"... we'll shortly announce a major investment to improve our Frequent Flyer program"

Status
Not open for further replies.
Sponsored Post

Struggling to use your Frequent Flyer Points?

Frequent Flyer Concierge takes the hard work out of finding award availability and redeeming your frequent flyer or credit card points for flights.

Using their expert knowledge and specialised tools, the Frequent Flyer Concierge team at Frequent Flyer Concierge will help you book a great trip that maximises the value for your points.

@AFF Editor a suggestion for an article or two. One would be easiest way to obtain status with other Oneworld airlines. The other more interesting one,for me at least, is the best and most cost effective way to buy Aviios and Star Alliance points.

Buy it with AT. Probably the cheapest with a status run through Casablanca. They have some very interesting paid double/triple milage subscription things which if used correctly can get OWE at a pretty cheap price.
 
Lots of comparisons to US airlines with major devaluations...but for those US airlines were their frequent flyer operations so profitable?

QFF is a hugely profitable scheme for Qantas, for other airlines this might be a lot more marginal. There would be much less incentive to gut the program and make big changes if it's so successful.

In the last decade we have seen very little in the way of actual devaluations of the QFF program even as schemes around the world were devaluing theirs. Points required for redemption have moved a bit but not all that much considering inflation over this time.

CR seats are less available but it's difficult to say this is an actual devaluation. This is largely a post Covid thing with other carriers (including partner airlines) having far fewer reward seats available and this is at least as much a function of supply/demand as anything else.

PC and PCP are genuine enhancements to the program that don't need scare quotes around the word either.

The last time I raised this point someone argued with me by saying we had seen significant devaluations in this time and the inability to invite non flying guests into the lounge was a prime example (!)...maybe Qantas have decided to change tack and a gradual sweeping devaluation is needed but it'd seem like an odd move for such a profitable program.

Also the value of QFF as a program is also based on what partner airlines make available. If CRs gradually go and so do partner awards then the frequent flyer model as a whole will be dying, whatever Qantas do won't make that much difference. If we still see good availability from partner airlines then it might still be worth collecting those Qantas points.
The problem with attempting to discuss profit is that Qantas Loyalty is only hugely profitable because of internal accounting methods. As one of the AFR articles mentioned, there's huge dissatisfaction within the Qantas Group because Loyalty is able to buy seats off the flying divisions (Domestic & International) for extremely low prices, inflating their profit at the expense of the flying divisions. If Loyalty had to pay more, a lot of that profit would be shifted from Loyalty to the flying divisions.

What is crystal clear is that Qantas wants to grow Loyalty and it thinks that growth is not possible under current arrangements because that's precisely why they are introducing CR+. It's relatively easy to see what's going on. If Qantas wants to sell more and more points, it needs more viable yet desirable ways to redeem them. Otherwise consumers are going to stop chasing them and banks/supermarkets/etc are going to stop buying them.

It's why devaluation is all but inevitable. Qantas, like Aeroplan and the US programs, wants to grow its program because there's money to be made in loyalty. But Qantas is not radically expanding its operations, leaving more seats for CRs. So it has to make CRs more expensive. It has decided to do this not by devaluing CRs, but by introducing a new more expensive tier to sit alongside CRs. But as the Canadian/US programs show, what will likely happen is that the cheap tier disappears over time and the more expensive tier is all that remains in practice.
 
The problem with attempting to discuss profit is that Qantas Loyalty is only hugely profitable because of internal accounting methods. As one of the AFR articles mentioned, there's huge dissatisfaction within the Qantas Group because Loyalty is able to buy seats off the flying divisions (Domestic & International) for extremely low prices, inflating their profit at the expense of the flying divisions. If Loyalty had to pay more, a lot of that profit would be shifted from Loyalty to the flying divisions.
Aside the whopping RRIA Revenue Received in Advance that sits on the books untaxed until such time as its brought to account when that toaster is bought or the CR flight is actually flown!

they are enjoying a cashflow the envy of most (except perhaps aged care homes.... but I digress)
 
To keep TheInsider happy with some actual conspiratorial thinking, here's some wild speculation about what happens over the next 6-12 months:

1. Qantas releases a big batch of CR seats alongside the launch of CR+ to ensure customers are not faced with wall-to-wall 800K seats when they see the news about the new program and decide to hop on qantas.com to see what's available.

2. Qantas then stop releasing almost any CR seats on highly desirable routes (eg premium cabins to all their African/South American/North American/European destinations) to test the success of the program. Qantas wants to see precisely how many people are willing to fork over points at CR+ rates and they can't do that if they keep releasing cheaper seats (ie you can't test how many people are willing to pay 800K per trip if there are plenty of options to pay 280K per trip).

And the wildest speculation of all:

3. If the CR+ program proves to be a roaring success and Qantas is happily surprised at how many people are willing to pay the higher rates, this becomes the last major release of CR seats ever. Why give away seats at CR levels when most punters are willing to pay CR+ rates (even begrudgingly)?

I think it's unlikely to play out this way because there will be a lot of initial resistance to paying CR+ rates, but I also don't think it is out of the realm of possibility.

Fun times ahead.
 
To keep TheInsider happy with some actual conspiratorial thinking, here's some wild speculation about what happens over the next 6-12 months:

1. Qantas releases a big batch of CR seats alongside the launch of CR+ to ensure customers are not faced with wall-to-wall 800K seats when they see the news about the new program and decide to hop on qantas.com to see what's available.

2. Qantas then stop releasing almost any CR seats on highly desirable routes (eg premium cabins to all their African/South American/North American/European destinations) to test the success of the program. Qantas wants to see precisely how many people are willing to fork over points at CR+ rates and they can't do that if they keep releasing cheaper seats (ie you can't test how many people are willing to pay 800K per trip if there are plenty of options to pay 280K per trip).

And the wildest speculation of all:

3. If the CR+ program proves to be a roaring success and Qantas is happily surprised at how many people are willing to pay the higher rates, this becomes the last major release of CR seats ever. Why give away seats at CR levels when most punters are willing to pay CR+ rates (even begrudgingly)?

I think it's unlikely to play out this way because there will be a lot of initial resistance to paying CR+ rates, but I also don't think it is out of the realm of possibility.

Fun times ahead.
And if the CR+ is not succesfull, then some campaign (for a limited time, 30% reduction of points required) to get us to accept the new norm.
 
While we are focussing on one half of the equation, burning our points once we have them, what impact would there be if it becomes harder to earn the points in the first place? How would Qantas react - drop what it charges for the points to providers?
If Australian authorities cut down on interchange fees, the whole gig would be up for Qantas. Indeed, it would be a devastating blow. Without interchange, banks can't afford to buy points en masse (see Europe). And banks are the biggest purchases of Qantas points.

What would happen next is anyone's guess. But Europe provides some interesting tidbits. What the major European carriers did was go all in on the US market — BA and Air France/KLM are two of the most aggressive sellers of points in the US market, regularly offering US credit card users 20-30% transfer bonuses and orienting their points program to US customers (Air France recently cut award prices to/from the US).

This is a huge middle finger to their home country customers as it means, for example, an American can earn BA points orders of magnitude quicker than a Brit. But BA doesn't care — it's all about chasing the money.

Now if US interchange fees go away, the current version of the loyalty game would be dead and it would have to re-emerge in different form.
 
If Australian authorities cut down on interchange fees, the whole gig would be up for Qantas. Indeed, it would be a devastating blow. Without interchange, banks can't afford to buy points en masse (see Europe). And banks are the biggest purchases of Qantas points.

What would happen next is anyone's guess. But Europe provides some interesting tidbits. What the major European carriers did was go all in on the US market — BA and Air France/KLM are two of the most aggressive sellers of points in the US market, regularly offering US credit card users 20-30% transfer bonuses and orienting their points program to US customers (Air France recently cut award prices to/from the US).

This is a huge middle finger to their home country customers as it means, for example, an American can earn BA points orders of magnitude quicker than a Brit. But BA doesn't care — it's all about chasing the money.

Now if US interchange fees go away, the current version of the loyalty game would be dead and it would have to re-emerge in different form.
Actually interchange fee changes were announced in the US last week after lawsuit was settled.
 
The Frequent Flyer Concierge team takes the hard work out of finding reward seat availability. Using their expert knowledge and specialised tools, they'll help you book a great trip that maximises the value for your points.

AFF Supporters can remove this and all advertisements

Actually interchange fee changes were announced in the US last week after lawsuit was settled.
It's a big nothing burger.

All they've agreed to do is 'reduce swipe rates by at least four basis points - 0.04 percentage points - for three years, and ensure an average rate that is seven basis points below the current average for five years.'

You have to remember interchange fees in the US are between 150 and 350 basis points.

'Levitin said U.S. merchants would still pay an average 219 basis point swipe fee, the highest in the developed world. "If that's the result of nearly two decades of litigation, then the settlement is a huge loss for U.S. merchants," he said.'

'"It's a bad deal for merchants," said Doug Kantor, general counsel of the National Association of Convenience Stores, in an interview. "It provides very small, very temporary relief, but afterward Mastercard and Visa will be free to raise rates, and the agreement doesn't provide a mechanism to slow an increase."'
 
To keep TheInsider happy with some actual conspiratorial thinking, here's some wild speculation about what happens over the next 6-12 months:

1. Qantas releases a big batch of CR seats alongside the launch of CR+ to ensure customers are not faced with wall-to-wall 800K seats when they see the news about the new program and decide to hop on qantas.com to see what's available.

2. Qantas then stop releasing almost any CR seats on highly desirable routes (eg premium cabins to all their African/South American/North American/European destinations) to test the success of the program. Qantas wants to see precisely how many people are willing to fork over points at CR+ rates and they can't do that if they keep releasing cheaper seats (ie you can't test how many people are willing to pay 800K per trip if there are plenty of options to pay 280K per trip).

And the wildest speculation of all:

3. If the CR+ program proves to be a roaring success and Qantas is happily surprised at how many people are willing to pay the higher rates, this becomes the last major release of CR seats ever. Why give away seats at CR levels when most punters are willing to pay CR+ rates (even begrudgingly)?

I think it's unlikely to play out this way because there will be a lot of initial resistance to paying CR+ rates, but I also don't think it is out of the realm of possibility.

Fun times ahead.

There’s nothing conspiratorial about this. Your suggestions are very feasible, sadly.
 
Getting consumer protection regulations enacted in America is hard and will continue to be.

That’s not the case in Australia, so expect to see a further reduction in interchange fees in the years ahead - esp given the huge increase in card payments since the last RBA interchange fee review.

There is a solid argument to be made the average consumers are currently subsidising us points pros.
 
From my last look at the M card interchange fees, they had already come down (I thought a good 0.06-0.09%)
 
Certainly not saying they won't, but the problem with releasing another big batch of CR at the introduction of CR+ is that it would draw the obvious comparison ("Boy, the CR+ is a ripoff!") and question ("Why CR+ when I can get CR for a fraction of the cost?").

As far as profitability for QF versus entitlement for Frequent Redeemers (esp. members of Points Churn Club & Churn Club+) - QF probably would like to "adjust" the effort ratio a little.

The interchange rates aren't the problem in Australia - its the incredibly prrofitable banks firehosing points at the "Pulse & a Payslip" churners who provide no profit to the banks but they're still playing an out-of-date game to the benefit of many forum regulars.

If there was an unlikely paradigm change by the banks to drop the pass-the-customer game on CCs and reward loyalty (ha!)*, then the system could be structured more "fairly", but at the moment when huge numbers of people can and have generated many hundreds of thousands of points each in the space of months, there's going to be a crunch at the point of redemption ... even if those people feel entitled to:

*Read a post / facebook page / blog - follow intructions - (1) Churn (2) Profit
*Automatic Churn Club+
*Expect status to allow extra access to CR
*Redeem points, using ChurnClub(+) to gain/retain status
*Rinse, repeat...


(And then, not at the scale of the banks, but important - the supermarkets. I think they are somewhat profitable too, or so I've been told! Similar gaming of the system available here.)



NB: I'm not aware of other airlines with the equivalent of Churn Club and the ability to get status for redemption flights, but then again, I'm not a member of enough FF schemes!


_________________________________________________________________________________
*Yes, I'm aware that {shoutout & special thanks to the ACA/Choice} credit card providers lost a lot of their tools to reward loyalty when the laws were changed to stop their "evil" practices (while allowing worse from BNPL, but that's what you get from Frydenburg et al!).
 
if not for gamification, the game wouldn't be played

one must offer a carrot (carat) to get people to turn up.

ever wondered why people don't like paying for new(s) content because subtlely what matters is ACCESS to the content not content in and of itself - its why forcing Facebook Meta to pay for news content is poor politics - sink or swim so now they have sunk the Aussie news outlets (not that I would go to FB for anything other than opinion, and clearly we all have friends who's opinions are far better left right out than say the G or the Oz...

I have a number of friends who have churned credit cards + DSCs and one of them has successfully scored QF SG as result of this approach. and because of the Churn Club qualification off CC bonus can now use points to pay for tics and still collect the DSCs... thus granting at least another year of SG without spending very much at all (100,000 divided by 16,000 makes 6 return trips Syd-Melb) plus throw in the annual European vacation and Asian trip and volia 500 SCs doesn't seem so far away (and yeah, they are a long way off LTG)
 
if not for gamification, the game wouldn't be played
However, like a casino, QF is the bank ... and if it decides that there's more money to be made from grinders than churners, it can make the call. I doubt the punters will stop showing up.
 
My point was that even as a WP you can’t even get a simple domestic CR when you need it.
Did you try calling?

I'm P1, mind you, but SYD-BNK/OOL/MEL/CBR/BNE CR seats in Y open up 80% of the time when I call
 
Did you try calling?

I'm P1, mind you, but SYD-BNK/OOL/MEL/CBR/BNE CR seats in Y open up 80% of the time when I call
Nah, TBH could not be coughd to call for something so unimportant to me (it's my son taking the flight) and risk waiting a long time to be messed around by offshore call centre - which is all I get as a WP these days. And which by report of other members on here seems not to know what release of a CR seat even means. It was more cost effective for me to keep working (and billing a client) than waste time on the phone. Which is exactly where QF wants us to be....
 
Status
Not open for further replies.

Become an AFF member!

Join Australian Frequent Flyer (AFF) for free and enjoy a better viewing experience, as well as full participation on our community forums.

AFF members can also access our Frequent Flyer Training courses, and upgrade to enjoy lots of other benefits and discounts!

AFF forum abbreviations

Wondering about Y, J or any of the other abbreviations used on our forum?

Check out our guide to common AFF acronyms & abbreviations.
Back
Top