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ACCC slams loyalty schemes

dajop

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This comment from Qantas in its snowy submission was eye-raising;


It suggests that partner airlines purchase the points awarded for a points-earning flight on a partner airline, and for example MH points accruals are meagre because MH is parsimonious. But that doesn’t seem plausible given things like QFF’s decision not so long ago to drastically reduce the points and status earning rates of most partner airlines. It would gave been fairer to say earn rates are determined by Qantas based on the partner, etc.
I am sure earn rates are determined by the partners, and what they are willing to pay for points for each fare level. But the rate at which QF sells points its partners probably weighs heavily on that, and it would be surely naive to assume QF sells its points to its partners at the same rate. For all we know, it could cost MH 3x what it costs AA to buy a QF point.
 
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It suggests that partner airlines purchase the points awarded for a points-earning flight on a partner airline,
I haven't read the full submission - but just that sentence alone is ambiguous. Could be read the way you suggest, or simply a fancy way of saying that earn rates are different, and the earn rate is determined by the particular partner services you are using. So fly MH you get 'x' points. Fly QF you get 'y' points. But both of those sets of points are still determined by Qantas.
 

trippin_the_rift

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This comment from Qantas in its snowy submission was eye-raising;

<snip>

Also interesting that there weren’t many submissions. The usual airline and supermarket suspects, but didn’t see any hotel chains and other accommodation providers, and very few from retailers. My pile of points earn plastic is dominated by the latter two groups, and Hotel schemes are where my few grudges against unfair dealings lie.

Cheers skip
The entire ACCC thing is a bogus witch hunt, brought on by a few frustrated folks who went crying to the ACCC when their points expired.

A total waste of taxpayer money, and if other Gov inquiries are anything to go by - their mind is already made up so submissions are basically worthless. Even more worthless when the ACCC publically says you can submit two - one for public and one for private. It's like running two sets of financials and submitting your preferred one to the ATO.

A few changes will come in to justify the ACCC spending god knows how much time and resources.

The outcome will ultimately drive up the costs to operate a loyalty program, and many small businesses will not be able to afford to run a program, and, therefore, not be able to compete with large, well-funded corporations.

However, in saying that - I don't know why both of the airlines mentioned just don't fix their own tech to make it more consumer-friendly.
The airlines would then avoid the ACCC parade, save taxpayers money, make customers happier, and most likely increase their own profits (because it would force creativity and innovation).

I am sure earn rates are determined by the partners, and what they are willing to pay for points for each fare level. But the rate at which QF sells points its partners probably weighs heavily on that, and it would be surely naive to assume QF sells its points to its partners at the same rate. For all we know, it could cost MH 3x what it costs AA to buy a QF point.
I haven't read the full submission - but just that sentence alone is ambiguous. Could be read the way you suggest, or simply a fancy way of saying that earn rates are different, and the earn rate is determined by the particular partner services you are using. So fly MH you get 'x' points. Fly QF you get 'y' points. But both of those sets of points are still determined by Qantas.
It works like this: the airline with dominance [ie: more of their members flying with the other airline] dictates the terms.
Therefore, one could assume that Qantas dictates the terms for the MH agreement. Fairer and simpler, right?
 

AFF Editor

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The final report was released by the ACCC today. A number of AFF's comments have been taken on board.

 

PineappleSkip

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Just read as far as section 4.3. Nice that the ACCC has engaged with the whole booking class/fare bucket issue, included a section about it, mentioned AFFs submission as a counterpoint to those of QF and VA, and concluded

The ACCC notes the submissions of some frequent flyer programs to this review and welcomes any changes that frequent flyer operators can implement to ensure consumers have access to sufficient information about the booking class, or its relationship to the rate at which frequent flyer points may be earned. This could include operators giving thought to improving their communication of information about the booking class to consumers, including its impact on the loyalty scheme’s earn rate—particularly as it impacts on booking flights with affiliates or partner airlines.
Putting the fare bucket of the fare attached to a displayed price would be a significant help, along with a hyperlink to the relevant section of the relevant earning table. Or some sch. Over to you, red roo and others.

Oh and many thanks to Editor for the valuable work canvassing members’ opinions and putting the submission together. AFF (hopefully) again proving itself a force to be reckoned with. :)

Cheers skip
 
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Mattg

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Just read as far as section 4.3. Nice that the ACCC has engaged with the whole booking class/fare bucket issue, included a section about it, mentioned AFFs submission as a counterpoint to those of QF and VA, and concluded



Putting the fare bucket of the fare attached to a displayed price would be a significant help, along with a hyperlink to the relevant section of the relevant earning table. Or some sch. Over to you, red roo and others.

Cheers skip
And until things are changed, we're going to keep seeing posts such as this one... :(

 
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We owe a lot of thanks for AFF for providing feedback to the ACCC :)😇. AFF is cross referenced multiple times. It's an interesting final report. Time will tell if the recommendations made are implemented. Lots of complaints about redemption charges and the lack of transparency, lack of availability to redeem etc. No surprises really. Complexity of schemes etc., and data privacy is also mentioned at great length as are earning booking classes and change in earn rates, expiry of points etc.

My fave are the comments on the complexity of terms and conditions. It's estimated to take 2hrs and 19 minutes to read the 27,851 words in the Velocity Frequent Flyer terms and conditions (rated 24.3 - very difficult to read) and 1 hour 40 mins to read the Qantas FF terms and conditions 20,046 words (rated 37.0 difficult to read).
 

PineappleSkip

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So, what next?

The media coverage of the report hasn’t been overwhelming. There is a Fairfax article here and a Murdoch article here. No-one clamouring for the Minister’s head over this. So we shan’t expect a pressured minister promising to fix these issues overnight.

Some interesting commentary about the need for fair compensation where schemes are changed to the detriment of punters, and also about the inadequacy of the current consumer law to deal with this.

Wouldn’t expect any law change soon, if at all. ACCC commented any law changes will need to be carefully considered, and would no doubt be vigorously lobbied against by the airlines, supermarkets, etc. ACCC will now consign the law issue to CAANZ, which is the official level subset of the Consumer Affairs Forum, a ministerial committee involving the Commonwealth, each State and New Zealand. Seems the CAF meets in the middle of each year and puts out a communique usually at the beginning of August.

Anyway, the win is the mentions in the ACCC report, particularly the comments that changing program terms without compensation may be unfair trading. This will give any future would-be trashers of such programs food for thought.

Cheers skip
 

GPH

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There should really be no doubt that loyalty schemes are generally 'bad', ie designed for the company benefit not the consumer. But as pauly7 alludes to above, for educated consumers there are ways to work the schemes to our benefit. The ACCC are likely to consider the masses, not the educated consumer.
Yep, once upon a time we (the consumer) worked on a premise of “Caveat Emptor” now it is a nanny state where one doesn’t have to be responsible for any of their own actions . I digress, some of these changes “may” be beneficial, but at the end of the day the scheme will still be skewed toward the provider
 

lneesham

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What still annoys me the most is that the cost has skyrocketed while the earn rates have dropped to virtually nothing. In Nov 1998, back when you earned per km, not per mile then discounted for class, I flew QF PER-MEL-SYD-BNE-PER for 38,000 points from memory (could have been 42,000, it was a while ago), plus about $50 in carrier charges. Just checked and on a flex economy fare for the same route would cost 365,600 points without charges - no way is that value for money.
 

woodborer

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What still annoys me the most is that the cost has skyrocketed while the earn rates have dropped to virtually nothing. In Nov 1998, back when you earned per km, not per mile then discounted for class, I flew QF PER-MEL-SYD-BNE-PER for 38,000 points from memory (could have been 42,000, it was a while ago), plus about $50 in carrier charges. Just checked and on a flex economy fare for the same route would cost 365,600 points without charges - no way is that value for money.
Because comparing a classic award with an at seat award is a fair comparison...
 

lneesham

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Because comparing a classic award with an at seat award is a fair comparison...
Hey, I get that they're not exactly comparable, but 320,000 points doesn't work out even remotely equivalent to $50. To be fair, cash today for that route works out to $2,535 = 0.693c/point - In 1998 I think on sale it was about $900 so less $50, even worst case for 38,000 points works out 2.2c/point. Creeping devaluation of points has been regular and consistent for decades, a bit here a bit there, most of it never published. Eventually something that is effectively money but should never be influenced by inflation, CPI or M3 is somehow worth a third of what it was and costs twice as many resources to earn. And they make more out of it than ever, on-selling the data.
 

woodborer

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Hey, I get that they're not exactly comparable, but 320,000 points doesn't work out even remotely equivalent to $50. To be fair, cash today for that route works out to $2,535 = 0.693c/point - In 1998 I think on sale it was about $900 so less $50, even worst case for 38,000 points works out 2.2c/point. Creeping devaluation of points has been regular and consistent for decades, a bit here a bit there, most of it never published. Eventually something that is effectively money but should never be influenced by inflation, CPI or M3 is somehow worth a third of what it was and costs twice as many resources to earn. And they make more out of it than ever, on-selling the data.

Why not? Money itself reduces in value over time because of inflation. It's ridiculous to think that points value can't change over time.
 

lneesham

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Money does not reduce in value over time. The amount of currency increases over time. That's why it's called inflation, and why actual money ($/hr worked, an ounce of gold, real estate) go up in dollar terms over time. If programs want to devalue their currencies then they need to pay interest or they're just robbing people, same as any other savings account. Why would anyone keep money in a bank if what could be bought with it was guaranteed to decrease, unless they made a choice to keep it there for convenience?
 

aussiejohn

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A total waste of taxpayer money, and if other Gov inquiries are anything to go by - their mind is already made up so submissions are basically worthless.

Trippin_the_rift

As Sir Sir Humphrey so eloquently put it - "A basic rule of government is never look into anything you don't have to, and never set up an inquiry unless you know in advance what its findings will be."
 

Gazza129

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I'm just waiting for SOMEONE to tackle my biggest bugbear with airlines.........THE ONE WAY TICKET. How are those (paid) fares justifiable on ANY level???
 

trippin_the_rift

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I'm just waiting for SOMEONE to tackle my biggest bugbear with airlines.........THE ONE WAY TICKET. How are those (paid) fares justifiable on ANY level???
This is exactly how low-cost airlines got their foot in the door in Asia.

one-way sectors are 1/2 the cost of a return.

Most folks in Asia book one way. Easier, faster, simpler. Fairer.
 

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