Understanding the huge differences in taxes & charges between different redemption options

I wrote a few weeks ago about using a tool called AwardAce to identify the best redemption options when there are multiple options between two cities. The tool is great, but focuses on the number of points needed and only gives an indicative view of the taxes & charges component, which can be a substantial influence on which option to pick.

There are three primary variables which define both the number of points you are charged, and the amount of taxes & charges you pay:

  1. The departure point of your flight, and the local taxes levied;
  2. The points ‘currency’ you’re booking with – BA Avios, Qantas Points etc.
  3. The ‘metal’ you’re flying – e.g. operated by British Airways, American Airlines etc.

There isn’t much you can do about (1), so I’ll focus on (2) and (3). Because both the points amount and the taxes & charges amount change, you need to use this formula to calculate the overall cheapest option:

Cash value of points for Option A + taxes & charges for Option A vs. Cash value of points for Option B + taxes & charges for Option B

Example

Let’s take a journey in Business Class, from Philadelphia to London, using either British Airways Avios or Qantas Points.

Firstly, with British Airways, you have two options:

Screen Shot 2017-10-08 at 21.43.18

The option at 18.35pm with British Airways costs 50,000 Avios + £374.50, with the option at 21.10pm with American Airlines costs 60,000 Avios + £384.30.

Running the same search with Qantas, gives you the same two options in Business (with an additional option in Economy):

 

Screen Shot 2017-10-08 at 21.48.13

In this case, the option at 18.35pm with British Airways costs 53,000 Qantas Points + £370.01, with the option at 21.10pm with American Airlines costing 50,000 Qantas Points + £4.28. That is not a typo, it’s £4.28 in taxes & charges with American Airlines when booking with Qantas.

Converting all of the four potential permutations into cash, you have:

  • British Airways flight (6.35pm)…
    • …with Avios, = 50,000 Avios + £374.50 = £969;
    • …with Qantas, = 53,000 Qantas + £370.01 = £842;
  • American Airlines flight (9.10pm)…
    • …with Avios, = 60,000 Avios + £384.30 = £1,097;
    • …with Qantas, = 50,000 Avios + £4.28 = £450;

 

In this case, booking the American Airlines flight using Qantas points is c. 45% cheaper than the next cheapest option, and almost 60% cheaper than the most expensive option. In terms of absolute savings, a single person travelling one way saves c. £392 in total and more than £370 in absolute cash costs.

 

So how should you use this information?

Firstly, try to maintain a diverse portfolio of different points accounts so that you can take advantage of discrepancies like these. The above was just an example, and it isn’t always the case that using Qantas points is better British Airways Avios – if I had run the same analysis on a domestic flight between Sydney and Melbourne, BA would have come out on top.

Secondly, when you’re considering using your points, it pays to explore a few different options to identify which the cheapest option is, and to consider both the amount of points needed and the taxes & charges in a combined valuation. In the example above, note the taxes & charges between flying American with Avios points and flying BA with Qantas points were very similar, but because Qantas points are (on average) worth less than BA points, it’s overall cheaper to use Qantas points.

Get in touch if you have any questions on the above, or just let me know what you’re thinking and I can have a look for you.

How has the value of a frequent flyer point changed in the last 12 months?

Roughly a year ago, I wrote about the value of frequent flyer points in this article. Whilst the theory of how you value points hasn’t changed, and it is still heavily linked to your approach to determining value, I thought it would be interesting to look at my own valuation and whether it has changed much over the last year.

This is my latest valuation table, with 2016 valuations included and changes highlighted in green and red:

Screen Shot 2017-09-24 at 13.29.15

The ‘actual’ column refers to the valuation, in Australian Dollar cents, for every point I’ve ever redeemed agains that specific scheme. The ‘suggested floor’ column is my recommendation for the minimum valuation you should place on your points, when you’re comparing a ‘use points’ vs. ‘pay cash’ scenario. The reason for the difference is an attempt to reflect specific nuances of the redemptions I’ve made that might not apply to you (e.g. I’ve been forced to accept a lower valuation than I ordinarily would for reasons X, Y and Z).

Key movers and shakers:

  • In general, hotel schemes have improved in value, with the exception of IHG. SPG and Marriott are up 20% and 12.5% respectively, thanks in part to value of non-hotel redemptions (e.g. Marriott travel packages). IHG have just been through a devaluation, where the number of points needed for a room has increased for a large number of properties, but the cash prices have not increased at the same rate.
  • Virgin UK has increased by almost 10%, with British Airways remaining static. This mainly reflects the lower fuel surcharges on Virgin (which helps improve their value), and the fact that relatively little has changed at BA in the last 12 months as they continue to grapple with an identity crisis and a series of customer service changes.
  • Both of the Australian carriers have reduced in value, with Virgin Australia falling 20% and Qantas falling 25%. I think this is mainly a result of me understanding the schemes better! Across most distances, you need > Qantas and Virgin Australia points than the UK schemes, but the taxes and charges are on a par so it’s unreasonable to rate points in those schemes at the same level.

Why are valuations important? I treat points as a scarce resource, and only want to use them when I’m getting the right level of value vs. booking in cash. These tables help me assess every redemption to work out whether I’m getting the right level of value or not.

Availability and Alerting with Expert Flyer

partner-center-logo-expert-flyerI wrote a few weeks ago about a site called Award Ace (www.awardace.com), which is a great way of quickly finding out the best value way to redeem your points on a specific route. This week I’m going to cover Expert Flyer (www.expertflyer.com), which is a website with a huge range of features but highlights are:

  1. Alerting on fare class availability;
  2. Detailed fare information;
  3. Flight status and availability;

Whilst Expert Flyer is a subscription service and probably wouldn’t be worth the fee for most infrequent flyers, it’s useful to know what it can do for you as you can always benefit from my subscription!

1. Alerting on fare class availability;

Primary use: being automatically notified when a flight you want to book on points has availability.

‘Availability’ in frequent flyer parlance refers to the ability to reserve seats using air miles on any given flight. Most airlines only release a handful of seats that can be booked using points, and typically only 1-2 in Business Class. The availability of these seats changes all the time, because:

  • Different airlines have different policies for when they first release seats – some do it at T-355 days, some much closer to departure;
  • People book and cancel redemptions all the time;
  • Airlines often release additional seats closer to departure based on how busy the flight is;

It wasn’t so long ago that you would have to manually check on a daily basis to see if seats had opened up on the flight you wanted to book, but Expert Flyer lets you do this automatically.

You simply search for the flight you’re interested using the website interface:

Screen Shot 2017-09-10 at 18.41.49

Click on a ‘setup alert’ button, enter a name for it, and hit save:

Screen Shot 2017-09-10 at 18.42.55

And then sit back and wait! If availability opens up on your flight, you’ll get an e-mail that looks like this:

Screen Shot 2017-09-10 at 18.45.00

If you’re looking to use your points and not wanting to book urgently, just drop me an e-mail and I’m happy to set up alerting / monitoring on your behalf. I’m currently on a 100% success rate for booking the redemptions I need to book based on this alerting, but it could be that availability never opens up, so still be prepared that nothing will come through.

2. Detailed Fare Information

Primary use: being able to work out how long a given airfare is likely to be around for.

I used to worry quite a lot about how long a given price I’d found for some flights was likely to be around. Expert Flyer gives you access to the detailed underlying fare information that lets you work this out! As an example, say you’d found bargain prices for London to Istanbul with British Airways. Do you book straight away, or can you wait a few days to confirm other things like accommodation?

If you put the flight details into Expert Flyer, and select ‘detailed fare rules’, you’ll get a screen that looks like this:

Screen Shot 2017-09-10 at 18.52.48

You can see from this screenshot, that it states ‘TICKETS MUST BE ISSUED ON/AFTER 31AUG17 AND ON/BEFORE 26SEP17″, which tells me I’ve got until the 26th September to book before the fare expires and the price is likely to increase.

3. Flight status and availability;

Primary use: working out how busy a flight is to inform upgrade chances and flight selection.

As a general rule, it’s better to fly Economy when the plane is quiet (increased chance you’ll be able to engineer a row to yourself), and to fly Premium Economy when the plane is really busy (increased chance of an upgrade).

Expert Flyer lets you search any flight and see how booked it is. Taking a flight from London to Hong Kong tomorrow as an example:

Screen Shot 2017-09-10 at 18.58.11

The above screenshot shows you every direct flight from London to Hong Kong tomorrow; 5 flights with Cathay Pacific (‘CX’), 2 flights with British Airways (‘BA’) and 1 flight with Virgin (‘VS’). Over to the right is the column entitled ‘available classes’ and then a series of letters followed by numbers. The letter is the fare class, and the number is how many seats are available against that fare class.

  • F,A denotes First Class
  • J,C,D,I denotes Business Class
  • W,R,E, T denotes Premium Economy
  • Y, B, H, K, M, L, V, S, N Q, O denotes Economy

There is some variation between airlines, who might use the codes slightly differently, but the above is a good general guide.

Putting these together with the numbers in the screenshot, and taking BA31 as an example:

  • ‘F1 A0’ means there is a single seat for sale in First Class. Given airlines ordinarily oversell First by a single seat, this probably means F is completely full at present.
  • ‘J3, C1, D1, R1, I1’ means there are 7 seats in total for sale in Business Class. Again, airlines are typically willing to overbook Business by a few seats, so I would guess Business is 95%+ full.
  • ‘W4, E2, T1’ means there are 7 seats for sale in Premium Economy. Given the BA Premium Economy cabin is only c. 20 seats, this means PE is likely 60-70% full.
  • ‘Y9, B9, H9, K9, M9, L9, V9, S9, N9 Q9, O9’ means there are a heck of a lot of seats available in Economy! At most, Economy is looking 50-60% full.

If I were in Business or Premium Economy on tomorrow’s BA31, I wouldn’t fancy my changes for an upgrade, but if I was in Economy I’d be feeling optimistic about my ability to bag a row to myself in the airport.

If you have flights you want to book, or upcoming flights that you’re simply interested in, then just drop me an e-mail and I can use my Expert Flyer subscription to help you out.

Picking the right redemption with AwardAce

Screen Shot 2017-07-30 at 22.11.18To the maximum extent possible, I try to build points balances with multiple different frequent flyer programs. Doing so is important for a few different reasons:

  • It helps to get around the age old problem of award availability (i.e. there not being a seat available in the class you want, for the route you want, on the day you want).
  • It diversifies risk in case any given program decides to reduce the value of its points and
  • It lets you, to an extent, pick the redemption that gives you best $ per point.

This article focused on the latter point, and gives you a quick overview of AwardAce.

In short, AwardAce is a simple tool which tells you the number of points required to redeem an award seat for a given route in a given cabin.

As an example, browse to www.awardace.com and start by putting in details of a particular route. I used Sydney to Hong Kong in Business. The result is a chart that looks like this:

Screen Shot 2017-07-30 at 22.12.48

This tells me that the cheapest redemption is to use 30,000 United MileagePlus miles, and the most expensive to use Flying Blue (Air France / KLM) or MileMiglia (Alitalia). I happen to have a stockpile of MileagePlus, Qantas and BA Executive Club miles and so this is helpful in telling me that using MileagePlus would be the best value.

There are a few things it doesn’t tell you, however:

  • Schedule, airline and aircraft; using the example above, with Qantas I’d get a direct service on a Qantas aircraft with a flat bed, whereas with MileagePlus I either need to go via Shanghai / Beijing (Air China) or via Bangkok (Thai Airways). By-in-large, Thai & Air China have an inferior business class product to Qantas, and with a stop being required, it’s not really a direct comparison.
  • Taxes and charges; continuing the example, Qantas charges just over double the fuel surcharges that are charged if you redeem through MileagePlus.
  • Value of the points; in a Qantas point is worth 1$c and a MileagePlus mile is worth 2$c, then using twice as many Qantas points doesn’t mean you’re paying twice as much. You need to factor in the relative value of a point held in each scheme to get a true comparison between different programs.

Factoring these things in makes a big difference to what on the face of it seemed like a fairly simple equation. If you value a direct service, and on average get half as much value for a Qantas point as a MileagePlus point, then the equation becomes much more competitive than if you valued the points roughly equally and didn’t mind the connection and the longer journey time.

As a result, whilst AwardAce can’t tell you the right answer in terms of which redemption is best, it can at least simplify the admin required to find out how much it costs to redeem on a given route.

What have I used my points on in the last year?

Screen Shot 2017-03-05 at 21.49.44Like any self-respecting points nerd, I maintain a tracker of all the times I’ve used loyalty points for cars, flights and hotels. It helps to see how much value you’re getting for points in different schemes, not least because it means:

  • When you need to spend money to accrue the points, you can hold that against their value to work out if worthwhile or not.
  • When you’re considering a redemption, you can work out if it’s good value based on your usual spending patterns.

The last year has been fairly ‘typical’, that is, not particularly different from any of the last 3-5 years in terms of earning and spending points.

Headline Statistics

Over the last 12 months, I’ve redeemed 1,463,300 points across 10 different loyalty schemes. Those are: BA, Qantas, United and Virgin (UK & Australia) for airlines; IHG, Hilton, Marriott and SPG for hotels; and Hertz for cars.

Taking inspiration from the recent oscars, here’s an awards style run down of highlights from the last year:

  • Most points for a redemption (total): 200,000 IHG points for 4 nights at the spectacular InterContinental Da Nang Sun Peninsula in Vietnam.
  • Most points for a redemption (individual): 66,500 British Airways Avios for a one-way flight in Business from Vancouver to London with BA.
  • Most active scheme: IHG, with a total of 440,000 points paying for 14 free nights in 7 different InterContinental and Crowne Plaza hotels.
  • Best value scheme (per point): Not all points are created equal, so this one is a tough category to judge! Hertz averaged c$10 per point which is at least twice any other scheme. This is primarily driven by the low number of points needed for a redemption (550/day for a car). Ignoring Hertz, Virgin Atlantic wins with an average of c$4.72 per point.
  • Best value redemption (per point): This one goes to British Airways, where I was able to use 9,000 Avios to save a whopping AU$1,726 on some very last minute flights from Da Nang to Hong Kong with Dragonair. Those points delivered an awesome c$19.18 per point.
  • Most valuable scheme (overall): In the last 12 months I’ve used 403,500 British Airways Avios, delivering a total of AU$13,545 worth of savings.
  • Most valuable redemption (overall): I used 100,000 Virgin Atlantic points for two one-way tickets from London to San Francisco in Virgin Upper Class, which I valued at AU$4,764.

Overall, my tracker is telling me that I’ve used points to save a total of AU$31,245 in the last 12 months.

It would be great to hear about your own redemption success stories, and hopefully at least this inspires you to start your own tracker…

A rundown of the new Qantas ‘Classic Hotel Rewards’

Screen Shot 2017-02-19 at 18.49.43I recently came across Qantas ‘Classic Hotel Rewards‘, a new initiative promising “exclusive discounts when you book a Classic Hotel Reward using Qantas Points”. I got pretty excited by this, thinking this could mean fixed-price redemptions at hotels using Qantas points.

Fixed-price redemptions across hotels and flights are the cornerstone of getting value from the miles you’ve collected. Why so important? Take the humble Holiday Inn in Cardiff, Wales. Year-round it needs 40,000 IHG points for a free room, irrespective of the cash price. Do this in a cold day in October, and those 40,000 points may save you £100. Get yourself a free night in February when Wales are playing England at the Millennium Stadium, and you’ve probably saved more like £300 for the same number of points.

It’s well known in the industry that as a general rule you shouldn’t use your airline miles for hotels, as the number of points needed tends to be anchored to the cash price and at a lacklustre rate. British Airways, for example, gives a miserly 0.4 – 0.6 pence per point. And so the prospect of fixed-priced hotel rewards using airline miles would genuinely be new and exciting (at least to me!).

However, and I’m sure you’ve guessed by now, that’s not what we have here! I checked out the pricing of a couple of properties across a number of dates using these Classic Hotel Rewards, with the results below. In summary:

  • The number of points needed is variable, correlated to the cash price for the hotel – there is no fixed pricing and no arbitrage opportunity.
  • When using your Qantas points for a standard hotel booking, you’ll be getting around 0.6-0.7 $c per point worth of value.
  • When using your Qantas points for a Classic Hotel Reward, you’ll be getting around 0.8-1.0 $c per point worth of value.

Conclusion

Classic Hotel Rewards offer and improved valuation for your points when compared with the ‘standard’ use of Qantas points for hotels, but still fall well short of my valuation for a Qantas point and I would still not recommend it unless you have a significant number of Qantas points to burn.

More Information

You can find some of the calculations below. To try and give a few sensible data points, I’ve picked two hotels and a range of dates to test. The first hotel is the Adina Apartment Hotel Sydney Darling Harbour and the Travelodge Perth. The dates I’ve used across both are Thursday 23rd February (something in the next week), Saturday 15th April (Easter weekend) and Saturday 20th May (something vaguely off-peak a fair way in the future).

Adina Apartment Hotel Sydney Darling Harbour

  • Thursday 23rd February
    • Points required: 34,000
    • Internet cash price: $299
    • $c/point: 0.88
  • Saturday 15th April
    • Points required: Not Available
    • Internet cash price: $314
    • $c/point: N/A
  • Saturday 20th May
    • Points required: 30,000
    • Internet cash price: $314
    • $c/point: 1.05

Travelodge Perth

  • Thursday 23rd February
    • Points required: 19,000
    • Internet cash price: $169
    • $c/point: 0.89
  • Saturday 15th April
    • Points required: 19,000
    • Internet cash price: $152
    • $c/point: 0.8
  • Saturday 20th May
    • Points required: 25,000
    • Internet cash price: $186
    • $c/point: 0.74

How does the Virgin Australia award chart compare with Qantas?

virgin_australia_aA couple of weeks ago I wrote about redeeming miles on Qantas, and which distances and cabins provided the best value. This week I had planned to follow up with a similar analysis on the Virgin Australia award chart, highlighting differences between the two and when you’d be better redeeming your points on one vs. the other. However, when I sat down and compared the reward charts, it appears they are identical! The only difference is:

  • for Economy flights, Virgin Australia is cheaper by 200 points per leg;
  • for Premium Economy flights, Virgin Australia is cheaper by 300 points per leg;
  • for Business Class flights, Virgin Australia is cheaper by 500 points per leg;

Just to confirm this is the award chart for flights on Virgin Australia, Virgin Alantic, Virgin Samoa, Air New Zealand, Alitalia, Delta and Virgin America:

screen-shot-2016-11-27-at-21-02-04

So is there any difference between Qantas and Virgin Australia when it comes to reward seats? Differences in availability aside, there’s two other key considerations beyond any comparisons on the service between the two:

  1. The taxes & charges on redemptions;
  2. The ease of earning in either Qantas or Virgin Australia;

Taxes & Charges

I’ll be the first to admit this wasn’t scientific, but I sampled a few routes to compare the taxes & charges between Qantas and VA.

  • Sydney – Melbourne: with Qantas, this was 8,000 + $34.18 in Economy, and 16,000 + $34.18 in Business. Virgin Australia was 7,800 + $21.11 in Economy or 15,500 + $21.11 in Business.
  • Sydney – Los Angeles: with Qantas, this was 45,000 + $251.15 in Economy, and 96,000 + $466.15 in Business. Virgin Australia was 44,800 + $107.17 in Economy or 95,500 + $120.55.
  • Melbourne – Perth: with Qantas, this was 18,000 + $34.30 in Economy, and 36,000 + $34.30 in Business. Virgin Australia was 17,800 + $18.15 in Economy, and 35,500 + $18.15 in Business.

In all cases,  Virgin Australia beat Qantas for taxes & charges, with the difference more pronounced on International routes and in Business Class.

Ease of Earning

There’s two primary ways of earning airline miles – by actually flying with the airline, and through credit cards. On the latter, American Express Membership Rewards convert out to Qantas & VA at the same rate, and the earning rates tend to be the same on other cards. The only general observation is that initial ‘welcome’ bonus offers on Qantas are typically easier to come by and more generous than Virgin Australia.

When it comes to flying, Qantas and VA run two quite different schemes for both Domestic and International flights.

  • Domestic: Qantas credit points based on distance flown, whereas Virgin Australia is based on the fare paid. To make the comparison easier, I have included below the Qantas earn rates and then the equivalent amount you would need to spend on the equivalent fare with Virgin Australia to earn the same number of points.
  • International: Both Qantas and Virgin Australia credit based on the number of miles flown.

let’s say you paid the cheapest possible Economy and Business fares for the routes above, this is what you’d earn:

  • Sydney – Melbourne: Qantas would earn 800 points in Economy, requiring $160 spend with Virgin Australia. You’d earn 2,000 points in Business with Qantas, or need to spend $400 with VA.
  • Sydney – Los Angeles: Qantas would earn 9,000 points in Economy, 22,500 points in Business. VA would earn 3,750 in Economy, 15,000 points in Business.
  • Melbourne – Perth: Qantas would earn 2,900 points in Economy, requiring $580 spend with Virgin Australia. You’d earn 5,500 points in Business with Qantas, or need to spend $1,100 with VA.

This is hopefully fairly self explanatory – when it comes to flying, you will earn points more quickly with Qantas.

Summary

When it comes to burning points, there is very little difference between Qantas and Virgin in terms of the number of points needed. Virgin Australia takes the honours, however, thanks to the lower taxes & charges on both Domestic and International flights.

When it comes to earning points, if you primarily earn from credit card spend then there’s not much in it. If you earn most of your points from flying, you’ll do much better out of the Qantas scheme.

I try to keep an interest in both schemes, primarily to give different redemption options with partner airlines, but in general I’m trying to ramp up my VA points earning to keep the cash cost of redemptions low.

How do I get the best value when using Qantas points?

When I’m trying to decide how best to use my points with a given Frequent Flyer Program (FFP), I tend to look at three things:

  • The number of points required for the distance flown;
  • The cost of the taxes & charges;
  • The experience, including flight times, routing, seat, service etc. etc.

I then evaluate these things against both other redemption opportunities, but also against ‘doing nothing’ and using cash instead of points.

This article focuses on the first of these three categories. The steps below are for the Qantas FFP, but the principles apply across all programs.

  • Number of Points – Reward charts

I’ve talked previously about how you can maximise the value you get from your points by flying to places on the edge of distance boundaries, taking advantage of the zonal system by which most FFPs operate.

Qantas have two different award charts, one for redeeming on Qantas / Emirates / AA and the other for redeeming on Oneworld Partners (BA, Qatar, Finnair etc.). The former requires less points for an equivalent redemption than the latter.

This is what the Qantas ‘Classic Flight Reward’ chart looks like, with the ‘points per real mile’ value overlaid and the best value options highlighted in green:

screen-shot-2016-11-13-at-11-42-33

With a couple of anomalies, the further you fly the better the value you get, and whilst this is a fairly unexciting reward chart the standout appears to be Zone 8.

This is the equivalent ‘Partner Classic Flight Reward’ chart:

screen-shot-2016-11-13-at-10-20-56

It’s broadly the same in terms of sweet spots, with the point rates all being c. 10% higher than the Qantas Classic Flight Reward chart.

  • Number of Points – Destination Zones

So these charts tell you the best value distances, but how do you know which destinations fall within that zone? Instead of searching the flight distance route-by-route, I use an online radius plotter to draw concentric circles around my departure points to see which cities fall within the circle.

Here’s an example looking at flying from Singapore to Europe:

screen-shot-2016-11-12-at-16-45-04

Black is 4,800 miles / 60,000 points, red is 5,800 miles / 72,000 points and blue is 7,000 miles / 84,000 points [all in Business]. For a couple flying together, you’ll use 48,000 less points on a return by flying into Helsinki instead of London!

Here’s another example from Sydney to Asia:

screen-shot-2016-11-13-at-20-14-07

Bangkok at just inside 60,000 points in Business and Jakarta at just inside 50,000 in Business make it on to the ‘decent value’ list, with Tokyo being a nudge into the 72,000 points zone.

  • Summary

If you’re flexible about your destination or your routing, you can use these maps and this approach to get the best value for your points. I very rarely do a ‘normal’ trip these days which involves a return into a single city, I will often patch together a network of good value redemptions!

I can help you put together your own maps for the destinations you’re interested in, just get in touch!

Overview of Changes to Virgin Atlantic Flying Club

va_fclub_r_640-x-320When an e-mail arrived in my inbox from Virgin Atlantic with the subject “Your Flying Club is about to change”, I had a bad feeling. This was the first paragraph:

“We’ve got some great news. We’re introducing exciting new changes to Flying Club over the coming weeks. From giving you a brand new membership number to making it even quicker for you to reach reward flights, there’ll be lots to make your adventures with us even more rewarding.”

If the best thing they can say about the changes is that they’re issuing a new membership number, which is of absolutely no interest to anybody, then you know the changes are not going to be good.

I’ve split this article into earning, spending and status to explain the changes in each area.

Earning

  • Winners: people buying Upper Class and flexible Economy & Premium Economy tickets.
  • Losers: leisure travellers buying discount Economy and discount Premium Economy.

Broadly speaking, Virgin have moved to a revenue-based scheme, where the number of miles earned is more closely aligned to the price of the ticket purchased. They haven’t gone as far as looking at $ spent, and instead use the underlying fare class which is a proxy for spend. This table shows the old rate and the new rate:

screen-shot-2016-11-06-at-10-43-37

Broadly speaking, leisure travellers buy the categories that are going down (discount Economy and discount Premium Economy), and business travellers buy the categories that are going up.

There is no change to the number of miles you earn from partners, so if you credit from other airlines to Virgin Atlantic, you’re not impacted in this area.

Spending

  • Winners: people redeeming miles off-peak in Economy & Premium Economy.
  • Losers: people redeeming miles either during peak times, or in Upper Class.

Virgin Atlantic appear to have followed British Airways in introducing seasonal pricing. They don’t have quite as many ‘off-peak’ dates as BA, but they still cover:

  1. Easter: 31st March to 18th April 2017;
  2. Summer: 22nd June to 6th September 2017;
  3. Christmas: 13th December 2017 to 3rd January 2018;

The consolation prize is that UK half-terms have not been deemed as ‘peak’ for redemptions.

Along with the introduction of seasonal pricing, there are also substantial changes to the number of miles needed to redeem during these periods. Given the number of zones & destinations, I haven’t included every combination on this post. You can see the detail across a number of destinations in the Virgin guide here. To give you a flavour, this is what is happening for Hong Kong, New York and San Francisco:

screen-shot-2016-11-06-at-11-30-16

A fairly punishing set off changes during peak periods, with the exception of Hong Kong which seems to have come off OK except in Upper Class. Off-peak, Upper Class has still come off badly but the reductions in Premium Economy and Economy are significant.

If you have existing redemptions booked during an off-peak period, it would be worth looking at rebooking at the lower rates. With Premium Economy being a new sweet spot, I’m very tempted to cancel my upcoming Upper Class redemption to Hong Kong and rebook in Premium Economy, as doing so will free up 75,000 miles!

Status

  • Winners: people flying on flexible Upper Class tickets.
  • Losers: everyone else.

In general, it is going to get more difficult to earn Virgin Atlantic Flying Club status. There’s two dimensions to this, (i) the number of tier points you earn from flying will in general reduce and (ii) there has been a slight tweak to the number of tier points needed to earn Silver and Gold.

On the former, the table below shows how the earning is going to change. Note that Virgin have decided to gross up tier points by 25, so I’ve multiplied all the existing earning rates by that amount:

screen-shot-2016-11-06-at-12-13-41

With respect to qualification criteria, achieving Silver has moved from 375 to 400 points, the equivalent of an extra tier point in old currency. Qualifying for Gold has remained at the same level, of 1,000 points.

In the new world, you will need twice as many flights in discount Economy to achieve Gold as previous.

Overall

These changes are awful for people who earn miles and tier points flying discount Economy, and then want to redeem their points for school holiday flights or aspirational Upper Class flights. Unfortunately, a substantial chunk of my readership falls into that category!

The only positives to take are that earning / redeeming with partners hasn’t changed, and that off-peak Economy and Premium Economy flights have become much more valuable.

For any questions on these changes and what they mean for you, don’t hesitate to get in touch.

A new trick to reduce taxes & charges on certain BA redemptions?

British Airways have the unfortunate accolade of being one of the worst airlines in the world for applying taxes & charges when using your miles for a Reward Flight. Given the high fees, people like me are constantly on the lookout for new ways to avoid and/or reduce them, and it looks like I’ve just stumbled upon another way of doing this!

By way of background, Avios is the common reward currency of British Airways, Iberia and Avios.com. If you have registered with each of them, you can move your miles between the programs instantly and for free using the ‘Combine My Avios’ feature.

It’s already fairly well known that using Iberia.com to book Iberia flights results in much lower charges than using BA.com to book BA flights. As an example, to book London – New York return in Business costs 100,000 Avios and £488.42 with BA, but booking Madrid – New York return in Business costs 68,000 Avios and €182.45 with Iberia. Some of the difference can be explained by Air Passenger Duty, but not all £300+ of it!

In the example above, however, you’re not really comparing like-for-like, as to fly with Iberia you’ve got to get yourself down to Madrid. When I was playing around with a fairly complex itinerary for a friend, I found a ‘nuance’ that provides a more direct comparison.

Let’s say you’re looking to fly from Vancouver to the UK one-way in Business Class. BA.com will charge you the following:

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If you put the same thing into Iberia.com, you get an almost identical result:

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Where things get interesting is if you change your final destination to Jersey! If you update the search on ba.com, you’ll get:

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This triggers an increase in the taxes & charges (presumably equal to the LGW departing passenger taxes). However, when you do the same thing on Iberia.com, it’s a different story:

screen-shot-2016-10-09-at-15-50-32

By adding a throw-away flight and booking on Iberia.com, whilst the Avios cost goes up by 4,000, the taxes & charges component drops from £267.09 to £151.63. You’re saving £115.46 in return for 4,000 Avios, giving you around 2.89 pence per point.

A few things to note:

  • This only seems to work with Jersey, and not other destinations [I only tried a couple]. If you do identify others, keep in mind that life is much easier if you land into one airport and your onward flight goes from another, otherwise you may end up in difficulties with being forced to check your luggage through to your final destination
  • You need an Iberia Plus account, which needs to have been open for over 90 days in order to ‘Combine My Avios’ and take advantage of this.
  • Make sure when booking on the Iberia site, the LGW-JER leg books into Economy, otherwise the system won’t give you the savings on the Taxes & Charges.