Originally Posted by
Jimmie76
Do you have any proof of this?
The current BA Reports and Accounts mentions the accounting rules it uses when dealing with miles but that's it. They do not (as far as I can see) separate out the miles liability/redemption revenue from the other numbers
No airline breaks down it's income to the extent of revealing how much it makes from the sale of miles/points, however there are some clues like the advance sale deals DL did with AMEX and AA with Citi. That puts their income from credit cards alone in the 4-5% of revenue range.
Do you seriously think BA is radically different? Given AirMiles, Tesco, AMEX, Chase, and all the other partners, do you seriously think BA is significantly lower? When you consider that this is also the same range as BA's current operating income you realize how significant partner mile/points sales are to BA.
That the outstanding miles don't show up as a liability in the balance sheet is accounting trickery. I don't know how the sleight of hand words but it's true for all carriers. I suspect it's something to do with how the liability is calculated; what is the 'cost' if the loyalty scheme is using seats that would otherwise have gone empty? Maybe it's based on a bit of extra catering, plus some historic cost for miles that are exchanged with partners?
And then there's another wrinkle. Suppose BA flogs 50,000 miles to chase for, say, $300 which are redeemed for a TATL economy ticket that in turn generates another $400 in fuel surcharges. Does it cost any more to operate the aircraft with one extra passenger? I doubt you can measure it, so that extra $400 of revenue pretty much flows straight to the operating margin.
I'm sure there are other benefits to BA but hopefully you can see just how important the FF scheme is to BA; if it were "just a bit of fun" as HIDDY seems to think there would be no need for secrecy, deception or NDA's for our moderators. The FF scheme is the difference between profit and loss for BA. Its keeping some airlines from Bankruptcy.