When IAG published its last set of financial results, it promised to give a presentation to City analysts in early 2016 about how Avios works and – more relevantly – about a change in accounting policy regarding Avios income and liabilities.
That presentation took place last week.
Having spent 16 years of my life reading and writing such presentations, it washes over me but, if you are not a City person, you may find bits of it confusing. Here are a few interesting points that I picked out. I have not covered the technical accounting changes but they are explained in the presentation if you are interested.
Enough Avios seats are redeemed each day to fill the equivalent of 86 short-haul departures
1 million Avios points are issued every 5 minutes
101 billion Avios points were issued in 2015
There are 7.7 million Avios accounts across all partner airlines
Avios Group Ltd made a profit of roughly £135 million last year, representing a margin of roughly 20%. A quick bit of maths means that revenue was around £675 million. This means that Avios were sold, mainly to BA and Iberia, for an average of 0.67p each. I know what most external partners pay for their points (I always ask when I meet them!) and it is noticeably more than this, even for Amex, so the net cost to BA and Iberia will probably be nearer 0.5p.
Royal Air Maroc is going to adopt Avios as its reward currency this year. I would expect this to be in the Flybe / Meridiana mould (ie no ability to use Combine My Avios) but it should mean that Royal Air Maroc seats are available via ba.com for Avios redemption. The airline is already an Iberia partner. As well as opening new options to Morocco for UK tourists, it will offer additional options to Johannesburg, Accra and Algiers amongst other places.
The Avios ‘platform’ is now being actively sold to airlines as an alternative to building their own bespoke loyalty platform. This is route that Flybe, Meridiana and RAM have taken.
One of the strengths of these new partnerships is to build the value of Avios outside the UK. At Paris Orly, for example, BA only operates two services per day. However, 16% of flights from Orly can be booked with Avios.
As I said, it is all interesting stuff and worth a read if you have 10 minutes spare today.
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