Qantas takeover may result in Frequent Flyer scheme sell-off

Discussion in 'Qantas Frequent Flyer Program' started by Mish, Nov 26, 2006.

Thread Status:
Not open for further replies.
Welcome to Australia's leading independent Frequent Flyer and Travel Resource!
Our site contains tons of information that will improve your travel experience.
Joining AFF is fast, simple & ABSOLUTELY FREE -  join now by clicking on the JOIN NOW button, and take immediate advantage of these great BENEFITS.
Once registered, this box will disappear. And you will see fewer advertisements :)
  1. Mish

    Mish Junior Member

    May 24, 2006
    26
    1
    I thought this required a thread seperate to the QF Takeover bid one.

    Fin Review mentions that the acquirers of Qantas could "sell-off" the Frequent Flyer scheme to make a quick buck.

    How would that work?
     

  2. Soundguy

    Soundguy Member

    Jun 15, 2006
    323
    3
    Rudd's Banana Republic
    No idea.... it is a liability to Qantas rather than an asset after all.

    Probably FinRev don't know what they are on about.... welcome to Australian media!
     
  3. Dave Noble

    Dave Noble Senior Member

    Oct 10, 2005
    6,419
    8
    Are you sure that it is a liability rather than an asset given how many places they now sell points to ( such as debt card companies et al )

    Dave
     
  4. NM

    NM
    Moderator

    Aug 27, 2004
    15,764
    1,214
    Flight Map:
    View my flight map
    For many of the USA-based airline, their FF programs are the most profitable part of the company. So how can it be a liability to Qantas? Selling FF points to "partners" such as credit card companies earns a significant income for the FF program.
     
  5. Mal

    Mal Enthusiast

    Dec 25, 2004
    12,227
    1,309
    London
    Flight Map:
    View my flight map
    Points have a value. They are sold by Qantas FF to both other parts of Qantas and to third parties.

    They then have the liability for points, but income from the money the points were sold for and interest on that money.

    Points are also depreciated or lost (expire).

    Later the points are used to "purchase" flight upgrades etc.

    There is money to be made from FF schemes by airlines. Third parties would be interested in buying this right to make money :)
     
  6. JohnK

    JohnK Veteran Member

    Mar 22, 2005
    40,171
    8,658
    BNE, SYD and CNX
    Agree that any future FF points could be an asset for anyone lucky enough to takeover QF's FF scheme. You would accumulate FF points and this new entity would need to purchase flights to accommodate your award requests. Yes they could make a profit. My guess would be less award availability than is currently available.

    Are the current outstanding FF points regarded as an asset or liability to this future owner of QF's FF scheme? How does the new entity value FF points when using FF points on an upgrade could be worth $4,000 or if you purchase flights with the same FF points it may be worth $500. My guess would be a huge devaluation of existing FF points.
     
  7. Mal

    Mal Enthusiast

    Dec 25, 2004
    12,227
    1,309
    London
    Flight Map:
    View my flight map
    Qantas knows the value of their outstanding FF points in the market and would have this somewhere in their liabilities I assume.

    I don't think selling it off would produce a big issue in the short term. The third party wouldn't buy flights at retail prices - they would have deals with Qantas as to how points are redeemed. The actual mechanics of that would have to be worked out. (maybe paying Qantas Xc per mile needed for an award. Qantas may even still set the points level needed for rewards rather than the third party)

    Who says a flight upgrade isn't worth $20 for example? If a seat isn't sold but is used for an upgrade, then the cost is negligible.

    Only time will tell...
     
  8. SeatBackForward

    SeatBackForward Established Member

    Jun 20, 2006
    3,587
    1,625
    Sydney, Australia
    Flight Map:
    View my flight map
    If Qantas got rid of their frequent flyer programme, I'd say Virgin Blue would suddenly become a lot more attractive to a lot of people.
     
  9. Dave Noble

    Dave Noble Senior Member

    Oct 10, 2005
    6,419
    8
    There is a big difference between selling the scheme to a 3rd party and to terminating the scheme; I doubt v much that they are considering the latter

    Dave
     
  10. NM

    NM
    Moderator

    Aug 27, 2004
    15,764
    1,214
    Flight Map:
    View my flight map
    I think we can categorically rule out the latter. Any owner of an airline knows the benefits the airline receives from having a FF program where passengers think they are being rewarded for their loyalty. Anyone investing a large amount of money in Qantas will not be breaking the current FF scheme,

    Then again, as the saying goes - How do you get a small fortune from the airline industry? Start with a large fortune :shock: .
     
  11. Dave Noble

    Dave Noble Senior Member

    Oct 10, 2005
    6,419
    8
    Some might say that it is already broken

    Dave
     
  12. NM

    NM
    Moderator

    Aug 27, 2004
    15,764
    1,214
    Flight Map:
    View my flight map
    Its probably about due for the next round of "enhancements" :shock: .
     
  13. In an oligopoly, firms usually compete in non-price ways. The QFF scheme is one such non-price way. Given that other airlines compete with QF on most routes, I think that QF would feel the pinch if it downgraded its FF program compared to that of its competitors. All you have to do is read most of the threads here to see that most of us are heavily involved with FF programs. Indeed, when a more attractive one can be used in conjunction with QF (AA for example) most of us tend to use the one with greater value.
     
  14. Dave Noble

    Dave Noble Senior Member

    Oct 10, 2005
    6,419
    8
    Using these fora as a baseline to what most people will do would seem flawed to me. I suspect that a large percentage of QFF members would not really even be aware that there are other schemes that could be used instead

    Dave
     
  15. NM

    NM
    Moderator

    Aug 27, 2004
    15,764
    1,214
    Flight Map:
    View my flight map
    Indeed. A friend of mine recently mentioned he had a trip to China using CX/QF in J so I suggested he steal some candy. He now has OneWorld Sapphire status for the first time ever.

    He is now in PNG this week. PX flights so no OneWorld benefits. But he was complaining about the cost and process for getting a PNG visa so I suggested an APEC card. So he now will be applying as soon as he gets back. He visits PNG at least 3 times a year, as well as some other places where it could come in handy. Just one PNG visit and he has saved more than the cost of the card.


    Until I told him of these things he had no idea other existed.
     
  16. tuapekastar

    tuapekastar Established Member

    Mar 16, 2005
    4,298
    1,012
    MEL
    Flight Map:
    View my flight map
    When I first suggested stealing candy on an ATW to two friends, they thought I was crazy. They were not aware they could use AA miles to redeem on QF (and others)...thought they could only redeem them on AA. I think the vast majority of QF FF programme members would be simlilarly unaware (as, TBH, was I, before finding this forum).
     
  17. I certainly wasn't aware until I started reading posts on this forum, and then joining. I have learned so much useful information and recommend joining to others I know who are interested in travelling for business and/or pleasure.
     
  18. drron

    drron Enthusiast

    Jul 4, 2002
    17,712
    15,865
    Sunshine Coast
    Yes this is very true.I have a partner who does at least 3 J return trips to europe each year plus a reasonable amount of domestic travel on QF.Has become lifetime plat but spends all his time complaining how he cant get the QFF awards he wants.Just accumulates points.Pointing out that you can get the awards on other OW partners falls on deaf ears.Also the suggestion that if he joined AAdvantage he need not be a candy theif to be explat every year on AA and get awards for a lot less points is met by the response-so whats the catch.I have given up but have volunteered to adopt him so I can use the points!
     
  19. oz_mark

    oz_mark Enthusiast

    Jun 30, 2002
    17,380
    1,624
    Melbourne
    Flight Map:
    View my flight map
    Quite a few loyalty schemes are actually run by third party companies. For example, some of the bank reward schemes are operated not by the bank,but by a third party. In principle, moving to a third party provider should be fairly seamless to the average user (although there may be tweaks around some of the privacy provisions and the like)
     
  20. Tooner

    Tooner Active Member

    Nov 7, 2006
    747
    72
    Sydney
    Flight Map:
    View my flight map
    I remember the AFR article about this, suggesting that the third party would be a trust, with the aim to extract some value from the sale to reduce the cost of the takeover.

    Apparently Air Canada did this (Texas Pacific Group again). Has anyone any experience of how it works with Air Canada?
     
Loading...

Share This Page