97 billion (yes, billion) Avios issued in 2013 …. and what that means

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• Frenske says:

  23 Jun23 June 07:05

  Interesting count Von Count … however not all Avios end up being used for IAG flights.

  • Rob says:

    23 Jun23 June 08:18

    See the last paragraph! Remember that an American Airlines member using AA miles on BA take their seat from the Avios availability pot, so it averages out.

• mrtibbs1999 says:

  23 Jun23 June 07:11

  “However, in my experience of doing very complex and very simple financial models over the years, it doesn’t make much difference.”

  That’s true in my experience, but boy can you sell the complex ones for more money 😉

  • Karen Brown says:

    23 Jun23 June 13:00

    “However, in my experience of doing very complex and very simple financial models over the years, it doesn’t make much difference.”

    What a fantastic statement. Financial analysis in a, for once, true nutshell.

    You are a man of many talents !

• Cheshire Pete says:

  23 Jun23 June 07:15

  Be interesting to know how many 2 for 1 redemptions are used and at what average amount, as you can’t predict this in advance can you? If just 10 were used at 100,000 each that’s 1 million Avios being used for free from just 10 people! I’m sure it must be much more than this!

• Richie says:

  23 Jun23 June 07:39

  There will also be thousands of people each year who open a baec account , fly with ba, and never use the miles. . Some people just don’t get in to it like us lot.

  • Lloyd says:

    23 Jun23 June 07:44

    Agreed. It would be interesting to find out what proportion of Avios are cancelled each year due to non activity etc. I suspect the number is far higher than many people think.

  • Nick says:

    23 Jun23 June 10:17

    Pretty much everybody I know collects avios. Pretty much nobody I know knows how to get use/value out of them.

    My parents let something like 200,000 expire last year because they forgot that they’d put them in my mum’s account and were now collecting in my dad’s account, or something. They have been collecting airmiles/avios for over a decade – they have never redeemed one point.Their friends use Avios exclusively for hotel bookings. My brother paid £250 for a return flight to Germany last night on a budget airline, and even when I pointed out he had the 9,000 avios needed to book it for £35 (assuming – ha! – availability), he just shrugged his shoulders and said it would probably work out at about the same cost.

    I guess it’s a bit like clubcard points, and gambling. For a few of us who spend/waste time doing this, the value in collecting clubcard points or Avios is obvious and we are able to attribute value to the points (albeit diminishing value for Avios). For others, they will be going on holiday and might check if they have enough avios to reduce the price of their hotel a bit – they will be more concerned about whether they have enough avios to do something, rather than working out if they could get more value for those points elsewhere. But for most, I imagine they get on a BA flight or go shopping in Tesco and don’t bother to collect points/Avios, or do so and just forget about them. We probably represent a tiny minority of people really. A bit like card-counters, just far less sexy.

• Jimmy says:

  23 Jun23 June 07:55

  Raffles, forgive me if I’ve got this wrong but I think you have a background in economics (or, at least, the finance industry)? If so, what’s the likely effect of having growing amounts of Avios in the system?

  To my mind, an increase in the ‘money’ supply leads to higher levels of inflation…

  • Mr Bridge says:

    23 Jun23 June 08:39

    There are factors that reduce the supply;
    1 suspense – this is avios issued that have not been redeemed, so out of the figures quoted what is the annual redemption for flights
    2. I think i am right in saying ba avios expire if you have no activity for 2 years. obviously small amounts that people have earnt, probably from flights have expired.

    • Rob says:

      23 Jun23 June 08:44

      3 years.

      The expiry rules are ‘soft’ though since ANY activity (earning or burning) resets the 3 years. Compare to Emirates or Lufthansa where they expire after 3 years whatever you do. This, interestingly, is what I think BA will choose to do if they start getting worried about the liability rather than jacking up redemption rates.

      Note too that lack of seat availability on BA makes it more likely that you will redeem on another airline or for Eurostar, a hotel etc, which is bad news from BA – they have to start handing over real cash.

      • Karen Brown says:

        23 Jun23 June 13:03

        They can always devalue then. As you’ve often pointed out we are in the hands of the airlines who can change the rules anytime as they choose.

      • JQ says:

        23 Jun23 June 17:49

        Well it works the other way too, you can redeem for BA seats with AA/CX/JL/AY miles.

        • Rob says:

          23 Jun23 June 21:09

          See last paragraph …. bet you it averages out!

    • Andrew (@andrewseftel) says:

      23 Jun23 June 09:53

      Don’t forget redemptions!

• Erico1875 says:

  23 Jun23 June 08:07

  Divide 97 billion by 5.9 million members you only get aprox 16.5K Avios per member.
  Considering most people on HFP and Flyertalk BA probably collect at least 10 times that, somr much ,much more, then the amount of users actually redeeming Avios is probably less than a million.
  Maybe half those issued are never redeemed

  • Rob says:

    23 Jun23 June 08:29

    There is a low floor for redeeming Avios – 2,250 Avios gets you a one-way to Amsterdam using ‘Avios and money’ and that redemption is still a decent deal compared to paying cash. I doubt a huge percentage expire if the user is smart enough.

    Lufthansa, on the other hand, has no redemptions worth making – given the crazy short haul taxes – unless you have 30,000 Miles & More miles or so. LH also has a very tough expiry policy as miles expire 3 years after you earn them, whatever other activity you have. The ‘break’ rate with them is huge. But don’t give BA ideas ….

• AviosNewbie says:

  23 Jun23 June 08:12

  Raffles, do you know what’s the accounting treatment for these liabilities? Especially, as most people would be able to keep their avios from expiring?

  • Rob says:

    23 Jun23 June 08:22

    No. It may be in the US filings which require more detail than UK filings. There are two issues:

    a) how does BA measure the liability? Remember that some redemptions (eg Eurostar, hotels, partner airlines) involve BA paying out money to a third party. Avios do therefore create a real cash liability for the company. This will be adjusted for the % that expire and the % that get redeemed on BA. Totally finger in the air, but I guess at a liability of 0.2p per Avios in circulation.

    b) how does BA treat the income from Avios sales to Tesco etc? You can either take it immediately to profit, or it becomes a deferred liability and you only treat the Tesco money as ‘income’ when either i) the Avios are redeemed or ii) they expire.

    • Erico1875 says:

      23 Jun23 June 08:31

      What do you think Tesco and other partners pay for an Avios?

      • Rob says:

        23 Jun23 June 08:40

        No. It is probably higher than we think, because there are so many avios.com ‘non flight’ redemptions which involve BA paying money to third parties. These tend to come out at 0.5p per Avios, eg Eurostar, hotels, car hire, fine wine, sports tickets.

        It is hard to see BA selling them at under 0.5p given that they will be paying out 0.5p if the person immediately redeems for, say, a crate of fine wine or Eurostar. I’d need to see the numbers though. If only 5% of people redeem for something that involves Avios paying 0.5p / point to a third party then they could afford to sell them for less.

        • Lloyd says:

          24 Jun24 June 07:40

          It is in the annual accounts the liability occurs at the point of redemption. From memory in previous years it was based upon when the points were created. Cant remember exactly but it is something along those lines…

• Mikeact says:

  23 Jun23 June 08:23

  I guess of course, that numerous Avios are redeemed for many other OW and other carriers etc., not just BA.

  • Rob says:

    23 Jun23 June 08:25

    And vice versa – redemptions from other oneworld partners come out of Avios availability.

    • e14 says:

      23 Jun23 June 08:36

      They come out of the available seats but bring in income to BA

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