If you want to fly to New York next week the good news that the cost of the flight with British Airways is a mere £94 return. Before you go rushing off to bag a bargain flight you might stop to ask “what’s the catch?”
Well, the fare you will actually pay is £367.10 – almost four times the price of the flight itself. Thanks to a bewildering array of taxes, surcharges and obscure sounding fees (11 of them in total) paying for an airline flight is essentially an exercise akin to a meeting with the officials at a Cambodian land border: everyone wants their cut of your money, they don’t care what you think about it and you have no choice but to pay it. Except than in Cambodia they will at least give you a smile.
Worthless miles
I discovered this while trying to spend my hard-earned BA Miles. Having accrued over 50,000 miles I was excited to learn that I had enough to go to New York – only to discover that once I’d paid the associated taxes (£273.10) I could travel on a fully paid ticket for less than £100 extra. So that’s the value of my 50,000 miles:£0.0019 per mile. I worked out that I spent a little over £10,000 on the flights that got me these miles. It makes my Tesco Clubcard seem positively generous.
If I try to spend my BA miles on a European flight the situation is even more ridiculous. A flight to Pisa in May for example will cost me 15,000 BA miles. It will also cost me £65.50 in taxes, compared to the regular flight which is £96.50 including all taxes. So here my miles are worth £31 – again around the £0.002 mark. To add insult to injury I found an Easyjet flight on the same day to the same destination for £61.72 return including all fees and taxes; I would pay BA more than this in taxes on top of the 15,000 BA miles!
All of this is made that bit more surreal by the fact that you can buy BA Miles for cash at ba.com. 15,000 miles will set you back, wait for it, £255 (plus a £15 processing fee). I can’t for the life of me think of a reason why someone would buy BA Miles, but I may have missed something blindingly obvious and will be happy to have this pointed out to me.
Here’s the table of charges for a sample flight itinerary leaving London Heathrow for New York JFK (taken from the BA website on 15/3/11). It makes painful reading.
Government, authority and airport charges
Air Passenger Duty – United Kingdom – £60.00
Passenger Service Charge – United Kingdom- £23.00
Customs User Fee – USA – £3.40
Transportation Tax(Departure) – USA -£10.00
Transportation Tax(Arrival) – USA- £10.00
Animal & Plant Health User Fee (Aphis) – USA- £3.10
Immigration User Fee – USA- £4.30
Passenger Civil Aviation Security Service Fee – USA – £1.50
Passenger Facility Charge- £2.80
Total government, authority and airport charges £118.10
British Airways fees and surcharges
Fuel Surcharge- £145.00
Insurance and Security Surcharge- £10.00
Total British Airways fees and surcharges £155.00
Total taxes, fees and surcharges £273.10
Despite the fact that the oil price has risen in recent years the fuel surcharge still appears to be a completely fabricated cost, calculated on the back of a cigarette packet and determined with the airline’s profitable interest in mind. This arbitrary tax seems to have little correlation with the fluctuating cost of fuel. And as for the other charges, they are just a depressing list to go through; a host of different bodies sucking the money from my credit card, just because they can.
I know that most of these charges have been around for years, and it’s inevitable that in the next few years they’ll be bumped up by a ludicrous amount again. I suspect the best solution is to stop looking at these surcharge breakdowns; I was happier when I didn’t know. And as for my BA Miles card, I have to accept it’s no longer a ticket to ride.
I suggest using the actual Airmiles scheme – http://www.airmiles.co.uk – you can still earn the money via credit cards & online shopping, while you can also convert your Tesco clubcard points. Crucially, the free flights (which are all with BA anyway) are free INCLUSIVE of taxes and charges. We got to Oman in November last year for 10,000 Air Miles all up, and there were no extra charges.
If I remember rightly, the miles gained per £10 spent on the Amex card is better than the BA Miles scheme as well.
This helpful piece of advice comes from someone who has a frequent flyer account with just about every airline, and has never managed to book a reward flight. So please take it with a pinch of salt…
Cheers David. Agree with you re: Airmiles – much better for European flights (thanks to the inclusive taxes) and also a very good deal for Eurostar tickets.
I’ll add the link to your own analysis of how to get the best out of Airmiles – a good breakdown and a argument to go to Shetland, if one were needed. http://www.bestflightsales.com/best-value-air-miles-destinations-when-to-use-frequent-flyer-points/
Talking of Shetland, this reminds me of the time back in 2000 when I was working up there for a couple of weeks and wanted to get a flight for Sam to join me. At the time Sainsbury’s were being ridiculously generous with their Airmiles and we managed to get her a free flight in exchange for 12 boxes of Rice Krispies and a couple of kilos of rice. Happy days.
Andy, I feel sorry for you!
And I feel sorry for me!
Sorry that you’ve written it all down & that I read it! Now I’m informed!
I didn’t know the exact numbers, even not as I’m a travel agent, but I knew that you get nothing for free. Also not if you collect miles. Just go to the supermarket or fuel station or wherever and collects points. In the end, you won’t save any money! Or that little, that it’s not worth mentioning here in my comment.
Why should it be different with airlines?
In the end we just pay a price, which is worth for us to explore the world!
But still a very interesting article & thanks for sharing it!
I think the answer is that it depends, but ultimately miles are no where worth what we paid to get them. What it depends on is how, when and for what you use them. For example, I could use thousands of miles to get a magazine subscription, and pay the equivelent to hundreds of dollars for a $20 subscription. But, several years ago I cashed out 250,000 miles for two business class seats to Bangkok from Washington DC. I paid a couple of hundred of dollars in fees and received $12,000 in free airfare.
I fly most of the time for work, so accumulating miles is a nice perk. But I would not go out of my way to purchase more, it’s just not worth the money.
Sorry for making you read this Melvin
You are right of course that we don’t get anything for nothing. But in this case it seems that what they offer is worse than nothing – in some cases it’s cheaper to fly with another airline on regular prices than to take their ‘free’ flight. Thankfully I’ve never chosen an airline to collect air miles but I do think that these incentive schemes are worthless when the taxes are still piled on.
Matt, perhaps it’s just BA that I should pick on. Like you, I’ve found other airlines happy to offer other ways to spend miles. For example, as a result of us flying to India with Virgin we were able to collect a free Eurostar return ticket from London to Lille. Now that WAS real value from a reward programme.
Very topical indeed! Just yesterday did I scrape up enough Lufthansa miles to book a return trip from London to Kiev (30,000 miles worth).
I agree that paying taxes makes the entire “free flight” scheme decidedly UN-free – however, I happened to have enough miles on my account (15,000) to cover the various taxes as well. And since my Lufthansa miles are exclusively the result of frequent business trips, it is going to be a free flight in the end. So, laughable as it is, the system does work sometimes.
Regarding the fuel costs, note that most to all airlines use hedging agreements to lock their future fuel price at a certain level – meaning that fuel surcharge will not necessarily follow the market dynamics on a day-to-day basis.
You’re right Ancji, and I was like you – many of my miles were accrued while flying for my last job. I do remember in the past however when I was redeeming KLM air miles points I didn’t have to pay these charges – mind you, that was before the days of heavy fuel surcharges.
I understand that airlines use hedging and forward buying to protect themselves from sudden fluctuations, but I wonder why it is that some impose consistently higher fuel surcharges than others, and we’re talking over several years. Are they just very bad at managing their fuel purchasing? Or is this another way to increase revenue without affecting the headline price?
Great article Andy. It’s always a disappointment when seeing what your miles will actually get you.
I used to travel for work and I primarily flew with BA or One World alliance airlines. I accrued just over 96,000 miles and even got to BA Silver at one point. Oh those heady days! I still have the miles, but I’m a Blue again. I have looked occasionally at “free” flights across the Atlantic in the last few years, but have never cashed in. I have considered upgrading World Traveller tickets to WTP or even Club World, but the cost (in miles) is astronimical (19,000 per class upgade last time I looked). So I sit on my miles and occasionally flirt with how I may spend them.
Tax plays a big part in the decision making, but in a World that must get greener, perhaps it does discourage flyers on the unnecessary flights? London to Paris anyone?
It’d be interesting to hear what other do with large chunks of miles and if tax holds mileage card holders from grabbing a mileage ticket…
Great article, Andy, thank you. BA Miles are a bit like Nectar – they make it appear like you have more miles than you really do by rewarding you with such large quantities of them – thousands upon thousands – which sounds like a lot but in reality they are not as valuable as many people assume. I concur with David (who left the first comment) that the regular Airmiles loyalty program is a lot more rewarding than the BA Miles program. Although even under the Airmiles scheme the number of flights are limited because the airlines restrict the quantity of available seats on a plane to Airmiles customers (in fact, you can often find a flight unavailable on the Airmiles website but available to buy as normal which can be frustrating). I write a blog about boosting airmiles at http://www.loyalty-program.co.uk which contains information about boosting your Airmiles collection and how to spend them wisely if anyone is interested.
British Airways miles are a rip off. 50,000 milrs for a return form London to New York has a £298 surcharge! So my “free” flights for a family of 3 actually costs £900! What a crock of shit. I used to fly BA out of preference to collect their miles, but no longer.
@ Andy: It’s not just BA who charge those fees, although they are by far the stingiest Frquent Flier club.
I stumbled across your article while I was Googling ways to swap out miles I have with the BMI Diamond Club, as they also charge ridiculous fees for so-called “free flights”. Some years ago I made the mistake of taking out a BMI credit card due to the 20,000 bonus miles on offer at the time.
Eventually, I ended up with just over 70,000 miles and looked into using them to book a transatlantic flight. However, when I spoke with BMI’s Diamond Club they advised me that the fees & surcharges would be close to $600 for a flight that would have cost $850 (it was around Christmas). In contrast, if I had had enough American Airlines miles at the time, I could have used them instead and only paid the government taxes.
Lesson learned: I only fly American and only look to earn miles with them these days. They also recently dropped the restriction on earning AA Advantage miles on BA flights between the UK and USA. On the whole, the only major difference between the BA & AA is paying for booze in Economy Class. Given the cost difference in fees I’d rather fly American. I’m not that thirsty!
No offense Andy but just because you don’t know how to use BA Miles effectively does not make them poor value. In short, they should be used for upgrades, not economy tickets. For instance, if you’d upgraded from WT+ to CW the value of your points would have typically been in the region of £1500 (and usually more than double that if you upgrade from CW to First).
As for purchasing miles for cash, it’s usually not a good idea but if you’re just a couple thousand pounds short of an upgrade, it’s something to consider.
Thanks for the input Jonas – I haven’t looked at the upper end of the scale but yes, when upgrading you can get a higher value on those miles. I appreciate this, but bear in mind the high initial outlay for those tickets. When many people cash in miles they are aiming for a ‘free flight’ ahead of anything else. Those free rewards are no longer available.
Perhaps people will need to refocus how they view their airmiles and use them as upgrade tools – in this way, as you’ve shown, they can have a better value.
I just upgraded LHR to TLV from WT+ to CW for 5000miles, an upgrade which would otherwise have cost around $750, which makes for around $150 value per thousand mile. For such cases, buying a thousand miles for $30 or so is a BARGAIN.
Interesting – it does seem to make a good deal (if you’re buying a full-fare economy ticket in the first place).
Good to get lots of useful tips on how to best utilise BA Miles- thanks again to everyone.
It is hard not to agree with Jonas. Most people don;t know how to use miles efficiently, but those who do enjoy substantial savings. Perhaps the cleverest bunch are those who do not collect but purchase their ticket using a miles broker.
Don;t get mad, get even.