1. THE GREAT BANK ROBBERY ...WITH A TWIST
 

Despite a huge public backlash the National Australia Bank has stood by its controversial decision to dilute the value of its customers' reward points. The bank told its 150,000 Gold Rewards members last month that it would cost them 1.5 points to buy one Qantas frequent flyer point. The only concession was that the point dilution would not be retrospective, when the new conversion rate kicks in on June 15.

At the same time, the bank announced an innovative venture with travel agency Harvey World Travel which lets members convert their points for flights and travel packages, effectively bypassing airline loyalty programs.

A new wave

The bigger picture to emerge from this latest frequent flyer drama is that Australia's reward points system is at saturation point, and desperation is setting in to keep customers loyal. But the real question is this: is NAB offering a worthwhile alternative, or just another gimmick bound to further frustrate the already tense market? Both NAB and Westpac, which has recently launched its Altitude rewards program, seem to be moving towards non-airline linked reward programs.

Interestingly, the ANZ - which was recently named best international frequent traveller credit card at America's Freddie Awards - is moving in the opposite direction. It now offers direct conversion of points earned by its customers to Qantas frequent flyer points. Could this be a sign of Qantas tightening its links with the ANZ program, especially following NAB's general cards manager George Beatty's comments that the airline was charging the bank more to buy its frequent-flyer points since Ansett's collapse? It's hard to say, and Mr Beatty says changes to the bank's points conversion strategy was driven more by customer demand for more reward choices, not just travel.

And the bank may just be able to put its customers off travelling. Up till now a Sydney to Melbourne flight cost 30,000 Gold Reward points, but midway through this month the fee will be increase by an extra 15,000.

NAB/Harvey deal

And it doesn't really get any better with the new Harvey World Travel/NAB partnership. According to reports, a similar flight using the new service would cost some 66,000 points. But the big bonus there, at least for now, is that flexibility in choosing available flights is much better and the choice of airlines is much greater.

And the sniping has already begun. ANZ announced it would offer free Qantas frequent flyer membership for the first year to any disgruntled NAB customers willing to switch. Westpac Altitude is also offering special deals for NAB cardholders who want out.

Leveraged Equities offer you a margin loan account secured by over 600 of Australia's top listed shares and managed funds. You can use your existing portfolio, residential property or cash as security for a loan to increase your investment power in the Australian share market.

The points are based on your loan amount or daily loan balance, and the larger the loan, the more points you could earn, between 20,000 to 65,000 points per $100,000 p.a. or part thereof.

Let your investment power really "take off" with the Leveraged Equities MarginFlyer. Call them on 1300 307 807 or visit www.leveraged.com.au.

You must be a member of the Qantas Frequent Flyer program to earn and redeem points in accordance with the terms and conditions of the Qantas Frequent Flyer program. The Terms and Conditions of the Leveraged Equities Margin Flyer Rewards Program apply to the earning of points on Leveraged Equities products.
    

2. THE PRESS ROUNDUP
 

New Qantas partners

Qantas has welcomed three new domestic partner airlines into its fold. You now can earn and redeem points when flying Sunshine Express, serving southeast Queensland; Air North, serving northern Australia; and Aeropelican, which flies between Newcastle and Sydney.

Australian Airlines and points

The new Qantas sister company Australia Airlines has announced that Qantas Frequent Flyer program members will not be able to earn points on flights booked with the Asia-bound carrier. Members will however be able to claim award flights when the new airline takes off later this year.

United blackouts

United Airlines has announced its "blackout" periods, when reward flights can't be claimed. The dates include December 12-28 for travel between Los Angeles, Auckland, Melbourne and Sydney and San Francisco to Sydney; December 28-31 for Sydney to LA and San Francisco, and Melbourne and Auckland to LA.

Flying money

Frequent flyer points are the world's second largest currency, according to the Economist magazine. The total number of frequent flyer miles worldwide is worth an estimated $500billion. And it's something many frustrated frequent flyer point holders - and especially former Ansett loyalty program members - are quickly realising. There are so many points sitting around waiting to be used that airlines are forced to keep frequent flyer seats limited, or they'd probably go bust.

Showing all cards

Showing all cards Virgin has announced its advertised ticket prices will soon include all taxes and charges. This will end uncertainty and frustration among many travellers who have in the past been stunned by the additional costs hiding behind airline tickets. The airline is also boasting of being recently named the best low fare airline in Australasia in the Skytrax Airline of the Year 2002 survey.

Prompt apologies

United Airlines are latching onto a new "sorry system" which automatically sends out apologetic letters to frequent flyers when a flight has been delayed or cancelled. The computer system cost some $10million and links the airlines flight operations with the group's frequent flyer database, according to a recent report in Washington Post. The airline says it's part of a drive to improve its image. No doubt the system will also reduce the number of complaints to United and in the future could be used to bombard frequent flyers with personally tailored advertising.

We have been quietly enhancing our premium service, the Frequent Flyer Club, with exciting new discounted travel services. Members are urged to check out the Discounted Travel Services page and read all about the latest addition - a 33% savings off MileageManager.  MileageManager offers a solution to manage your "deceptively simple, yet endlessly complicated" frequent flyer programs. It provides all the tools you need - such as a single consolidated statement, program activity summaries, program bonuses and guides, award schedules, mileage reconcilers, and email alerts.  Visit the MileageManager website for more details.

Frequent Flyer Club members are entitled to a free Frequent Flyer Health Check each year. In keeping with our discussion on airline versus bank-based loyalty programs, this month we will feature the Health Check we prepared for a Frequent Flyer Club member who is also a member of the Westpac Altitude program. Penny, a Brisbane resident, has 26,000 Westpac Altitude points. She earns about 3,500 points per month, and is saving to go to LA next March.

You can download our Report and read our recommendation.

Qantas deals

Earn two points per dollar spent with Qantas Holidays on accommodation and sightseeing as part of the airline's Great Indoors adventure in Melbourne. Participating hotels include Swanston Hotel, Saville on Russell, Park Hyatt and Sheraton Towers. Valid until August 21.

Earn at least 500 Qantas frequent flyer points when renting selected Avis cars worldwide. Valid until July 31. You can also earn double frequent flyer points if renting through Hertz or Thrifty until the end of June.

Ski in New Zealand and earn 5,000 points through the Qantas SKIMAX promotion.

Star Alliance

Star Alliance is continuing its 55,000 bonus miles promotion. To celebrate its fifth anniversary, the alliance is giving away 55,555 bonus miles on any five Star Alliance airlines in 55 days. The promotion ends on July 7.

Kiwi bonus

You can earn an extra 5,000 miles on selected Singapore Airline's economy or business class flights between Auckland and Hong Kong until July 31. The airline's frequent flyer program, KrisFlyer, is also offering 2,500 bonus miles on one-way trips between the two cities.

Virgin bound for Gold Coast

Virgin Blue is to expand its Australian network from July 1. To entice travellers to its new Sydney to Gold Coast route, the airline's offering special fares of around $190 one way. The limited seats are available until July 4.

Fly Buys

Collect 2,500 bonus points when purchasing Toshiba Pocket PC products from Harris Technology until June 30.

You will also get an extra 500 points when you buy certain Kodak digital camera products from Harris Technology until the end of June.

Rent a car from Budget for 3 days or more and collect 1000 bonus Fly Buys points for each consecutive 3 days plus 1 point per dollar spend until June 30.