Similarly, you could get from Seattle to Paris (via Philadelphia) for just 20,000 miles with an AAdvantage off-peak award, but that same itinerary would cost 32,500 Avios. The British Airways Visa currently offers a total of 100,000 avios – 50,000 bonus Avios after spending $2,000 within the first three months of account opening and an additional 25,000 bonus Avios when you spend $10,000 on purchases made within the first year, plus earn another 25,000 bonus Avios when you spend a total of $20,000 on purchases within your first year.
Think of your loyalty accounts like a set of paintbrushes: Any one of them can probably help you design the trip you want, but they don’t all serve the same purpose. Some programs (like British Airways Avios) are most efficient when you’re working with a small canvas, while others (like Southwest Rapid Rewards) give you flexibility when your plans are still abstract. Learning the ins and outs of the various programs is part of the challenge (and fun) of award travel.
The strengths and weaknesses of different airline and hotel rewards are also part of why I advocate earning transferable points. Programs like Chase Ultimate Rewards and Starwood Preferred Guest not only protect you from devaluations, but also give you more options for getting where you want to go. They’re like the Swiss Army knives of loyalty programs, offering many tools in one.
I’m disappointed with the upcoming changes from British Airways, but Avios still offer plenty of value. The landscape of the travel world is constantly shifting, and there will be other great opportunities down the line.
Chase Sapphire Preferred® Card
|Intro APR||Regular APR||Annual Fee||Foreign Transaction Fee||Credit Rating|
|N/A||16.24%-23.24% Variable||Introductory Annual Fee of $0 the first year, then $95||0%||Excellent Credit|