British Airways Is Testing Eliminating Infamous Surcharges, Charging More Miles
British Airways is infamous in the points and miles community for charging absurdly high surcharges. For years, these were so deceptively marketed that a class action lawsuit forced the airline to settle and award up to 2.2 billion Avios as compensation. BA hasn't decreased the surcharges since then. Instead, it simply renamed them from "fuel surcharges" to a more neutral "carrier-imposed charge."
But the surcharges are still absurd. I've found multiple cases where British Airways surcharges were higher than the cost to book a flight outright with cash, implying a negative value for BA Avios:
So, it was exciting at first to read that British Airways is pricing out awards with no surcharges. However, once we dug in, we found that this isn't a customer-friendly move at all. Instead, British Airways seems to be trialing a way to get members to redeem for flights at a worse value.
The original report from Head For Points found that British Airways Executive Club is displaying different-than-normal pricing on the route from London Heathrow (LHR) to Chania, Greece (CHQ). Instead of 20,000 Avios for a one-way business class flight on this route, the award search results showed 25,000 Avios for the one-way, but with lower surcharges.
When we tested this same route here in the US, we got the standard 20,000 Avios award pricing with the standard $40 surcharges:
On the next page, there's an option to pay fewer Avios and more cash, but not more Avios and less cash:
Likewise, when I searched an off-peak date, the search results returned the standard off-peak pricing of 17,000 Avios plus the same $40 surcharge in business class:
Or, 8,500 Avios plus $27.50 in surcharges in economy:
But, when TPG UK's General Manager Christian Kramer and Director of Content Nicky Kelvin performed the same searches, the price returned as 22,000 Avios one-way in business class or 12,000 Avios one-way in economy. However, the out-of-pocket cost dropped to just £0.50 (US$0.65) for each option:
These searches seem to indicate that this pricing is limited to Executive Club members based in the United Kingdom at this time.
You may be wondering what's so bad about the out-of-pocket price for an award flight dropping to under $1. Well, with this change, British Airways is making the default choice a much worse value.
The off-peak business class award price for the LHR-CHQ route is 17,000 Avios plus £25 (US$32.50) in surcharges. As you can see, this 17,000 Avios plus £25 rate is still available. However, the default choice is now 22,000 Avios plus £0.50 (US$0.65).
In exchange for 5,000 additional Avios, you're only saving £24.50 (US$31.85). That's just 0.49 pence (0.64 cents) in savings for each of those additional Avios. For reference, TPG valuations of Avios are more than double that at 1.5 cents. And you can redeem Avios for 0.77 pence (1.0 cent) for buy-on-board food and drinks.
In fact, when you consider all of the options, it would be best to take the payment option with the least amount of Avios and highest amount of cash, even if you value Avios at just 1 cent each:
(US 1.5 cpp per Avios)
(US 1 cpp per Avios)
The original report indicated this pricing was only on award flights between London Heathrow (LHR) and Chania, Greece. However, further testing shows that the this pricing is also showing up on other European routes such as London Heathrow to Athens, Greece (ATH):
However, it's not showing up on other intra-Europe routes such as London Heathrow to Berlin Tegel (TXL), on which the standard off-peak pricing and surcharges are showing:
It's not a bad thing that British Airways is giving award travelers the chance to minimize their out-of-pocket cost. A traveler with more Avios than he knows what to do with may happily take the option to pay under $1 for an award flight. However, this change makes the default option a worse choice for most travelers. As if finding and booking award flights wasn't hard enough, you now need to break out a calculator to get the best value.
Additional reporting by Christian Kramer and Nicky Kelvin.