I doubt it's a coincidence that it has been set at exactly the maximum RFS cash fee for a round-trip booking in Y.

Incidentally, the fee is not £17.50 each way. The fee is £35 per booking, but if you have paid less cash than that on the booking, BA will simply take the cash that you have paid and will not ask for the difference.

So if you have paid £17.50 on each of two bookings for LHR-XXX and XXX-LHR and you cancel both of them, then BA keeps the £17.50 on each booking as it's less than the £35 due. Similarly, if you have paid £17.50 on LHR-XXX and £11.50 on XXX-LHR, BA keeps the total of £29.00 if you cancel both bookings.

However, if you had two bookings for LHR-XXX and XXX-LHR, on each of which you had paid £100, you would get back £65 on each booking, in other words paying a total of £35 x 2 = £70 in cancellation fees.