Airfare is largely priced according to demand, with far less in proportion to operating costs or quality of service. You'll find plenty of short regional flights (that mostly serve as feeders) that, when booked individually and within days of departure, book at astronomically high fares. Those fares have little to do with quality of service.
I think this is one of those cases where the only person who would pay such an outrageously high fare is someone who absolutely needs to be on that flight, given that alternatives exist. This doesn't appear to have much to do with the fact that BA (and other intra-Europe carriers) don't offer a very attractive C product, even in comparison with "typical" US domestic F (and JFK-YYZ isn't typical).