Welcome to Flyertalk and to the BA section!

In short, the answer is yes - you're saving a lot of money and this is quite common. To explain further, there are two different kinds of bookings which it's important to distinguish between.

On the one hand you have cash bookings, which in this case would cost £203pp - this is the default option you get when using the BA homepage, or the "Book a flight" option on the Book dropdown menu. Cash bookings are generally non-refundable unless you pay for a very expensive fare and fluctuate in price depending on demand. The fare element can be discounted using Avios but the rate is generally terrible, other than for the lowest £5/10 off for 500/1000 Avios etc. option where you're just achieving 1p per Avios.

On the other hand you have redemption bookings which you can make using the "Book a flight with Avios" option on the Book dropdown menu. These are refundable subject to a fee (until 24 hours before departure) and cost a fixed amount of Avios and cash depending on

• the class of travel
• the mileage band that the flight falls within (LHR-BLQ falls within the Zone 2, 651-1150 mile band)
• whether the date of departure is a peak or off-peak date in the BA redepemption calendar.

There's a table showing the 'base' Avios amount for each class/mileage/date combination here. BA will also give you other options allowing you to pay a higher or lower amount of Avios, with a correspondingly higher or lower cash contribution. The default option they suggest, which costs "just" 50p for short-haul flights, is also terrible value! If you value an Avios at 1p then for an economy Zone 2 off-peak redemption such as this the £45 + 2900 Avios option is indeed the cheapest, working out at the equivalent of £74pp.

Since redemptions have a fixed price whilst cash prices vary, it can sometimes be cheaper to make a cash booking and other times cheaper to make a redemption booking. The additional flexibility of a redemption booking can sometimes mean that it's worthwhile paying slightly more than the cash cost for a redemption; I often use this if I am thinking about booking a trip somewhere - it allows me to 'lock in' the redemption price whilst having the flexibility to cancel and rebook at the cash price if that's still lower when my travel plans firm up. This is where the Avios scheme can offer a lot of value for frequent fliers and it's why I'm happy to buy Avios at around 1p each, since I'm confident I can redeem them for an average of 2-3 times that in value.

Another factor to take into consideration here is that redemptions are priced on a per-leg basis, so it costs the same to book two one-way flights as a return. With cash pricing this is not at all the case; for short-haul economy flights there is often a small but noticeable premium for one-way flights, whilst for Business class or long-haul flights it sometimes it is often cheaper to book a return flight than a one-way!

Presumably you will be returning from BLQ at some point so to make a fair comparison you'd have to look at what the return cash fare would be. Bear in mind that you don't have to fly back specifically from BLQ if the available BA flights don't suit your plans - you can use the multi city option to return from one of the many other European airports that BA serves.