Spending Avios – Avoiding Extortionate Taxes

Taxes are the thorn in a miles collector’s side. As outlined in my posts about Reward Flight Savers, and Upgrading Using Avios, taxes can prove to be extortionate, making redemptions in economy terrible value. Avoiding these taxes is not an exact science, therefore the following advice will work in some situations and not others, but you can have a go with all of them to try and get what you want!

How much tax am I paying?

Let’s take a Club World British Airways flight to Sydney as an example. Amongst an assortment of taxes, you will pay:

· £188 “Air Passenger Duty” for the pleasure of departing from a UK airport; and

· £494 “Fuel Surcharge”.

These amounts are obscene. By comparison, a return flight between New York and Los Angeles attracts taxes of just £3.20!

Here is the full chart of Air Passenger Duty rates:

Bands (approximate distance in miles from the UK) Reduced rate (lowest class of travel) Standard rate (other than the lowest class of travel) Higher rate
From 1 April 2011 From 1 April 2012 From 1 April 2013 From 1 April 2011 From 1 April 2012 From 1 April 2013 From 01 April 2013
Band A (0-2,000) £12 £13 £13 £24 £26 £26 £52
Band B (2,001-4,000) £60 £65 £67 £120 £130 £134 £268
Band C (4,001-6,000) £75 £81 £83 £150 £162 £166 £332
Band D (over 6,000) £85 £92 £94 £170 £184 £188 £376

How can I avoid extortionate taxes?

1. Spend your Avios using Reward Flight Savers

2. Use your Avios for redemptions elsewhere once you are already abroad, such as the NYC to LA flight with American Airlines mentioned above.

3. Fly “ex-EU”

What do you mean “Fly ex-EU”?!

This is the nick-name given to flying from a European airport, and can be done to avoid Air Passenger Duty (APD) – this can be as much as £188 on a long haul flight and so avoiding it can lead to a significant saving. Also note that British Airways will often run sales on flights that originate from airports other than London, use Flyertalk to keep on top of these developments.

If you fly from another airport but transfer through London for less than 24 hours, you will not pay APD.

Popular airports to fly ex-EU are Brussels, Amsterdam and Rome. Significant savings can also be made on taxes by using Avios to fly with Air Berlin from Germany, or Aer Lingus from Ireland, but I will post about both these possibilities later, and concentrate of flying “ex-EU” with British Airways.

How does it work? A New York example

1. Book a redemption flight or even cash flight to New York from Brussels, thus avoiding high taxes.

2. Book a cheap one way flight to Brussels to arrive in time for your flight (allow as much time as possible to connect, the airline will not be responsible if you miss your onward flight!)

3. Now take your flight you have originally booked (BrusselsàLondonàNew York).

4. On the return journey, take you flight from New York to London, but then miss the last section of the flight to Brussels, you are already home!

A personal example

My business class seat on a low-tax Air Canada flight to Santiago, Chile:

I travelled in South America last year and managed a fantastic redemption. I first caught a very cheap flight to Frankfurt in order to avoid high UK taxes.

I then began my full itinerary in Frankfurt. I flew to Buenos Aires with Lufthansa, and on to Santiago a couple of weeks later with Air Canada. My return flight picked me up a few months later in Bogota, taking me to New York for a week, before returning to London on Continental.

These flights were all in Business Class, and cost just 32,500 miles and £400 in tax. The true value of this route was in excess of £5,000!

In conclusion

If you are willing to put the time into researching different options and departure points, huge savings can be made. Always see how much cheaper you can get to your destination by starting your flight in a nearby European airport, or use your miles elsewhere!

As always, please feel free to comment with any questions or additional tips you may have. Please follow the blog to get posts straight to your inbox, and follow the Miles Mogul on Facebook!

Nicky

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One thought on “Spending Avios – Avoiding Extortionate Taxes

  1. […] upgrade, and today I will look into Pro-active Online Upgrades (fondly known as POUGs). Just like trying to avoid extortionate UK air taxes, there is no exact science behind chasing a POUG, but there are games to be […]

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