A few weeks ago, Qantas opened a physical store where Qantas Frequent Flyer members can redeem their points in person for products such as toasters. Complementing the online rewards store, the Qantas Rewards Room is located in the Qantas domestic terminal of Melbourne Airport, near Gate 1. The store will remain there until the end of June.
It’s an interesting initiative. But the fact remains that redeeming Qantas points on the ground is a terrible waste of points!
Frequent flyer points don’t have a fixed value. Their value depends on how they’re redeemed. And in most cases, redeeming points for reward flights or upgrades will net a far greater value than redeeming on the ground – for things like gift cards and products from the Qantas rewards store.
Why redeeming Qantas points on the ground is poor value
Let’s look at a couple of ways to redeem Qantas points at the Qantas Shopping Rewards Store. First up, there’s this toaster which costs 32,600 Qantas points:
A quick search on Google shows that the recommended retail price of this toaster is $169. You can get it cheaper than this at some retailers, although the Qantas Store price does include delivery. If you’re spending 32,600 Qantas points on something that you could buy for $169, you’re getting around half a cent worth of value from each point.
It’s a similar story when redeeming points for a gift card…
You’re spending 4,950 frequent flyer points for a voucher that is worth $25, which also gives around 0.5 cents per point in value. This amount is pretty much fixed, regardless of what you buy at the Qantas Store.
The best use of Qantas points is in the air
Remember that $169 toaster that cost 32,600 Qantas frequent flyer points? Well, for 32,000 Qantas points, you could instead book a return Business class flight from Melbourne to Sydney – or two return trips in Economy.
You’d also need to pay the taxes and carrier charges in addition to the points, which on one return trip from Melbourne to Sydney works out to be $71.66. But, considering that 2x return trips in Economy would normally cost $676, and you’re only spending $143 by redeeming points, that’s a value of 1.67 cents per point. And if you were to book a return trip in Business Class, you’d be getting an even greater 5.42 cents in value for each Qantas point.
Why are flight and upgrade rewards better value?
Qantas can afford to offer better value on flight rewards and upgrades because their capacity is limited. The airline only releases award seats when they don’t expect to be able to sell the same seats to a full-fare paying customer. The same goes for upgrades, which (on international flights) are only allocated in the days before the flight if seats remain unsold.
But with 12.6 million Qantas Frequent Flyer members, there aren’t nearly enough award seats and upgrades to go around. That’s one reason that Qantas (and other airlines) has been trying to encourage its members to redeem points on the ground.
Rewards which are easily convertible to cash (such as gift cards and vouchers) can be produced in unlimited quantities as Qantas Frequent Flyer makes a nice margin on these. But that’s why, for customers, redeeming Qantas points on the ground is poor value and generally a waste of your hard-earned points. This principle applies to just about every frequent flyer program in the world – not just Qantas Frequent Flyer.
That said, cashing in your frequent flyer points for a toaster is better than letting them expire!
Join the discussion on the Australian Frequent Flyer forum: Best use of Qantas points for non-flight redemption