Why We Are Spending Our Iberia Avios on Coach American Awards

A recent, limited time promotion from Iberia effectively sold Iberia Avios for fractions of a penny each up to 90,000 in total. While many are using their points to fly in business class to Europe, we have opted for coach – on American Airlines – close to home. But why, you ask?

The Deal

It’s been widely covered and I won’t go into too great of detail as the promotion was only offered for a limited period (three days June 21st-24th, 2018). A bonus of 9,000 avios (the point currency used by British Airways, Aer Lingus, and Iberia) was to be awarded within 10 days following the purchase of any ticket on Iberia, Iberia Express or Air Nostrum, regardless of cost, duration or date. There was a cap of 90,000 points to be accumulated per account.

Our Results

While some were able to secure $18-19 flights from Madrid or Barcelona to other areas of Spain with which they compete with low-cost carriers. I waited until I saw confirmation that the chain would honor the deal given their sister company’s recent decision against honoring a mistake fare (which was more expensive than low-cost carriers running the same route). Our acquisition price was closer to $33-34/ticket for a total “investment” of $340 for ten tickets and 90,000 avios. Without factoring in the value of credit card points (it’s a shame my AMEX wasn’t accepted on the site), our acquisition cost was under $.004/point, an excellent price point.

I have ten tickets, mostly to and from Ibiza, that I have no intention of ever flying. The value of those points, however, are far higher than what I would otherwise be able to achieve. I value points differently than others. I value them based on what I would pay to fly the route for which I am spending points instead. For example, take World of Hyatt points (still the worst name for a loyalty program in the business and Marriott/SPG doesn’t even have one). While I could redeem 25,000 points for $1,000/nt Park Hyatt in the Maldives, it wouldn’t be a fair valuation to say they are worth 4¢/point because I would never spend $1,000/nt out of my own pocket. I value Hyatt points closer to what we redeem them for, about 2¢/point because anything below that amount I use cash and anything above that amount I use points.

For Iberia Avios, which have different rules and award charts than Aer Lingus and British Airways though they share the same name and parent company, I value the points at about 1.5¢/point based on what I spend those points purchasing.

As such, if Iberia chooses to again sell their points substantially below my valuation with limited restrictions, I will acquire them. The same goes for any other program.

Why We Aren’t Spending Iberia Avios on Business Class to Europe

The popular redemption appears to be Chicago to Madrid or other cities in the Eastern US where Iberia flies direct to Madrid. But that’s not for us. It’s not that there isn’t great value in those flights, there certainly is. The carrier doesn’t charge fuel surcharges like its fellow IAG companies, they don’t charge per flight but rather total distance so we can include a positioning from our home in Pittsburgh to New York or Boston without increasing the price as it would with British Airways avios. Flights to Europe in Business Class on Iberia is a perfectly fine way to spend your points, it’s just not what we wanted to do for the following reasons:

1. Destination – We have traveled extensively in Europe as we previously lived there. It’s hard not to go back to Manchester when we are across the Atlantic because of our friends and old haunts we like to visit. Agreeing on a destination outside of that is difficult. Lucy hasn’t been to Paris yet, but we would like to wait until she is just a little older to really fall in love with the place. I would like to go back to Morocco, Carly is not as keen. We would both like to go to the Azores for family reasons but haven’t put the effort into finding the right fit.
2. Cost – We would have needed to purchase at least two if not three of the 90k Iberia avios deals and we just were not willing to risk the honoring of the deal on more than $350 worth of “investment”. We would rather not use our Chase Ultimate Rewards or American Express Membership Rewards points to top up the accounts and make it reasonable. We also have a few Business Extra awards that we need to burn, so buying more points while we leave those awards unused seemed wasteful.
3. Timing – It’s a lot easier for us to sneak away for short weekends here and there. Flying from the east coast to Europe is short (positive) but you don’t really get enough time to sleep and wake up restful and adjusted to the new time zone. That means burning at least a day or two hating life while we stave off jet lag.

Why We Are Spending Them on Coach American Awards

We fell in love with a little town in Mexico, enough that we may want to move there. We would rather spend our time returning for key weekend and the Christmas/New Year’s holiday but the price is a little too expensive in the American Airlines Advantage program and too expensive to justify in cash. American charged twice the amount of points for the same route as British Airways did flown on American Airlines aircraft.

We were able to add our American Airlines Advantage numbers to our British Airways-issued tickets and this afforded us upgrades for all three of us in both directions. Half the price of American coach awards with upgrades for free to business class? That works out to a quarter of the price of the flown award. While American would have upgraded us as well on those flights, maybe that’s less true than it feels, but why spend twice the points for the privilege?

Points and miles should always be used for what brings value to you, not what the maximum possible value could be. We fly aspirational flights from time to time, but unlike Matthew, we usually fly business and rarely if ever, first class. There’s nothing wrong with flying first class, that’s how he chooses to use his points. My brother, who had more than enough points to fly in business or first class often chose coach so he could take more trips – that’s the best redemption for him.

For us, using our 90,000 Iberia avios will put more than $2,000 back in our pocket even after the expense of the points. It keeps our risk low while making possible the trips we absolutely want to take instead of a trip we may have enjoyed but weren’t racing to book independent of this promotion.

Would We Do It Again?

I think we would, and I think we would do it the exact same way. Instead of maximizing the promotion and earning 270,000 points across three accounts for $1,000 we have kept our risk low and our payoff reasonably high. I still have my suspicions that Iberia will post the points easily, not because of nefarious intentions as I once wondered, but rather, because of really limited or poorly performing technology. I will be willing to battle them for one account and ten flights, but not three accounts and 30 flights.

What do you think? Have I completely squandered a good opportunity? If you participated how are you spending your Avios?