Originally Posted by
aahjnnot
The Geek, you are, of course, right. I regard the fomula for Avios valuation in any transaction to be as follows:
V = 100 x (Pc - Pr + E) / (Ac + Ar)
where:
V is the value earned from the Avios spend in pence per avios
Pc is the payment required for a cash ticket (see notes below)
Pr is the payment required for an equivalent reward ticket
E is any additional value (or, if negative, cost) attached to a reward booking compared with a cash booking (see notes below)
Ac is the avios earned on a cash booking
Ar is the avios spent on an equivalent reward booking
Most assessments of avios valuation mistakenly fail to include E and Ac, which can fundamentally change the equation. Also, some judgement needs to be applied in applying value to these figures.
Ahh a real mathematician, unlike me who just works stuff out step by step in Excel. Agreed that the Ac values are nearly always omitted from the general FF valuations due to the more complex nature of modelling them { Status / Distance / Fare Class }, which is what I'm playing with at the moment. Did make a point in a previous post about "manufacturing value" which ties nicely with your examples on E.