Frequent flyer Overview

[Kairs]

Hi, I'm a journo writing a feature for the NRMA travel mag Way2Go and want to try to take an overview of the frequent flyer programmes in Australia...and this seems to be the best place to ask!

I wonder if you guys could help me with this: [FONT=&quot]The main thrust of the feature is on how to get free flights (and accommodation/ car hire / travel insurance) though frequent flyer programs and the credit cards linked to them, as well as Fly Buys and and anything similar that offers flights/holidays as a reward.

I know there's a whole heap of changes coming through on April 1 for the QFF programme but is there any indication what will be the best deal after that? It seems like AmEx was the best before - will it still be the best, just not for QFF flights alone now?

What's the best advice on how to make the card work for you, and what to beware of (eg avoid paying interest by paying card off every month). Is it only credit cards that are linked to FF programs (I am guessing it is as they want people paying interest)?

Is there are any way to compare frequent flyer programmes? I'm guessing Virgin and Qantas are the only two worth considering for MOST Australians (because they operate the domestic routes etc)?

And are there any good deals where you can swap your credit card debt onto another card, interest free for 6 months and earn FF point on the transfer? If so what are the pitfalls?

I'm sorry this is so long but it's obviously a big subject. I'm also sorry if many of these points have been covered elsewhere, but with the changes coming through I'd appreciate having all the answers in one place where I know it's the most current and up to date information!

Thank you so much...

Kevin Airs

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[lovetravellingoz]

[FONT=&quot]Is there are any way to compare frequent flyer programmes? I'm guessing Virgin and Qantas are the only two worth considering for MOST Australians (because they operate the domestic routes etc)? [/FONT]

Well yes and no....

Generalising long-haul international awards will deliver the greatest value (ie $ equivalent).

Generalising, most domestic redemptions are poor value as the points plus taxes which still need to be paid are often not dramtically less than buying domestic sale fare.

Which airline program is best however depends on a broad range of factors including credit card spend, flights, hotels, car-hire etc etc....as well as where they might wish to fly to on awards.

So there is not a simple answer.

Program wise:For some Amercican Airlines can be better than Qantas. For me Singapore Airlines is.

Now you said MOST....many Australians might struggle to get enough points for international travel and for the ones with low credit card spend a non -FF card with no fees would possibly be better value.

However many Australians can earn an international flight or two over several years if they are patient.

Some might also redeem for store vouchers etc. But the $/point value is normally well below redeeming for international flights.

 

[simongr]

However many Australians can earn an international flight or two over several years if they are patient.
Some might also redeem for store vouchers etc. But the $/point value is normaly well below redeeming for international flights.

This is a real YMMV - I just redeemed $2,000 of DJs vouchers towards a new computer which could have bought a "better value" int'l flight but I need the computer and already have 2 J seats booked this year so the flight has little to no value in the short term.

I think if you go ahead with this article you are either going to skim the surface a la News Ltd and only going to be able to report the briefest sensational headlines or you might raise more questions than you answer.

I think people might get more value from some explanations of what to consider such as:

- availability of awards
- fees and surcharges for bookings
- opportunities to miss out on special deals/cash sales
- the amount of spending it actually takes to redeem a flight

If you spend time here you frequently see heated debate between people who are heavily into this arguing at opposite ends of the spectrum on different programs to join.

 

[Kairs]

I'm here to be guided by you guys who know the scheme best of all. I realise there will be contentious issues, but can we have a general walk through some of those points you raised?

As basic rules of thumb, you have to balance annual card fees on CCs against the value of the flights you will get. Your CC spend has to significant enough to generate enough points for OS trips to justify the taxes/fees etc. And ideally you need to clear the CC balance each month to make it worthwhile. If you don't, then a low interest rate is probably worth more than any frequent flyer scheme. How am I doing so far?

Redeeming points is presumably best spent on flights, rather than the "shop gifts" I see Qantas offer. And if you book far enough in advance, you should be able to use them for any trip you choose, although that may require forward planning of a year or more. I uderstand using them for upgrades is not worthwhile as they require a full-rate economy ticket and even then it is a gamble at the whim of the check-in counter as to whther you get upgraded?

In terms of redemption, which airline does the best deal? That presumably is a trade-off between te points gained (per flight/per spend) and the distance that will take you on an award flight.

Overall though it appears that gathering frequent flyer points by flying somewhere is very much a a secondary consideration - it's all about collecting points via the credit cards, correct?

And finally Flybuys - not worth the effort? I just worked out you need to spend $60,000+ to get a $100 gift voucher...

And finally what are the hidden costs that people might not realise?

Ta.

 

[yo yo ma]

And finally Flybuys - not worth the effort? I just worked out you need to spend $60,000+ to get a $100 gift voucher...

True that FB doesn't give you great rewards, however, it really isn't that much effort. All you need to do is hand the card over each time you make a purchase. I don't see it to be too much of a hassle.

 

[simongr]

Overall though it appears that gathering frequent flyer points by flying somewhere is very much a a secondary consideration - it's all about collecting points via the credit cards, correct?

Ta.

This is the fundamental problem for actual frequent flyers - the airlines have maed it all about frequent spenders and not about frequent flyers. For someone who flies a lot (I used to do 3-5 around the world business class flights a year) it is annoying to see reward flights getting more and more scarce and expensive as airlines earcn so much from credit card spend...

 

[NM]

Let me provide a few real examples of FF points redemption value:

1. I redeemed 3 x business class seats on Qantas flights BNE-MEL-AKL and return. Had to route via MEL for availability of 3 seats on the same flights. For this trip, Qantas wanted 300,000 QFF points plus over $700 in taxes and fuel fines. Using AA Advantage miles, I spent 105,000 miles and $146 in taxes. This is for the exact same seats on the exact same flights. This was 2 years ago but redemption rates have not changes, though Qantas' fuel surcharges would be slightly less now.

2. Last year I redeemed for flights for 2 people for later this year. The route is BNE-MEL in QF Business Class connecting to MEL-HKG in CX Fist Class. Then HKG-KUL in CX Business Class. then KUL-HKG (CX Business Class) connecting to HKG-BKK (CX First Class). Then BKK-SYD (BA First Class) connecting to SYD-BNE (QF Business Class). This is a OneWorld Award of just under 15,000 miles in First Class requiring 725,000 QF FF points or 360,000 AA miles. I don't know the taxes cost for QFF for that trip, but it would have been way more than the US$242 I paid to AA. And again this is for the same seats on the same flights.

Qantas is very expensive for long-haul premium cabin redemptions. So if your goal is a luxury trip to Europe in business or first class, then using Qantas FF is likely to require significantly more points than other programs will charge for the same itinerary. That is what we call the burn rate, which for Qantas is poor value in most cases. The best value Qantas flight redemption is the OneWorld 35,000 miles economy class reward for 142,500 points. I did redeem seven of these about 6 years ago for a 3 month family ATW holiday.

Earn rates depend on how you are earning the points. If the majority of points come from frequent spending rather than frequent flying, then Qantas earn rates can be better than others and AA is certainly not as good for Australian credit card spenders. But if you earn frequent flyer points from frequently flying, then Qantas is not always the best program even when flying on Qantas flights.

And having status within the FF program has its advantages. But status is generally earned by BIS (Bum In Seat) and not by spending. There are some exceptions when it comes to earning lifetime status such as with AA, but you need to spend an awful lot to reach Lifetime Platinum status with AA (2 Million AA miles required). Having status with the FF program can help with availability of reward flights, lounge access, priority check-in, priority and increased baggage allowances etc.

In my view, FF redemptions for short domestic flights are poor value and you are better off paying for the ticket. Next weekend Mrs NM is flying to Sydney and even though I have masses of FF points available in both QF and AA programs, I purchased paid tickets on Virgin Blue as that represented the best value for this trip.

unless you have a really big credit card spending pattern, and that usually only applies to people able use the card for business expenses, in many cases I do not expect the cost of the card fees etc warrant the game of roulette for award seats. Just get a low-cost card and buy discounted airfares. If you are a frequent flyer (BIS type) then credit cards can be a good way to supplement the points balance.

 

[Kairs]

Those are excellent examples, thank you Nelly.

I'm sure this is a VERY dumb question, but how do you choose to spend your airmiles via AA or QFF? Presumably you have a pot of points on your credit card which can be converted to either?

And just out of curiosity, how have you accumulated all your outsanding points? Business expenses on a credit card or flying?

And on a more general note, how important is it to watch for special offers, be it reward flights or bonus points or value added extras like free travel insurance (is there such a thing)?

Many thanks again for your patience.

 

[comint]

I uderstand using them for upgrades is not worthwhile as they require a full-rate economy ticket and even then it is a gamble at the whim of the check-in counter as to whther you get upgraded?

Not true, you describe (partially correctly) the Qantas Frequent Flyer program when flying internationally. (Qantas markets 4 distinct types of economy tickets, only the Red E-deal can’t be upgraded using points*.) For domestic travel, upgrades can be confirmed, if available, at time of booking!

Frequent Flyer programs offer more than just points, for actual frequent flyers “status” can provide some very useful extras… (For example in a few days I am going to try and score a complimentary massage from Qantas, while also enjoying a bottle of their Moet! All this, just before my Jetstar economy flight. )

In terms of redemption, which airline does the best deal?

If the answer to this question was so easy we wouldn’t see as many frequent flyer programs as we do. Each airline’s program is better for some, and worse for others. But you do need to factor “earn” and “burn” together. Perhaps coming up with some member “types” – e.g. Sam, 27, single, on a good wage, loves shopping, doesn’t travel for work, but likes 2 holidays away per year.

Presumably if you contact each airline (Virgin Blue (/Skywest), Qantas (/Jetstar), Rex and the international airlines), they might suggest a “type” to help you analyse their program favourable against their competitors.

Overall though it appears that gathering frequent flyer points by flying somewhere is very much a a secondary consideration - it's all about collecting points via the credit cards, correct?

Again depends on the person (& the program - I don't think Rex's is any use to frequent buyers, only frequent flyers). Did you know that on many flights with Qantas, I earn twice as many points as you do (I assume that you are bronze)!

 

[jamesatfish]

This is the fundamental problem for actual frequent flyers - the airlines have maed it all about frequent spenders and not about frequent flyers. For someone who flies a lot (I used to do 3-5 around the world business class flights a year) it is annoying to see reward flights getting more and more scarce and expensive as airlines earcn so much from credit card spend...

I actually disagree with simongr here - since becoming a 'more' frequent flyer (that's a relative term given the company on this forum) I've found that Qantas makes it much easier to redeem points into flights than as someone with plenty of points but no airline 'status'.

As a result of owning two businesses for which our major suppliers accept credit card payments, my wife and I accumulate a fairly large number of FF points each year, which in theory gives us the ability to 'afford' to book First Class flight redemptions with Qantas.

Prior to having FF status, in order to book these trips we needed to plan at least 13 months in advance, and as the dates we wanted to travel became available in the Qantas system (you can only book up to ~360 days in advance) we would place daily calls to the Qantas booking centre to try to snare seats on the flight we wanted. Booking an around-the-world trip often took 15-20 separate phone calls and resulted in compromises in dates and flights in order to get to where we wanted to go.

Since earning Platinum FF status, one of our 'privileges' is the ability to request that Qantas make FF seats available on the flights we choose. As a result we've been able to book trips on exactly the flights we choose with as little as a month's advance notice where there were no FF seats otherwise available - a much easier process and a clear 'reward' for flying more often with Qantas.

The moral of the story is that earning points is different to being able to redeem points for 'free flights'. The points are relatively easy to come by, but if you want to redeem those points for 'premium' flights then you're going to have to work hard to do so - either by taking the persistent path with the Qantas booking centre or by actually flying enough on paid tickets to earn the right to make 'easier' FF redemptions.

 

[zzyss]

To put it into layperson terms, might it be better to convert the value of points to dollars in order to be able to make a simple comparison?

e.g.
It takes $1000 to earn 1000pts, so your "earn rate" is $1/pt
It then takes 1000pts to get $10 voucher, so your "burn rate" is 100pt/$

So then you could do a gross simplification of the possible earn/burn rates for similar products on each of the programs (vouchers, domestic flights, international flights), giving you a rough platform for comparison.

Obviously many around here will be upset at the sheer inaccuracy of it all, but at the end of the day I'm sure that you're only writing to give a general impression, not a scientifically accurate study, right?

 

[comint]

It takes $1000 to earn 1000pts, so your "earn rate" is $1/pt

BUT, I can get 1000 points for around $100 by flying MEL-SYD on QF! (Plus some cards have better conversion rates than 1:1!)

 

[jamesatfish]

BUT, I can get 1000 points for around $100 by flying MEL-SYD on QF! (Plus some cards have better conversion rates than 1:1!)

Which raises an interesting point - how many 'frequent flyers' actually consider the FF points they receive for their flights as their primary source of points?

For instance, when flying CBR-SYD, I'm more interested in the 20 status credits than the 1000 FF points; even when flying LHR-SYD it's the 360SCs I'm after and I don't even think about the 21,172 FF points. In fact, I really only think of earning points through credit card spend these days - I wonder how many people feel the same way?

Perhaps this is the idea - most people earn FF points on their card spend and redeem the points on non-flight awards because actually getting a decent flight is just too hard for most people? So the Qantas 'Frequent Flyer' program is not really about flying at all for 90% of the participants - it's just a card rewards program run by an airline.

 

[comint]

...most people earn FF points on their card spend and redeem the points on non-flight awards because actually getting a decent flight is just too hard for most people?

Many of these "types" may be better off in a credit card loyalty program, rather than QFF!

 

[serfty]

Those are excellent examples, thank you Nelly. ...

I can't specifically for NM, but here's my thoughts.

... I'm sure this is a VERY dumb question, but how do you choose to spend your airmiles via AA or QFF? Presumably you have a pot of points on your credit card which can be converted to either? ...

Australian Credit cards earn "points" at various rates. Two of the of the better earing are the Amex "Rewards Maximizer" asn the AMEX Platinum Credit card, both of which earn at 3 "points" Per $2 (although the maximizer will change to 5 points per $4 in April 1).

These can currently be converted to Qantas at 1:1 (although, this may change on April 1 depending on your particular award "program"). They can also be converted to AA at 60,700 Amex MR to 25,031 AAdvantage. It's up to the member to work out what value is best. e.g. 35,000 AAdvantage point will get a business class return trip between Perth and Auckland on AAdvantage. The same journey booking the same seat availability would cost 50,000 with Qantas Frequent Flyer.

Conversely, 8000 QFF points will get you MEL-SYD one-way in economy; it would cost 20,000 AAdvantage miles.

Of course, frequent flyers in the know would rarely book such a trip, revenue purchases are so much more cost effective.

... And just out of curiosity, how have you accumulated all your outsanding points? Business expenses on a credit card or flying? ...

For my self, it's about 50/50 - I fly 70-100 flights per year.

... And on a more general note, how important is it to watch for special offers, be it reward flights or bonus points or value added extras like free travel insurance (is there such a thing)? ...

Rarely are any bonus schemes worth the extra effort. As for "competitions" where there are one or a few winners, I look at them as a not worth expending extra energy for. If you happen to be doing it, well and good, if not, then so be it.

... Many thanks again for your patience.

Cheers!

 

[PaulC83]

for what its worth I will give you a run down of my experience as a FF.

I am in my mid 20s, and about 4 years ago moved to a regional area for a good work opportunity. Due to being regional my flying increased mainly to visit family, and after a few flights I decided to join QF frequent flyers, as I decided I didnt want to leave that box empty on the form when buying tickets. Velocity wasn't a factor for me as DJ do not fly to Alice Springs anymore.

My flying habits were 3-5 trips home a year (back to major capital city), one generally longhaul (O/S) holiday, and maybe 6 return flights for work purposes (from which I am allowed to keep my points).

I have one credit card (Im happy to say just a plain CC from CBA), which earns 1 point for every $2 spent. My income is in the mid-upper range of middleclass, and I use the CC mainly to pay for bills, or purchases that are large or online and on the odd occassion for incurred business expenses for which I get reimburst. This generally amounts to maybe $20k-$30k a year.

So taking that flying and CC into account I get around 60k points in a 12 month period. A return trip home for me (ASP->ADL) is 30k points (using points for the taxes) in Economy. So basically I can earn 2 trips home each year with my general travel and spending without going out of my way.

This year I just scraped in to qualify for QF Silver, which although very passive benefits, I have seen a difference in the service (plus being able to use QC checkin counters, and better seats, I am lucky not many platinums on my routes, so usually I get top of queue), and am quite happy to continue with QF because of it.

Of course I am not particularly typical of people on this forum, as I do not travel a lot for business, or overseas, or in premium travel classes. I joined this forum when I found out I was going to attain silver, mainly as I was curious about the benefits I could attain. Programs like FlyBuys are of no use to me, as being single my spend at those sorts of shops (e.g. grocery and clothing/department stores, also not much choice living regional) is minimal, and although I could earn rewards eventually, flybuys points expire, whereas (at least at the moment) QF points dont expire as long as you fly with them a couple of times in I think a 3 year period.

I have learnt a lot from this forum, and there are certainly strategies for maximising earn, and scheming, but in general its an art not a science. For the elemental frequent flyer program choice, its a combination of the routes you fly, the airlines that offer that route, and the earn/burn coupled with the availability of awards with that earn/burn on the routes you most desire. For getting maximum benefit it is more a case of learning the system, and either exploiting or making best use of some of the better earners (examples of these are RTW tickets, using cheaper premium fares on alliance airlines, special CC earn rules like the AMEX rent one etc.).

The changes to the credit card earn system will be negative I believe as it means people lose flexibility and choice, for what I can't really see much benefit for Qantas.

In general though as people have said, YMMV.

Thats my 2c anyway.

 

[lovetravellingoz]

Rarely are any bonus schemes worth the extra effort.

As for "competitions" where there are one or a few winners, I look at them as a not worth expending extra energy for. If you happen to be doing it, well and good, if not, then so be it.

I agree that "competition" type promotions offer little chance of success for individuals.

However I would have to disagree that bonus schemes are rarely worth the effort.

Some are certainly not...and with all that I partake in I always weigh up effort (and any monetary cost) versus likely reward. Some I ignore and some I grab.

For me they have been quite lucrative, even ignoring the recent very lucrative Everday Promotion which was an aberation as it was a "mistake" promo and hence not likey to be repeated anytime soon.

coughulatively 10K here, 1K there, 5K there can add up...

I started recording my my point earn in July 2006.

So adding it all up now I can see that since July 2006 I have earnt 0.75 Million points in about 2 years, 7 months and with the Everday Promo more again on top of this.

This with only a small earn from flights (say 50K) and Card spend in this period would have been under $100K per year. So say about $200K.

So that is about 0.7 million from point running not counting the latest Everday Promotion which was a significant amount on top of that again, and 0.05 million from actual flying.

So by pursing various bonii and using cards with maximum point earn my $200 K has been turned into 700K of points.

If I had taking a more passive approach and just used say the Westpac Altitude Amex/VISA combo (which is what I used to be on) that same $200K would probably have gained me only say 150K of FF points and 50K from flying with about 200K in total.

In that period waived CC fees have in the main been the norm. So about the only additional dollars that I have put up to gain this was the $125 fee in the recent Earth Promo (started late 2008) to gain 20K up front and temporary earn rate of 3.0.

However there is bit of reading time...but that also picks up all sorts of other travel tips besides point earn.

ie It also allowed me to pick up 2 Nokia N95 phones for only 10K each. Which apart from Fly Buys (once ok, but now not worth ones effort) has been my only ever non-flight use of points.

So not a bad cost-benefit ratio

PS: In a past career I was a genuine frequent flyer and flew say one, or more, return flight per fortnight.

 

[NM]

Those are excellent examples, thank you Nelly.

I'm sure this is a VERY dumb question, but how do you choose to spend your airmiles via AA or QFF? Presumably you have a pot of points on your credit card which can be converted to either?

I tend to use my QF FF points for upgrades. That way the points are not devalued by the need to pay fuel surcharges (I call them fuel fines) on the awards. I use them for both domestic and international upgrade. I have not redeemed Qantas points for a flight since obtaining seven ATW awards in 2003.

I use my AA miles for flight awards. These have included the examples I noted previously as well as 3 seats BNE-ADL-PER and PER-SYD-BNE.

And just out of curiosity, how have you accumulated all your outsanding points? Business expenses on a credit card or flying?

Prior to my 2003 redemption of seven ATW tickets, I converted about 100,000 Amex points to Qantas FF points to bring my balance to the 910,000 needed for the redemption. All other Qantas points have been earned from flying and hotel stays.

Most of my AA miles have been from flying, with a very small amount from partners such as rental cars and one-off bonuses for surveys etc. I did transfer about 200,000 Amex points to SPG back before the end of September last year when the rate was 600 SPG points for 1000 Amex points, then moved them from SPG to AA. But I only did that at that time because of the better transfer rate that ended at the end of September (its now 330 SPG points for 1000 Amex points).

I have done a lot of flying over the years and have Qantas Lifetime Gold status and have been AA Executive Platinum for 3 years. Since reaching Qantas Lifetime Gold status I have not credited a single flight to Qantas FF and now credit all OneWorld flights to AA for the better redemption rate.

All my business expenses go on a corporate credit card and I have not transferred any points from that card to any program. They remain with the card's program for now but will likely end up being moved to AA at some later stage. Although they can go to Qantas, I have no intention of moving them there. Its not a huge balance, maybe 160K in total. I pay the annual fee for the rewards program for that card and my employer pays the card annual fee. Our corporate expense policy mandates that I must use the corporate card for business expenses, so all my personal credit card spend is my own and not business expenses.

However, I did get a good number of Amex points from the recent Everyday Spend promo. But they are remaining in Amex for now and I have no intention of transferring these to Qantas. Will likely transfer to Amex via SPG later, or perhaps redeem for retain vouchers if I don't need the flights. So keeping them in Amex provides the flexibility to redeem as I need for what I need at the time.

And on a more general note, how important is it to watch for special offers, be it reward flights or bonus points or value added extras like free travel insurance (is there such a thing)?

Its certainly important to know and understand the programs and the offers available. For example, I made good use of the Amex->SPG enhanced transfer rate before it ended.

But travel-related loyalty programs don't end with frequent flyer programs. I have had excellent value from several hotel partner programs, including Hilton Honors and Priority Club. For example during 2007 I was earning Priority Club reward points at an average of about 6000 points per night stayed (there are some good bonuses available if you know where to look) and then took advantage of their Points Breaker rewards to book rooms for 5000 points per room per night. We ended up with two rooms for 10 nights over Christmas and New Year at the Gold Coast at the end of that year, all on points. All up I redeemed 24 room nights between Sept and Dec that year, all earned during about 20 nights of paid stays, mostly at Holiday Inn Express or similar hotels in the USA at very cheap nightly room rates.

So combining good value rewards such as premium cabin international flights and hotel awards such as I described, travel-related loyalty programs can be very good value. But I do not see the credit card points as a major contributor to my redemptions.

 

[lovetravellingoz]

I think that the last few posts clearly demonstrate that there is not one right answer, or one way to optimise things.

These need to be tailored to an individuals circumstances and what they desire to achieve with their redemptions.

 

[NM]

Which raises an interesting point - how many 'frequent flyers' actually consider the FF points they receive for their flights as their primary source of points?

I certainly do and always have. Credit card points are just a top-up for me.

And I am not interested in Status Credits any more. I have earned Zero SCs in the last 3 or 4 years. But I am interested in Elite Qualifying Points (EQP) whoch earn status in AAdvantage.