Why does BA sell seats VERY cheaply whilst blocking off Avios availability?
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‘RevMan’ (ie revenue management) as it is called in the trade, is by nature part science and part instinct. Any idiot can fill a plane if they charge ultra-low fares. The real skill is in how you increase the pricing as the plane fills and you get nearer to departure in order to maximise the marginal revenue from every passenger.
If I drop the economic theory, what this means is that – on any particular day – there may be 10 people who need to fly to Detroit as 12 hours notice. BA wants to keep 10 seats empty for those people because their employers are happy to pay the full business class fare.
There may be a further 50 people who have business in Detroit and tend to book 2-3 weeks in advance. BA will want to keep seats for them too, as they will be paying a high semi-flexible price.
You also need to fill all of the other seats on the plane, and you need to siphon off people who are willing to pay £750 to fly to Detroit from those who will only pay £400. As I said, it is half science and half instinct.
BA revenue management and Avios redemptions
If you have tried to find an Avios seat to the United States over the Summer, you will know that there is very little about in premium classes. Very little indeed.
This would lead you to think that BA expects all of these planes to be full of high-paying business passengers – even though that is illogical over the Summer.
I wrote yesterday about some of the astonishing deals available at present from European starting points. See here for more details.
From Brussels, for example, you can buy a Club World ticket to Las Vegas for £917.
For £917, BA will fly you in Club Europe to London from Brussels, Club World to Las Vegas and return. Even a BA Executive Club Blue member would earn a whopping 17,000 Avios back – enough for two return flights to some parts of Europe. If you have an On Business corporate account you will earn over £100-worth of On Business points as well.
British Airways is willing to sell lots and lots of seats at this price.
Yet, for Avios redemptions, the cupboard is bare. But this makes no sense.
Let’s compare the economics to BA side by side:
£917 cash ticket Brussels to Las Vegas – BA needs to cover the cost and taxes of four flights, must issue 17000 Avios (more to a Bronze, Silver or Gold member) and must issue On Business points equivalent to approximately a further 12500 Avios.
£575 ‘taxes and surcharges’ Club World Avios redemption London to Las Vegas – BA need only cover the costs of the two long-haul flight, issues NO Avios and issues NO On Business points. BA reduces its accounting liability for Avios redemptions by the equivalent of 100,000 points. It also has two extra Club Europe seats for sale between Brussels and Heathrow because the Avios redemption is direct.
There is an Air Passenger Duty difference here, because the £917 ticket incurs no APD as the passenger is not stopping over in London. I admit that.
However, taken overall, the net cost to British Airways of the two flights I highlight above must be pretty similar.
If the BA accounts put a book value on an Avios of just 0.25p, then the accounting income from the redemption flight is £575 cash + a £250 reduction in liabilities for the book value of the Avios redeemed. This is around £825.
Similarly, the accounting income for the £917 flight is £917 less, say, £70 for the book value of the Avios and On Business points issued. This is around £850.
Much of a muchness then. So why are Club World Avios redemption seats to the US almost impossible to find when BA is falling over itself to sell Club World seats for cash for roughly the same net cost?
Obviously the £917 flight brings in more hard cash but from an accounting and profit-reporting perspective the difference is small. And that is before you consider the impact on BAEC member loyalty by effectively closing off redemptions ……
How to earn Avios from UK credit cards (April 2024)
As a reminder, there are various ways of earning Avios points from UK credit cards. Many cards also have generous sign-up bonuses!
In February 2022, Barclaycard launched two exciting new Barclaycard Avios Mastercard cards with a bonus of up to 25,000 Avios. You can apply here.
You qualify for the bonus on these cards even if you have a British Airways American Express card:
Barclaycard Avios Plus Mastercard
Get 25,000 Avios for signing up and an upgrade voucher at £10,000 Read our full review
Barclaycard Avios Mastercard
5,000 Avios for signing up and an upgrade voucher at £20,000 Read our full review
There are two official British Airways American Express cards with attractive sign-up bonuses:
British Airways American Express Premium Plus
25,000 Avios and the famous annual 2-4-1 voucher Read our full review
British Airways American Express
5,000 Avios for signing up and an Economy 2-4-1 voucher for spending £15,000 Read our full review
You can also get generous sign-up bonuses by applying for American Express cards which earn Membership Rewards points. These points convert at 1:1 into Avios.
American Express Preferred Rewards Gold
Your best beginner’s card – 20,000 points, FREE for a year & four airport lounge passes Read our full review
The Platinum Card from American Express
40,000 bonus points and a huge range of valuable benefits – for a fee Read our full review
Run your own business?
We recommend Capital on Tap for limited companies. You earn 1 Avios per £1 which is impressive for a Visa card, along with a sign-up bonus worth 10,500 Avios.
SPECIAL OFFER: Until 12th May 2024, the Capital on Tap Business Rewards Visa card is offering a bonus of 30,000 points, convertible into 30,000 Avios. You must have a Limited Company to apply. Click here to learn more and click here to apply.
Capital on Tap Business Rewards Visa
Huge 30,000 points bonus until 12th May 2024 Read our full review
You should also consider the British Airways Accelerating Business credit card. This is open to sole traders as well as limited companies and has a 30,000 Avios sign-up bonus.
British Airways Accelerating Business American Express
30,000 Avios sign-up bonus – plus annual bonuses of up to 30,000 Avios Read our full review
There are also generous bonuses on the two American Express Business cards, with the points converting at 1:1 into Avios. These cards are open to sole traders as well as limited companies.
American Express Business Platinum
40,000 points sign-up bonus and an annual £200 Amex Travel credit Read our full review
American Express Business Gold
20,000 points sign-up bonus and FREE for a year Read our full review
Click here to read our detailed summary of all UK credit cards which earn Avios. This includes both personal and small business cards.
Aeronaut 
Rob 
squills 
Cosmo74 
Ralph 
Former BA Gold 
Nick 
Alan 
M 
Errol 
Redemptions 
jhk 
BA-flyer 
Worzel 
Danksy 
oyster 
tim 
Peter 
MrHeckles 
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