Based on public data (especially IAG’s most recent results, since IAG is BA’s parent), here’s a breakdown of which segments look to be outperforming for British Airways / IAG, and where they may be underperforming — plus some risks.
What Segments Are
Outperforming
- Transatlantic Premium / Long-Haul Premium
- IAG points to very strong demand on North Atlantic / transatlantic routes, especially in premium cabins.
- In Q1 2025, IAG said unit revenue was strong, helped by “high yields … in our core markets” and specifically highlighted good performance in long-haul premium.
- The Guardian also notes that BA (via IAG) benefited from increased transatlantic ticket sales in 2024.
- This premium demand is likely contributing disproportionately to profit growth, given margins on premium long-haul are generally higher.
- Leisure Travel / Premium Leisure
- IAG says that while corporate (business) travel is recovering, the “premium leisure” segment is particularly strong.
- In its capital-return and financial planning, IAG emphasizes that “leisure demand remains robust.”
- BA Holidays (part of IAG Loyalty) is also growing: in H1 2025, revenue from BA Holidays grew, and a large portion is from “Club” (frequent) customers whose average booking revenue is notably higher than non-members.
- Cargo
- Cargo revenues for IAG rose in 2024: Morningstar reports a 6.7% increase.
- This helps diversify BA/IAG beyond purely passenger business and captures upsides in freight demand.
- Other Revenue: Loyalty, MRO, Holidays
- “Other Revenue” (which includes IAG Loyalty, BA Holidays, maintenance, etc.) grew in IAG’s 2024 results.
- IAG Loyalty (Avios program) seems resilient: in H1 2025, Avios issuance and redemption both climbed, helping drive profitability.
What Segments Are
Underperforming / Facing Risk
- Corporate / Business Travel (Especially Short-Haul)
- IAG has explicitly said that business travel “will not fully recover to pre-pandemic levels, particularly for short-duration and short-haul trips.”
- In Q2 2025, IAG reported that corporate (business) volume declined ~8% YoY; BA’s revenue from corporate bookings was almost flat, but volume dropped.
- This suggests that while premium long-haul might be recovering (or even growing), lower-margin business travel (especially short trips) is more challenged.
- North Atlantic Economy (or Weaker Transatlantic Unit Revenue)
- Despite strong premium transatlantic demand, there is some reported weakness: Bloomberg reports that IAG said “some softness” in North Atlantic routes, with a 7.1% decline in unit revenue on those routes.
- So, while premium may be doing well, certain economy segments (or key origin market softness) could be dragging.
- Cost Pressures / FX Risk
- Non-fuel unit costs are increasing, and IAG flags foreign exchange (FX) as a negative factor.
- Even if revenue is strong, rising costs could squeeze margins in some segments.
Interpretation: Why This Matters for British Airways
- Strength in premium long-haul and transatlantic is a big positive for BA: these are high-margin routes, and the demand recovery here supports BA’s profitability strategy.
- Leisure travelers trading up (to premium leisure) is a favorable trend: they are likely contributing more revenue per seat.
- Corporate short-haul is not fully back: if business travel doesn’t rebound fully, that could limit BA’s upside in some premium / mid-premium segments.
- Revenue volatility on key long-haul economy markets (like North Atlantic) could be a risk if pricing power weakens or competition intensifies.
- Diversification (cargo, loyalty, holidays) is helping BA / IAG hedge against cyclical passenger demand risks.