Potential Sale of QFF Program

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Nov 3, 2004
Full article: Qantas shares take off - Business - Business - theage.com.au

Qantas shares take off

.... The airline is also considering the sale of its frequent flyer program, which could fetch the airline at least $1.5 billion.

Chief executive Geoff Dixon confirmed the carrier was "reviewing" the ownership of its 4.9 member loyalty program.

The airline provided no more details, only to say it plans to also introduce a separate loyalty scheme for its low-cost offshoot Jetstar.

It is not expected the sale will impact existing members. One reason for this is that Qantas will be careful not to lose its loyal customer base - especially high yielding business travellers - to rivals such as Virgin Blue which introduced its own loyalty scheme two years ago.

It is expected Qantas could follow Air Canada's lead and list the loyalty program on the Australian Securities Exchange.

Air Canada still has a corner stake in its 5 million member Aeroplan program, which is now valued at around $4.8 billion on the Toronto Stock Exchange.

The program is actually worth more than the airline itself. It has been rumoured Aeroplan could even buy Qantas's frequent flyer program.

One reason for the high price paid for loyalty programs are their databases of usually high income earning consumers. Unlike airlines, loyalty schemes are more stable and not subject to the volatilities airlines are, such as oil prices and terrorist attacks.
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