The fraudster bought hundreds of cheap advance tickets and then converted and sold them just before the flight as expensive "last minute" deals.
The scam meant that he could sell a ticket bought for £1,700 weeks before the flight for up to £5,500 just before take-off.
The fraud, said to have cost the airline nearly £250,000, was exposed in a security audit at Heathrow Airport and the perpetrator Mark Smith, 36, was jailed, it was said.
It emerged during the employment tribunal of Allan Russell, a colleague of Smith, who was cleared of any wrong doing by the court but still dismissed by the company.
The tribunal in Reading, Berks, heard that Terminal Five manager Smith bought the advance tickets, and then asked Mr Russell to convert them at the last minute on a check-in computer.
The expensive tickets were then sold through a fake travel agency Churchley Smith Lifestyle Ltd.
Mr Russell, who worked at Heathrow's Terminals One, Four and Five, told the tribunal he was given free concert tickets for Take That and passes for ITV's X-Factor by Smith in exchange for converting the airline tickets on his computer.
Mr Russell, 38, was cleared by the same jury and is suing BA for unfair dismissal, breach of contract and public interest disclosure.
He claimed that he had done nothing wrong and had actually "whistleblown" on the air fare scam so was wrongly sacked.
The BA employee, from Redhill, Surrey, was acquitted of fraud in August last year but his former colleague Smith was jailed for three years for three counts of fraud.
Mr Russell said he refused an offer by BA bosses to take unpaid suspension following the scam's revelation, preferring to run the risk of being dismissed, just so that his story could be told.
During preliminary interviews, Mr Russell told his bosses it was "common practice" for BA employees to change ticket dates on behalf of colleagues.
The scam was rumbled by a BA auditor who spotted that 193 bookings had been made using the same credit card belonging to Smith and 310 bookings had been made using Smith's email address.
Abid Mahey, responsible for customer services in Terminals Three and Five, and who dismissed Mr Russell, told the panel: "I found that Allan had fraudulently misused BA's ticketing system, breaching BA's fare and ticketing rules and had caused BA to suffer a financial loss of £235,988.02.
"Allan had amended tickets at the request of Mark Smith who worked as an account manager in Terminal Five.
"This amounted to a breach of the fare and ticketing rules (by) amending the date of travel for bookings without charging the appropriate amended fare.
"He forced late stage bookings onto advance fares. For example, by allowing a 42-day advance fare to be booked for dates of travel which were less than the 42 days from the dates of booking.
"He also upgraded bookings without charging an upgrade fare.
"Allan appeared to have benefited from this arrangement by receipt of, for example, concert tickets from Mark."
The court heard how Mr Russell was only allowed to deal with passengers on the day of flight and those who were in Terminals One and Four where he worked, when they came to check in for their flights.
Mr Mahey continued: "The types of changes Allan was making to bookings did not fall within his remit."
Jerry Foran, head of BA's revenue management department, spotted the discrepancies in the ticketing system and launched a series of investigations to determine who was purchasing hundreds of tickets using three credit cards, and which member of staff was altering the dates on purchased tickets.
Mr Mahey told the panel: "I understand that in Spring 2008, Jerry carried out one such audit and identified several bookings that had been made using the same credit card where a particular fare had been forced onto a booking that didn't fall within that particular fare category.
"An example would be where a 42-day advance fare is forced on to a booking for travel in two days' time.
"This had the result of reducing the amount payable for the reservation as the advance fare costs less than a "last minute" fare.
"He referred the matter on to Sergio Martini, the security adviser, for investigation.
"Sergio established how many reservations had been paid for using a specific card number between January 2007 and April 2008, which showed there were 191.
"He then ran a check to see how many bookings had been made with one email address, of which there were 310, between June 2005 and January 2009.
"He identified three credit cards that had been used to make bookings.
"Sergio discovered that between October 2007 and June 2008, Allan had made or amended 185 of those bookings."
According to Mr Mahey, Smith, from Ware, Herts., booked a flight on January 17, 2008 through the BA website for a trip in March 2008, to return on March 15, 2008.
The fare was £1,799.20 and Mr Russell altered the booking using his BA identification. On January 17, Mr Russell cancelled the flights so that the passenger would depart on February 2, 2008 to return on February 8.
Mr Russell made a further amendment, said Mr Mahey, adding: "The correct fare, had the Club Class seven day ticket been available at the end of the booking, would have been £5,636.70.
"BA suffered a revenue loss of between £3,837.50 and £5,185.50.
"Allan admitted during the preliminary interviews that he made the changes to several bookings at Mark's request, although he had said to Mark on a previous occasion, that he was 'taking the p***'.
"He (Mr Russell) admitted that he had received complimentary concert tickets from Mark in relation to his actions.
"He alleged that the changes he made were in BA's best interest and that it was common practice for employees to make changes to reservations at the request of their colleagues.
"He also alleged that he did not require authorisation for such changes."
Mr Russell claims he is owed two days in lieu payment and that his decline for unpaid suspension, despite already earning £30,000 pounds from basic pay while he was suspended for 13 months, was because it was in the public's interest.