Confessions of an airmiles addicted Travel Princess
My passport photos have got progressively worse. The first (aged about 6 months) was good. The second aged 5 I like. The third isn’t my passport photo of course but I refuse to let anyone other than an official demanding my passport, see the man looking into space because he can’t wear his glasses due to regulations and either has dubious facial hair or none in the last one five years ago which now looks odd. Where did it all go wrong? We don’t have time for that.
This blog instead is about my love of flying, how that translated into becoming an avid collector of airmiles and some pointers as to whether you should do the same. Since 2002, my debit card has seen less action than Everton and Tottenham’s trophy cabinet combined, in favour of a miles earning credit card.
Why do I do it? Well, that’s where the title comes in. I like turning left. I like the pointy end of the plane. I like a big seat and lots of room (essential at 5’6”) and I like a lounge. I’m a self-appointed Travel Princess.
Why? Well, click here to see where my airmiles have taken me
Airmiles were originally awarded for actual flying. Now, there are ways to collect airmiles via credit cards, bank accounts, shopping portals and more. If you fly frequently, you’ll rack up thousands of miles and the economics below will look different. But this article serves as a counterpoint to the numerous credit card adverts I’ve seen of late that make it seem all too easy. It’s aimed as a introduction to the subject for those new or newish to it. For further and better particulars, I’ve added a link at the end to a site that is rich with airmiles collection and redemption advice.
None of what follows is financial advice, nor life advice. It’s a collection of my thoughts and you should run the numbers on both spending and how much it costs to redeem airmiles for your own personal situation. It’s aimed at looking at how your credit card spend might work for you. It isn’t a recommendation to get a credit card or a specific card. Also, I want to repeat is that earning miles from a credit card might be the right thing for you if you pay the balance off each month and do not incur interest. It definitely isn’t if you incur interest by not paying off the balance because the interest will cost more than the value you’d get from the miles you earn.
Warning 1: Don’t collect airmiles
A strange start to this post I know, but let me explain. There are two reasons to not collect airmiles. First, it gets addictive. You find new ways to collect airmiles and before you know it, every purchase involves a new way to maximise the number of airmiles you can squeeze out. The second and perhaps more realistic is that the delayed gratification of collecting airmiles doesn’t actually yield the results you want and worse still, leaves you feeling cheated.
What could you do instead? Collect cash back on a credit card. Collect hotel points. Collect any other loyalty scheme points that give you a better rate of redemption.
These are the same questions I’ve posed to friends who have asked me if they should collect airmiles and I suggest, a good place to start if you are new to them or have some remain unredeemed.
Warning 2: Collecting airmiles for redeeming on economy tickets is poor value with certain exceptions
Remember the link on an airline website that let’s you look at the breakdown of the fare you are about to pay? Of course, not, you aren’t a miles nerd. But it exists. That £80 return ticket to somewhere in Europe? About £20 is the actual fare and £60 comprises duties, taxes, passenger service charges and whatnot. A more stark example? £370 to New York where the fare is, and I’m not kidding, £1
The actual fare is £1.
But to get the fare for a £1 you have to pay the other £367.81
So is the fare really a £1? No, but the vagaries of airline pricing is well beyond the scale of this article.
Why is this important? Well, because the same flight with airmiles would cost you 26,000 to 40,000 miles PLUS the £367.81 non-fare elements of the total. That’s right, those thousands of airmiles you’ve spent time collecting will save you £1. I have, I accept, found the most extreme example I could to illustrate this point but the underlying one remains the same; on an economy class ticket, the overwhelming majority of what you pay is duty, taxes and charges. Your airmiles don’t cover those.
There are some exceptions
US airlines take a different approach. When you redeem airmiles with them, they cover almost all of the non-fare elements. The cash outlay is rarely more than $10
Some time ago, British Airways took the decision to cap the non-fare element on european flights only to £35 per person. They now offer similar on longhaul flights with the non-fare element capped at £100 to New York but at 50,000 miles per person. That’s better but a lot of miles to save £300.
Q1: Why are you collecting airmiles?
Like any loyalty scheme, a shiny prize at the end is the way you are lured in. The promise of free travel is highly appealing to many with an upgrade to Business or First similarly so. What’s your goal. We’ll take a look in a moment as to whether it’s realistic. Why do I start here? Well because aimless collecting is the quickest way to disappointment. You’ll likely end up with a miles balance well below that which gives you what you want at the end. Two effective collection strategies I’ve seen have been:
A return in Business Class each year for two from the UK to New York
When I have enough, an weekend break from the UK to Europe in Economy or Club Europe
The difference here is cadence. The first means hitting a certain number of miles each year. The second is a more relaxed ‘as and when’ approach. By setting your own level of expectation at the start, it mitigates disappointment at the end.
Q2: Will I collect enough airmiles?
Let’s take the two scenarios above. I’m going to use British Airways as a worked example because that’s who I collect airmiles with. But you can and should repeat this exercise with whichever carrier you want.
The numbers below are big. How and why did I first get into this in 2002? Well, that’s when I became self-employed. I put all my work expenses through a card that earned miles. You might want to do the same, but please check the tax implications and legal position of doing so before making your decision. I am no longer self-employed but have two other ways of spending money; my two wonderful children.
A return in Business Class each year for two from the UK to New York
British Airways offers various airmiles (avios) to cash options. I’m going to focus on two price points: 100,000 plus £850 or 160,000 plus £350, per person.
So for two people it’s 200,000 plus £1700 or 320,000 plus £700.
Those are pretty hefty numbers. By comparison, a Business Class return to New York runs anywhere from £1700 upwards depending on dates, flexibility and how far in advance you purchase. If you are only generating miles from spending on your credit card, remember you will earn either 1 mile per £1 or 1.5 miles per £1 on a card with an annual fee that’s probably in the region of £250 per year. That means a spend of anywhere from £320,000 per year at worst to £133,333 at ‘best’.
There are ways to bring this down. The BA Premium Plus Amex card awards you a 2-4-1 voucher which let’s you redeem at half the miles cost for two people but does not half the cash element. That brings us down to a spend of just(!) £160,000 or £66,666 per year. Plus the cost of the Amex at £250 per year
Barclays have an Avios Plus credit card that is not quite as generous as the 2-4-1 and once again brings down the miles required but not the cash element.
Both cards offer generous one-off sign up bonuses of 25,000 miles. The Amex card gives 3 miles per £1 on purchases of BA flights or holidays.
Taking a step back then, unless you can put upwards of £5000 through your credit card per month and pay it off, this is an unrealistic collection strategy. Either you are going to have to pick another, or look to redeem far less often. Once every four years say and the numbers become more realistic.
How then, do people do it? Well, this strategy only works if you fly a lot. Imagine someone who flies LHR-JFK in Club on a paid ticket? They earn 16,000 to 24,000 miles return, from flying alone, before any additional miles if they bought the ticket on a miles earning credit card. (Note, the number of miles you earn from flying BA is changing in October 2023. The figure above was accurate at the time of writing)
When I have enough, an weekend break from the UK to Europe in Economy or Club Europe
Let’s use London to Rome as our example here but it holds for anything up to any destination 1,150 miles from London. A return to Rome for one person is 14,500-16,500 plus £35 in Economy and 27,000 to 31,500 plus £50 airmiles in Club Europe.
From credit card spend alone, that’s a ticket every £9666 to £31,500 you spend, depending on which ticket above you choose and if your card gives you 1 or 1.5 airmiles per £1 spent. The initial slug of miles from signing up for a card might cover your first ticket. Add in a bank account that gives you airmiles, or a shopping portal where you get miles on what you spend or a combination of the two and you will will earn miles at a quicker rate.
Note, for the frequent flyer, eg the person above flying to New York in Club on a regular basis, they could be earning a free (well minus the £35/£50 cash element) European flight for every flight transatlantic they take.
Q3: Will I be able to redeem my miles if I collect them?
Let’s start with the basics. There’s a limit to the number of seats airlines make available for airmiles bookings and that number can be tiny. It’s not the case that if there is a seat available for cash, there’s a seat available on airmiles. As a rule of thumb, the more expensive a cash ticket currently goes for compared to the norm for a flight to that destination on that day, the less likely (ceteris paribus - yeah, I did A Level Economics almost 30 years ago) you are to find a seat with miles. There are exceptions. Some airlines have dynamic pricing that’s as simple as peak and off-peak (eg the BA ranges above), some have a small number of seats available for a smaller amount of miles with a second bucket of seats for double or triple miles. Airlines will let you redeem miles for seats on their partners which can increase the pool of seats available; conversely, people who collect miles with that airline can also book on ‘yours’ which may mean fewer seats for you.
BA and Virgin have minimum seat guarantees. The BA guarantee is 4 in Club, 2 in Premium Economy and 8 in Economy on every flight. Some will go quicker than others. Those 4 seats in Club to Sydney? Well, they tend to go on the day they are released which is 355 days before the flight. Yes, there are people like me who sit at their computer waiting for the exact moment airmiles seats become available and snag them. In response to the statement that we should ‘Get out more’ the answer is a resounding ‘Yes, yes we will, in 355 days time’. While these are minimums and airlines may choose to release more, what’s the message here? Well, if you are a family of 5 looking at tickets in Club or 3 in Premium Economy or 9 in Economy, you are only ever going to be able redeem airmiles on the same flight where BA release more than the minimum. How do you know if or when they do? You don’t. Even if you are within the minimum guarantee, on popular routes you are going to have to book about a year out to get the seats you want. In all the years of doing this, in all but one instance, I’ve had to book longhaul club seats 9-12 months in advance. Seats in Europe I’ve found at short notice.
Q4: So what should I do?
If, having looked at your strategy and the spend it requires, you think this is something that would be valuable to you, then I suggest reading the excellent resources on headforpoints.com Rob and his team have created what is in my view, the richest resource on the internet for UK based collectors of loyalty points. He covers BA and Virgin along with the major hotel chains in great detail with information on great fares and loyalty schemes from other airlines if you are based in the UK. If you are based elsewhere, there are other sites that are country specific that a google search will uncover. In the US, I recommend thepointsguy.com
If this looks too complicated or doesn’t fit with your plans, then perhaps look at a different way of your credit card spend being rewarded. There are a number of cards on the market that give you cashback which you can use towards anything you like, not just flights. Like miles, the cashback is worth less than the interest you incur, so they are not good value if you don’t pay the full balance off each month.
Conclusion
I collect airmiles using my credit card and by flying. I also receive airmiles for having my bank account and mortgage. Where possible, I fly with an airline in the OneWorld alliance so that all of the miles earned by flying go into the same place. Having a BA Gold or Silver card gives you bonus miles when you fly. All of which add up to me earning miles from my everyday activities. It requires a bit of planning and hard work to redeem miles as I want to and an appreciation that some trips won’t work using miles so I either have to pay cash or re-arrange them. I won’t redeem miles unless I can get at least 1p per mile in terms of value. For a super clear breakdown of value, have a look at this article: headforpoints.com what is an avios worth?
I recognise that the time I use working out how to optimise earning and redeeming miles could be put to an alternative use. But I like the Salt and Pepper Squid in the Qantas lounge far too much to do so.