The ‘Number of the Day’ today is ….. 97 billion.
I was quoted in The Sunday Times yesterday (page 2 of the ‘Money’ section) in an article on the lack of Avios reward availability. The journalist who wrote it wanted some information on the size of the Avios scheme so I dug out the International Airlines Group accounts for last year.
It tells you what I already knew – that there are 5.9 million ‘active’ Avios accounts out there. Given that Iberia in Spain accounts for part of this, that there is an Avios scheme in South Africa and that British Airways Executive Club has a lot of members outside the UK, I estimate that around 4m accounts are UK based. Many people will also have two or even three accounts across the three schemes.
The 2013 accounts also told me something I didn’t know.
97 billion Avios points were awarded in 2013.
That is a LOT of Avios.
You shouldn’t be too surprised by this number. After all, IAG flies over 140 billion passenger seat miles per year – albeit not at 100% capacity – and you earn at least 1 Avios per mile flown. Many people do not collect but they are offset by those who collect additional miles from Tesco, Amex etc.
If all of those people chose to redeem their Avios for return economy flights to New York on BA at 20,000 Avios each-way, it would require 4.8 million seats each year. That is 13,287 economy seats per day. That would require 66 aircraft at an average of 200 economy seats per plane.
That is a huge number. Think about that for a minute. BA and Iberia need to give away the equivalent of EVERY economy seat on 66 New York departures EVERY DAY just to keep the number of Avios in circulation constant.
You can also look at it as a % of flown seat miles.
IAG flew 230,000,000,000 passenger kilometres in 2013, ie 143,000,000,000 miles. That is ‘number of seats on aircraft (empty or filled) x distance flown’.
As a rough rule of thumb, I would say that you need to redeem 5.5 Avios to fly one mile in economy. (New York is 20,000 / 3,466 miles = 5.8x. Los Angeles is 25,000 / 5,464 miles = 4.6x, Dubai is 20,000 / 3,408 miles = 5.9x, Tokyo is 30,000 / 5,966 miles = 5.0 etc)
Divide 97 billion Avios issued in 2013 by 5.5 and you get 17,600,000,000 flown miles. BA issues enough Avios each year to fly 17.6 billion miles.
As a percentage of IAG capacity, that gets you (17.6/143) 12.3%.
If IAG fills 12.3% of its total seat numbers with Avios redemptions then it will absorb all of the new Avios being printed each year.
Of course, to fill 12.3% of seats it needs to offer up more than that. Plenty of planes go out every day with unfilled Avios redemption seats. IAG probably needs to make at least 20% of seats available for redemption to fill 12.3% of seats. Of course, IAG isn’t offering up anywhere near 12.3% of its capacity, let alone 20%+.
This is obviously a very simplistic analysis. However, in my experience of doing very complex and very simple financial models over the years, it doesn’t make much difference. If we adjusted for Avios that expired, redemptions for non-flight products, redemptions on partners, redemption by other airline schemes on BA etc etc, I would expect the end number to be close to the initial educated guess.