The net zero plot to kill off Avios points

Benedict J SmithTue, June 2, 2026 at 6:00 AM UTC

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Net zero to kill off Avios points

It wasn’t quite the Christmas present Avios members had been hoping for when, in mid-December last year, British Airways (BA) devalued its loyalty scheme.

Flights from London to New York that had previously required 50,000 points for an economy seat jumped by almost 10pc to 55,000 overnight, while cash amounts to cover taxes and other charges also leapt – for some routes by as much as double.

It represented one of the British flag carrier’s biggest overhauls to the scheme since 2019 after a series of smaller tweaks in the intervening years.

However, alongside “ongoing inflation and changing market conditions”, it stated it had a clear reason for doing so: tax.

While the Government has so far resisted climate groups’ calls to scrap airline loyalty schemes entirely, its decision to keep raising duties threatens to tax frequent flyer clubs out of existence by the back door.

What is Avios?‘The silent devaluation’

Air passenger duty (APD) – a tax charged to airlines on passengers departing from UK airports – will have risen for three consecutive years by April 2027.

Labour justified the move by claiming it was necessary to ensure airlines “make a fair contribution to the public finances” after tax rises previously failed to keep up with inflation.

It means the £216 tax paid per passenger on a long-haul premium economy flight in 2025 will be as much as £252 by spring next year.

Every time an Avios member uses points to book flights, they must pay a cash amount alongside the booking to cover these taxes, as well as other fees and carrier charges.

Whereas before this was a largely nominal amount, it has jumped considerably after successive increases to duties.

“APD is the silent devaluation,” says Jack Culpan, of airline loyalty scheme site Smart With Points. “Every time the Chancellor adjusts it, the value of a points redemption falls without the airline lifting a finger.”

For those spending their hard-earned money to accumulate points, the higher cash payments attached to redeeming them can act as a deterrent to spending them on flights.

On one frequent flyer messaging board, an Avios account holder explains that a long-haul business-class flight from London Heathrow to the Caribbean would require them to spend an extra £1,000 just to cover the taxes.

This, they add, is just a £500 saving compared to buying the ticket as normal.

“There’s really no such thing as a free flight these days,” says Rob Burgess, at loyalty scheme site Head for Points. “It’s a reward flight which comes with a large amount of extra taxes and charges on top that you have to pay.”

In response, forums dedicated to discussing how best to maximise Avios rewards have increasingly pushed an ‘earn and burn’ approach: spend the points when you get them before another round of devaluing strikes.

Recent sharp increases in the price of jet fuel since the outbreak of conflict in Iran have only raised the stakes further, as airlines must inevitably look for ways to pass on the higher costs.

“The smart play right now is probably to burn Avios rather than stockpile them,” Culpan says.

‘The greatest marketing creation in any sector globally’

Since American airlines first started introducing loyalty schemes in the early 1980s, the concept has underpinned much of the success in the commercial aviation industry.

Last year, American Express paid Delta Airlines $8.2bn for the right to use its SkyMiles programme as part of its credit card spending incentives – equivalent to some 14pc of the carrier’s annual revenue.

IAG – BA’s parent company which also owns Iberia, Aer Lingus and Vueling – issued 200 billion Avios points in 2025, generating a profit of more than £500m for the group. Virgin Atlantic’s Flying Club also has millions of members.

“Airlines are propped up by the money generated by the frequent flight programmes,” says Burgess. “They are probably the greatest marketing creation in any sector globally in the last 50 years.”

Popular ways of collecting Avios points

With Avios, the concept is simple: loyalty card customers collect points every time they book a flight through one of IAG’s carriers, spend using an Avios-affiliated credit card or shop at an Avios retail partner.

They can then use the points for flights, seat upgrades, hotel stays and car hire, among other things.

For flights, customers can collect a higher number of points by booking long-haul travel, upgrading to premium seats and increasing baggage allowances. In other words, the further and more frequently you fly, the more rewards you receive.

It’s this basic incentive model that has become an increasing target for green activists.

In its Seventh Carbon Budget published last year, the Climate Change Committee (CCC), a key adviser to the Government, put forward a number of potential levers to manage demand for flights, including an increase to APD and a frequent flyer levy that rose with the number of flights taken.

It said that as higher-income groups tended to be less responsive to price changes, “tax rates would need to be sufficiently high to manage demand”.

The CCC admitted that under some policies, “households who fly multiple times a year would be discouraged from flying so frequently”, and stated that a citizens’ panel convened to test public support for policies was in favour of a full ban of air-mile loyalty schemes as an “easy lever to implement”.

‘Excessive and wasteful consumption’

As part of its Jet Zero framework, the Government has ruled out direct intervention to bring down demand, instead favouring technological improvements and low-carbon fuels.

But the CCC appears to have Ed Miliband’s ear more than previous energy secretaries.

Since stepping into the role under Sir Keir Starmer’s administration, Mr Miliband has been a strong proponent for the quango, even clashing with Rachel Reeves, the Chancellor, when her airport expansion plans appeared to go against CCC advice.

The Energy Secretary’s willingness to listen to its recommendations might appear encouraging for campaigners who have long pushed for action on air mile loyalty schemes.

He is supported by a cadre of MPs on Labour’s Left who are united by criticism of Jet Zero, which they see as being overly cautious.

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Yet those impatient with the Government’s progress believe the key to addressing the “problem” of air mile schemes requires wielding taxes more effectively.

“Frequent flyer programmes encourage excessive and wasteful consumption of an incredibly polluting form of travel,” says Ali Warrington, of Possible, a climate charity that regularly engages with the Government on aviation policy.

“That kind of behaviour is something that should be disincentivised and taxed, rather than encouraged.”

In a report published last year alongside the think tank New Economics Foundation, Possible laid out proposals to bring down carbon emissions in the aviation sector by implementing wholesale reform of APD.

It recommended a tax on “ultra-frequent flyers” – defined as those who fly at least six times a year – to stymie demand, while offering a discount to families on their first flight.

This is as opposed to the current system of APD for commercial flights, which charges two different rates depending on travel class and seat size, but not the frequency of travel.

Alex Chapman, who wrote the report, says current technologies alone have shown there needs to be stronger measures in place to curb demand for aviation, which, the CCC estimates, will be the UK’s largest carbon emitter by 2040.

“We shouldn’t be growing the size of the problem when we don’t yet have the technological solutions to deal with its impact,” says Chapman, adding that he believes there is an inherent “exceptionalism” around the aviation industry.

“Domestic electricity consumption powered by gas has faced aggressive carbon pricing, while air travel, which is generally a luxury in most cases, hasn’t.

“That has come about partly thanks to effective lobbying tactics but also because politicians have perhaps, rightly, been nervous about increasing the price of the family holiday,” he says.

Introducing penalties for frequent flying could also be considered a case of rank hypocrisy of Labour ministers after it was revealed earlier this year that Ed Miliband and his staff at the Department for Energy and Net Zero had racked up more than 150,000 air miles between them since taking office in 2024.

Burgess isn’t convinced that higher taxes will have the impact on frequent flyers that most climate lobbyists hope, however.

As the New Economics Foundation itself has found, work-related trips account for about a third of “ultra-frequent” flyers’ annual flights.

Because the employer typically covers the cost of the flight but the traveller receives any loyalty points, driving up taxes will have limited bearing on Avios members.

“People who only get free miles from their work travel have a different view about their value and what they do with them because they literally didn’t pay for them – they’re flying on company money,” Burgess says.

“That creates incentives which are different when deciding where to spend your own money, because you look at the whole picture.”

In Germany and Australia, air miles accrued through business travel are considered a taxable non-cash benefit, meaning they are subject to income tax rates. This is to prevent companies dodging income tax by swapping taxable salaries for perks.

While these taxes are typically absorbed by employers, Burgess believes a similar approach in the UK to curb emissions would be ineffective as loyalty points have no fixed nominal value.

In Germany, for example, companies tend to pay a flat rate depending on the flight cost rather than calculate the value of points on a case-by-case basis.

“The lack of firm valuation is part of the appeal of points,” Burgess says. “But it also makes taxation a lot harder.”

Under the current system of raising APD on flights, there is also an argument that the Government may also be inadvertently encouraging Avios members to take more flights.

Because the tax only applies to flights departing from UK airports, Culpan says a previously niche workaround whereby flyers pay for a short-haul flight to Europe, stay overnight and use their points on the long-haul connection the following day has become increasingly “mainstream”.

“Positioning out of Europe isn’t a fringe tactic any more,” he says. “The more the UK loads APD and the more airlines load UK-side carrier charges on to award redemptions, the more rational it becomes for collectors to depart from elsewhere.”

He adds that this will inevitably start to hit the Treasury’s coffers, with the tax currently predicted to generate £6.5bn by the end of the decade, up from £4.6bn last year. “It’s a quiet pressure point on UK aviation tax policy,” Culpan says.

Raising duties any further in the current climate, however, risks having a devastating impact on a Labour Government that is already struggling to keep voters on side.

Ken Jarvis, the EasyJet chief, recently told LBC that the airline’s jet fuel costs had doubled since the start of March, from about $700 a metric tonne to $1,400.

BA issued another announcement to Avios members in May with news that it would be raising fees attached to redeeming flights once again, leaving families with even higher costs.

Richard Holden, the shadow transport secretary, says that any attempt by Labour to unnecessarily drive up the price of air travel or devalue flyer loyalty schemes would only be cruel to families.

“Brits already pay some of the highest flight taxes in Europe,” he says. “[Raising APD again] will drive up flight costs and hurt the airline industry just as we face rising energy and fuel costs.”

An IAG Loyalty spokesman said: “Air passenger duty increases the cost of flying generally, whether customers are paying in cash or using Avios. That does not reduce the value of Avios itself – members continue to benefit from being able to offset the cost of travel using Avios, particularly at a time when many consumers are looking for ways to make their money go further.”

A Treasury spokesman said: “Aviation already benefits from a uniquely favourable tax regime, with no VAT on tickets and no duty on jet fuel, so it is right that APD makes a fair contribution to public priorities, including cutting the cost of living.

“Airlines’ pricing and frequent flyer schemes are commercial decisions, and it is misleading to suggest that APD is responsible for how points are valued or redeemed.”

A Department for Energy and Net Zero spokesman added: “We value the Climate Change Committee’s independent advice, but that does not mean we have to replicate their pathway.

“We are clear that we will hit our targets without telling people how to live and behave.”

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Source: “AOL Money”