Originally Posted by
japaned
Thank you Flarmip - that's an extremely informative response and a great welcome to this forum.
There was a response from someone else to my post (that seems to have now been removed) saying that I should not highlight the fact that this loophole exists as BA will see it and make changes. From what you have said though I expect it is something BA are already fully aware of and perhaps don't care about. Do you agree?
No problem, you're welcome!
I don't see it as a loophole in any sense of the word. The whole point of having redemption schemes with fixed rates is to allow you to save money compared to a cash booking. This assumes you can get more value per point than what it cost you to acquire the points, which is also known as arbitrage. The possibility of achieving savings through arbitrage is a significant motivating factor that drives people to collect points and indeed sometimes even buy them.
Of course airlines such as BA limit redemption availability, since they would otherwise lose too much money; limiting availability also makes people feel like they've got a good deal when they manage to get a seat. The flipside is that limited availability is often a complaint of less frequent travellers, who don't necessarily know how to take best advantage of frequent flier schemes.
To solve both problems at once, many airlines have moved to variable-rate or revenue-based redemptions. These are typically linked to the cash prices in some fashion, meaning there is much better availability but equally the opportunities for arbitrage are much reduced. BA has already moved to revenue-based Avios earning so I fear it may be a question of when, not if, they move to revenue-based redemptions.