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Xmas/NY holidays with too much time and drinks in my hand make Gold Member ponder life’s most important matters... There was a recent post about the ‘price’ of status credits (http://www.australianfrequentflyer....am/price-status-credits-has-anyone-41326.html) which got me thinking about posting my 2 cents worth. I realise this has been debated ad-nauseum over the years and it varies for everyone, but here’s my take anyway - and apologies for the detail (skip to the bottom if you want my final conclusion!).
Unsurprisingly, the PRICE of a QFF point varies significantly depending upon your earning circumstances. I’ll explain how I determine the price of a QFF point later, but for ease of calculation let’s assume this is 1.5 cents per point. But for the sake of this post, let’s focus on something more important: VALUE. Put simply, the value of a QFF point is derived from the value of the redemption that you personally receive. Just as with status credits, value is highly subjective and for many who are not interested in optimising points redemption value, factors such as convenience are more important (eg. gift vouchers). But for me it’s quite the opposite: I am not looking to use my points at the QFF store or similar since IMHO this is among the worst value redemption of QFF points. My points valuation is determined using premium cabin award/upgrade redemptions which I compare to other options as an opportunity cost. If availability exists, these options offer the highest $ redemption value, which is why Qantas doesn’t offer much availability in premium cabins and yet has hundreds of options available via their online store with terrible redemption value. With a clear stranglehold on Australians participating in the QFF program and with only minor competition from Virgin (at this stage), no wonder the QFF program is by far the most profitable part of the entire Qantas business reporting >20% yield on the bottom line last financial. *gets off high horse*
To simplify things, let’s put Qantas status tiers aside for a moment, since we all know that higher status generally offers more premium award availability. So let’s focus on four types of QFF points redemptions which I believe offer the best points redemption value within the QFF program:
Each redemption must be valued in isolation as the redemption value is highly variable and unique to those circumstances. I’ll break each one down and explain how I value QFF points under each scenario. But first, there are a few global rules and considerations governing flight redemptions – refer Qantas points Tables (Frequent Flyer - Using Points - Qantas & Partner Classic Awards - Points Tables). Upon examination of the table, we can see that there is much better value in the higher zones by comparing the miles-to-point ratio. In different ways, this is also true for all four options I have listed above.
1. Qantas and Partner Classic Award (point to point)
Starting with a Qantas Classic Award, let’s assume a Business Class redemption (assumes you were going to pay for the business class fare outright anyway). A Zone 1 redemption (0-600 miles) which requires 16,000 points + taxes for MEL-SYD (439 miles). The underlying business class fare is currently $633 and award taxes are $34. On the surface, this equates to 3.74 Cents Per Point (CPP) (633-34/16000). But is this truly the value of a QFF point? IMHO, no it is not.
In this scenario, there are two key metrics which I believe reflect the Real Value (RV) of a QFF point:
1) the distance flown, and
2) the cost of the points you’ve spent + taxes.
For most of us, the price of a regular business class fare is irrelevant since we would never pay for it anyway. So when you account for these two metrics, the cost is $274 ((16,000*0.015)+34). Based on the distance flown (439 miles), the RV (higher is better) of this points redemption is 1.60 (439/274).
Applying the same logic to other sample routes:
Generally speaking, there’s better value (higher RV metric) among the higher zones (long haul routes). Some additional commentary:
Partner Classic Awards are much the same as Qantas Classic Awards but with slightly more points required per zone (~5-10%). I won’t do the math for a Partner classic award example because it applies the same logic but with the slight increase in points required. The additional points required have a direct inverse dilution of the value, however there are plenty of additional benefits to more than offset this such as:
Ultimately, taking all these factors into account I value a Partner Classic Award higher than a Qantas Classic Award, but not by much.
2. Oneworld Classic Award (Zone 10)
On the Qantas points table you’ll notice the Oneworld Classic Awards zone/points definitions have an incremental increase of miles between zones 1-9, until you hit zone 10 which is far broader at 19,201-35,000 miles. For those geographically challenged, 35,000 miles is more than enough for a ‘Round The World’ ticket, and you’ll need just 282,500 points for business class (extra 2,500 points required for the mandated QF phone booking). There are several conditions and rules that must be followed, however the key rules/benefits are:
Quantifying the value of a Zone 10 Award is a bit more complex because there’s a plethora of routing permutations. But for the time being let’s assume a sample itinerary of (AMS-xLHR-SFO-xLAX-SYD)-(NRT-xSYD)//(MEL-HKG-AMS) (where ‘x’ denotes transit, ‘//’ is a surface sector and the brackets denote a trip at a separate time to the other segments in brackets – eg. Visit Japan several months after arriving in Australia and then depart for Europe several months later again, all within 12 months). This routing totals 34,839 miles and if purchased as several one-way flights (as we did above in the Qantas and Partner Awards) the total paid fare would be somewhere in the region of $30,000 with $1,500 in fuel surcharges/taxes. I’m not going to determine the actual total cost by individual flight (too lazy), and I doubt anyone would be stupid enough to buy a ticket in this manner, but to apply a consistent determination of value, we’re looking at 10.1 CPP (30000-1500/282500). This value is obviously highly variable depending on your specific routing, but it gives you an idea of the great value a Zone 10 award can offer that is close to the maximum number of miles (35,000) and takes advantage of most of the benefits listed above.
The RV of a zone 10 award is a bit simpler. Applying the same login as before, the cost of the points is $5,735 ((282,500*0.015)+1500). Based on the distance flown (34,839), the RV of this points redemption is 6.07 (34839/5735). By way of comparison, this is roughly 50% better RV than the long haul Classic Awards examples we looked at earlier. Note I have not included the price of a US Air DM positioning flight to/from AMS at $2,500 in these calculations.
3. Any Seat Award (ASA)
ASA’s are similar to Qantas Classic Awards but the fuel surcharges and taxes are included by way of additional points required (usually between 20-25% more than the underlying classic award points). Most regular ASA points redemptions are only available if there is inventory available in the classic award bucket for the same flight, so they usually mirror the availability. But in Qantas’ wisdom, just so they can shut up all their members who complain about never being able to redeem their points on premium cabin long haul routes, they offer ASAs albeit at ludicrously inflated rates – some 5-10x the regular number of points. But, reasonably priced (points) Any Seat Awards offer two key benefits for those additional points that cover the fuel surcharges and taxes:
1) Full points earning and,
2) Status credits.
Quantifying the value of a ASA is relatively simple, but it relies upon several assumptions about the value of points and status credits which are unique to everyone’s personal circumstances. At the beginning of this post I linked to another thread in which I showed how I calculated the value of a status credit. I used a generalised status run on American Airlines that derived a value of $1.33 per status credit. Although I can actually do better than that, I suspect most people value a status credit higher than me since not everyone is in a position to attain status credits that cheaply, so I’ll stick with this value anyway. The next piece to the puzzle is how to value a QFF point – this is after all the point (pun intended J ) of this article. I will explain my calculations below in more detail, but for the time being lets use 1.5 CPP as the RV of a point.
Looking at two sample Business Class ASAs (JASA):
Some additional commentary:
Based on these examples, the RV of an ASA award is slightly better than for Classic awards if used on JASA/FASAs, but still not on par with a Zone 10 award.
4. Points Upgrades
Qantas allows you to request an upgrade to a higher cabin using your points on the basis of an eligible paid and confirmed ticket on a Qantas operated service. As expected, your QFF status has a big impact on the upgrade request success. Recent changes to the QFF program now consider every request until the cabin ahead is full, but you may not receive confirmation of the upgrade until at the gate, or several days prior (for International). The number of points required varies depending upon the booking code (eg. Discount/Flexible economy), however Discount Economy International fares classified as Red e-Deal (codes E, N, O, Q, X) cannot normally be upgraded with points. The upgrade points table is located here (Frequent Flyer - Using Points - Flight Upgrades - International Flight Upgrades).
To determine the CPP, let’s look at two examples:
That’s some seriously good CPP value! But again, is the CPP all that relevant or accurate if you were never going to spend $8K on a business fare in the first place? Applying the same principles as before, the RV can be derived as:
Based on these two examples and assuming a valuation of 1.5 cents per QFF point, it’s clear there is a variable RV for your points. It’s also worth noting that assuming equal QFF status, your ticket booking code also plays a part in deciding whether you get an upgrade or not. Generally speaking, the more you spend on the same ticket compared to someone else in the same cabin, the more chance you have of receiving that upgrade if available (eg. Super Saver v. Flexi-Saver).
Real Value (RV) put into perspective
Of course it’s easy to determine points valuations based on numbers alone, but RV does not take into account all of the creature comforts and privileges of flying in a premium cabin. It’s hard to quantify these subjective benefits but undoubtedly these play a big part in your determination of Real Value. To contrast a couple of examples:
I could list endless scenarios highlighting unquantifiable but tangible benefits of premium cabins but ultimately everyone has a differing level of tolerance/desire for comfort levels and benefits for different circumstances, so it’s important to take the CPP and RV metrics with a grain of salt because after all, they only measure value that can be quantified.
Food for thought
The RV of the points used in all of the examples above must be considered in the context of what else is available; the opportunity cost. There are several considerations:
Awards
Unlike in Australia where Qantas and Virgin have a duopoly of the Frequent Flyer Programs (FFP) and can therefore set uncompetitive points earn/burn ratios, there’s plenty of competition among American based carriers. So much so that several airlines will regularly offer you the opportunity to buy points (miles) at very cheap prices and then redeem these on their partner Alliance members. For example:
If you’re not sold on the idea yet, the miles required to fly First Class are only an extra ~15-25% more than business class for most of the American based FFPs. Conversely, Qantas charges a full 50% more points (despite the revenue fare usually only costing 20-30% more).
So how do I use a US Airlines Dividend Miles award to determine the value of my QFF points? Simple – my QFF points are worth no more than the cost paid ($2,500) to achieve the same outcome with Qantas. That same trip with Qantas (North America and Europe) requires well over 280,000 points in one-way redemptions, but given that we could construct a Zone 10 Oneworld Award and achieve the same outcome with fewer points, the value of my 280,000 QFF points is therefore no more than $2,500. The value of my QFF points in this scenario is a measly 0.89 CPP. The RV in this scenario is irrelevant because Dividend Miles is offering a flat fee (120,00 miles - $2,500) for the trip – it is not distance based. But there’s 1 significant benefit of a QF zone 10 award over a US DM award: up to 5 stopovers compared to only 2 with US DM. That’s worth quite a bit to me, so undoubtedly my CPP is higher but I cannot quantify this.
Beyond Award Redemptions
From a paid revenue fare perspective, there are also plenty of options but I’ll focus on just one to keep things simple; a Oneworld Explorer Fare (Star Alliance also has a similar product). For those unfamiliar, it’s basically a Round The World Fare whereby you travel in a East or West bound direction with allowance of up to 4 (non-USA) or 6 (USA) segments per continent. The ticket cost depends on which cabin you fly, how many continents you visit, and to a lesser extent the airlines and airports you use. But most importantly, for the point of this opportunity cost comparison, the cost is determined by your country of origin (yup, Australia gets ripped off again). The major benefits of this fare include:
So how do I use a OneWorld Explorer Fare to determine the RV of my QFF points? Assuming I originate my 16 segment itinerary ex South Africa and max out all routing to accrue 2600 Status Credits and earn ~90,000 QFF points on a DONE4 ticketed by AA (Mind Pearl <$1000 ticketing), I could split this trip into two separate trips by having a 10-11 month stopover in Australia. Note I have not included a US Air DM Award to get to and from South Africa ($2,500 with Thai). The current price of a DONE4 ex South Africa is roughly $6,000. Based on these circumstances:
If I assume there are two trips in it for me, and to be fair to the previous comparisons of a Zone 10 Award where I also had two trips (but with fewer stopovers and non-earning), each one of these paid fares would cost me $3,500 (7,000/2). And that does not include the points and Status credit tangible gain of $5,000 (1350+3700). But since I’ve not used any points for this ticket, I cannot calculate the RV.
So given all the best possible points redemptions, how then do I value my QFF points at approximately 1.5 cents per point? The scenarios that I would use include:
At this point its finger in the air science... I look at each of these different options and compare the pros/cons with respect to price and benefits and call it somewhere between all three options which happens to work out at roughly 1.5 cents per point. That said, I also 'waste' my QFF points on domestic upgrades to business as the cramped conditions in economy and the indignification of row 5 behind higher status pax (P1s) in row 4 just does my head in
. So the valuation of my points is really mixed among several uses and is highly subjective.
In conclusion, I believe the three scenarios listed above are among the best possible ways to compare the true value of QFF points.
Revisiting the four scenarios I prsented at the begining of this post, in order of best value I believe we have:
1. Zone 10 classic award (assuming maxed mileage up to 35,000 and multiple trips spread across the 12 month ticket validity)
2. Long haul FASA/JASA
3. Long haul points upgrade to Business
4. Long Haul Partner/Classic Business award
I suspect many who are redeeming their QFF points for short haul, economy and God forbid QFF store purchases are getting the raw end of the deal. But to each their own, we all have different motivations for the use of our ‘precious’ QFF points so once again, my determination of 1.5 cpp is personally subjective to my circumstances alone.
Confused yet?
Tell me how you value your QFF points!
Unsurprisingly, the PRICE of a QFF point varies significantly depending upon your earning circumstances. I’ll explain how I determine the price of a QFF point later, but for ease of calculation let’s assume this is 1.5 cents per point. But for the sake of this post, let’s focus on something more important: VALUE. Put simply, the value of a QFF point is derived from the value of the redemption that you personally receive. Just as with status credits, value is highly subjective and for many who are not interested in optimising points redemption value, factors such as convenience are more important (eg. gift vouchers). But for me it’s quite the opposite: I am not looking to use my points at the QFF store or similar since IMHO this is among the worst value redemption of QFF points. My points valuation is determined using premium cabin award/upgrade redemptions which I compare to other options as an opportunity cost. If availability exists, these options offer the highest $ redemption value, which is why Qantas doesn’t offer much availability in premium cabins and yet has hundreds of options available via their online store with terrible redemption value. With a clear stranglehold on Australians participating in the QFF program and with only minor competition from Virgin (at this stage), no wonder the QFF program is by far the most profitable part of the entire Qantas business reporting >20% yield on the bottom line last financial. *gets off high horse*
To simplify things, let’s put Qantas status tiers aside for a moment, since we all know that higher status generally offers more premium award availability. So let’s focus on four types of QFF points redemptions which I believe offer the best points redemption value within the QFF program:
- Qantas and Partner Classic Award (point to point)
- OneWorld Classic Award (Zone 10)
- Any Seat Award (ASA)
- Points Upgrades
Each redemption must be valued in isolation as the redemption value is highly variable and unique to those circumstances. I’ll break each one down and explain how I value QFF points under each scenario. But first, there are a few global rules and considerations governing flight redemptions – refer Qantas points Tables (Frequent Flyer - Using Points - Qantas & Partner Classic Awards - Points Tables). Upon examination of the table, we can see that there is much better value in the higher zones by comparing the miles-to-point ratio. In different ways, this is also true for all four options I have listed above.
1. Qantas and Partner Classic Award (point to point)
Starting with a Qantas Classic Award, let’s assume a Business Class redemption (assumes you were going to pay for the business class fare outright anyway). A Zone 1 redemption (0-600 miles) which requires 16,000 points + taxes for MEL-SYD (439 miles). The underlying business class fare is currently $633 and award taxes are $34. On the surface, this equates to 3.74 Cents Per Point (CPP) (633-34/16000). But is this truly the value of a QFF point? IMHO, no it is not.
In this scenario, there are two key metrics which I believe reflect the Real Value (RV) of a QFF point:
1) the distance flown, and
2) the cost of the points you’ve spent + taxes.
For most of us, the price of a regular business class fare is irrelevant since we would never pay for it anyway. So when you account for these two metrics, the cost is $274 ((16,000*0.015)+34). Based on the distance flown (439 miles), the RV (higher is better) of this points redemption is 1.60 (439/274).
Applying the same logic to other sample routes:
- A Zone 5 redemption (3601-4800) requires 60,000 points + taxes. MEL-HKG (4,596 miles) for which the underlying business class fare is currently $4,967 and award taxes are $208. (4967-208/60000) = 7.93 CPP. Applying the same value calculation as above, the RV of this points redemption is 4.15 (4596/(60,000*0.015)+208).
- A Zone 10 redemption (9601-15000) requires 128,000 points + taxes. PER-JFK (via SYD) (2,041 + 9,947 = 11,988) for which the underlying business class fare is currently $11,982 and award taxes are $493. (11982-493/128000) = 8.97 CPP. Applying the same value calculation, the RV of this points redemption is 4.96 (11988/(128,000*0.015)+493)
Generally speaking, there’s better value (higher RV metric) among the higher zones (long haul routes). Some additional commentary:
- There will always be fluctuations in RV due to the taxes and natural variations of miles for any given route within that zone which means the gradual increase in points value is not consistent.
- Airports all charge the airlines different amounts to land/park/depart etc so you will find that most airports are fairly similar in their taxes that QF will pass on. But some airports like LHR impose a whopping great tax on you (APD) for departing on long haul premium cabin travel (~$350 AUD). Avoid if possible. Arriving in LHR is not a problem, and transiting through LHR is still taxed, but nowhere near as much as originating from LHR.
- The examples above are for one-way fares. Qantas often has better pricing for a full return fare (eg. current sale fares) so the CPP value is grossly accentuated for the high one-way fare – bear this in mind if simply comparing CPP as your means of points valuation.
- Due to the mileage range within each zone, some routes offer better value than others (additional distance for the same points). For example, MEL-SIN and MEL-HKG both require the same number of points – 60,000 points. Similar scenario for Partner awards (eg. MAD-JFK at 3,588 miles falls just within Zone 4 – see below).
Partner Classic Awards are much the same as Qantas Classic Awards but with slightly more points required per zone (~5-10%). I won’t do the math for a Partner classic award example because it applies the same logic but with the slight increase in points required. The additional points required have a direct inverse dilution of the value, however there are plenty of additional benefits to more than offset this such as:
- Travel on any Qantas Partner Airline (more than just the Oneworld Alliance) with the reach of a global network
- There’s plenty more availability and flights for routes to/from Australia (eg. CX)
- Some partners do not charge anywhere near as much in fuel surcharges/taxes (eg. AA) so use this to your advantage via codeshares if available.
Ultimately, taking all these factors into account I value a Partner Classic Award higher than a Qantas Classic Award, but not by much.
2. Oneworld Classic Award (Zone 10)
On the Qantas points table you’ll notice the Oneworld Classic Awards zone/points definitions have an incremental increase of miles between zones 1-9, until you hit zone 10 which is far broader at 19,201-35,000 miles. For those geographically challenged, 35,000 miles is more than enough for a ‘Round The World’ ticket, and you’ll need just 282,500 points for business class (extra 2,500 points required for the mandated QF phone booking). There are several conditions and rules that must be followed, however the key rules/benefits are:
- Up to 16 segments (flights or surface sectors)
- Up to 5 stopovers (>24 hours in one destination)
- Surface Sectors do not count as another stopover (but they do count toward overall mileage)
- 12 months validity from commencement. This means you can break up your itinerary into several trips depending on your routing.
- If commencing outside of Australia, you can enter/exit Australia several times as long as you don’t violate two conditions: no more than 2 transfers in any destination, and no more than 1 stopover in one destination (these two conditions apply across all countries btw). So with some clever routing, you could come in/out of Australia 4-5 times in combination with some positioning flights to your home city, if that’s what you wanted to do!
- Qantas will allow you to book a flight using a non-operating airline carrier code-share. The benefit here is reduction of hefty fuel surcharges/taxes from the likes of QF/CX/BA by using a code-share on the same flight but from AA, IB or LA etc.
Quantifying the value of a Zone 10 Award is a bit more complex because there’s a plethora of routing permutations. But for the time being let’s assume a sample itinerary of (AMS-xLHR-SFO-xLAX-SYD)-(NRT-xSYD)//(MEL-HKG-AMS) (where ‘x’ denotes transit, ‘//’ is a surface sector and the brackets denote a trip at a separate time to the other segments in brackets – eg. Visit Japan several months after arriving in Australia and then depart for Europe several months later again, all within 12 months). This routing totals 34,839 miles and if purchased as several one-way flights (as we did above in the Qantas and Partner Awards) the total paid fare would be somewhere in the region of $30,000 with $1,500 in fuel surcharges/taxes. I’m not going to determine the actual total cost by individual flight (too lazy), and I doubt anyone would be stupid enough to buy a ticket in this manner, but to apply a consistent determination of value, we’re looking at 10.1 CPP (30000-1500/282500). This value is obviously highly variable depending on your specific routing, but it gives you an idea of the great value a Zone 10 award can offer that is close to the maximum number of miles (35,000) and takes advantage of most of the benefits listed above.
The RV of a zone 10 award is a bit simpler. Applying the same login as before, the cost of the points is $5,735 ((282,500*0.015)+1500). Based on the distance flown (34,839), the RV of this points redemption is 6.07 (34839/5735). By way of comparison, this is roughly 50% better RV than the long haul Classic Awards examples we looked at earlier. Note I have not included the price of a US Air DM positioning flight to/from AMS at $2,500 in these calculations.
3. Any Seat Award (ASA)
ASA’s are similar to Qantas Classic Awards but the fuel surcharges and taxes are included by way of additional points required (usually between 20-25% more than the underlying classic award points). Most regular ASA points redemptions are only available if there is inventory available in the classic award bucket for the same flight, so they usually mirror the availability. But in Qantas’ wisdom, just so they can shut up all their members who complain about never being able to redeem their points on premium cabin long haul routes, they offer ASAs albeit at ludicrously inflated rates – some 5-10x the regular number of points. But, reasonably priced (points) Any Seat Awards offer two key benefits for those additional points that cover the fuel surcharges and taxes:
1) Full points earning and,
2) Status credits.
Quantifying the value of a ASA is relatively simple, but it relies upon several assumptions about the value of points and status credits which are unique to everyone’s personal circumstances. At the beginning of this post I linked to another thread in which I showed how I calculated the value of a status credit. I used a generalised status run on American Airlines that derived a value of $1.33 per status credit. Although I can actually do better than that, I suspect most people value a status credit higher than me since not everyone is in a position to attain status credits that cheaply, so I’ll stick with this value anyway. The next piece to the puzzle is how to value a QFF point – this is after all the point (pun intended J ) of this article. I will explain my calculations below in more detail, but for the time being lets use 1.5 CPP as the RV of a point.
Looking at two sample Business Class ASAs (JASA):
- LHR-MEL. A recent search found regular ASA points redemption available at 205,878 points. If we adopt the same approach as a classic award, then at $9,128 AUD (6,041 GBP), we’re talking a value of 4.43 CPP (9128/205878). But on an ASA award we’re now also accruing points and status credits which we can quantify with a $ value as follows:
- Base miles = 10,516. We also attract a 50% Business Cabin Bonus (5,258), and as a Platinum QFF there’s another 100% status bonus (10,516). The total number of points earned is 26,290. Applying our value of QFF points at 1.5 cents per point, this yields a tangible net value of $394 (26,290*0.015).
- Status credits = 240. Applying my value of $1.33 per status credit, this yields a tangible net value of $319 (240*1.33).
- Total tangible benefit is therefore is $713 (394 + 317).
- Applying the same logic as before, the cost of the points is $3,088 ((208,878*0.015)+0). Based on the distance flown (10,516), the RV of this points redemption is 5.11 (10,516/205,878).
- MEL-PER. A recent search found regular ASA points redemption available at 48,646 points. Applying the same principles as the example above:
- Airfare cost is $1,572, we’re talking a value of 3.46 CPP (1,682/48,646)
- Base miles = 1,682. We also attract a 50% Business Cabin Bonus (841), and as a Platinum QFF there’s another 100% status bonus (1682). The total number of points earned is 4,205. Applying our value of QFF points at 1.5 cents per point, this yields a tangible net value of $63 (4,205*0.015).
- Status credits = 80. Applying my value of $1.33 per status credit, this yields a tangible net value of $106 (80*1.33)
- Total tangible benefit is therefore is $169 (63+106).
- Applying the same logic as before, the cost of the points is $730 ((48,646*0.015)+0). Based on the distance flown (1,682), the RV of this points redemption is 3.46 (1,682/48,646).
Some additional commentary:
- First Class ASAs (FASA) offer better RV again. For some reason, despite Classic Awards requiring an extra 50% points for a First Class award compared to a Business Class award, FASAs usually only require ~20-30% more points, but offer 50% additional status credits. The RV for FASAs is more like 5-6 on long-haul routes, but this is highly dependent upon how you value the price of a status credit, and to a lesser extent the value of a QFF point (cabin bonus extra points).
- Some indirect routing may require a slight increase in points compared to the most direct flight routing, but the extra status credits (and points) from the separate flights outweighs the additional airport taxes and fees (~$30). If direct flights and convenience is not a high priority, this would offer a higher RV yet again.
- By accruing status credits with an RV similar to a Classic Award, ASAs are great value because they all help toward qualification/re-qualification of your status where as Classic Awards do not.
- The Qantas loyalty bonus of 8,000 points per 500 status credits means that there’s an extra % of points available to you. These points cannot be recognised until you actually hit the next 500 status credit block so I have not included these in the calculations since they cannot be recognised in this scenario with a simple one-way flight.
- Qantas allows you to pay a portion of the ASA fare in cash via an incremental scale which decreases the total points required. Depending on how you value your QFF points, this usually works out more favorably than using the full points requirement since most of the time the cash required works out at approximately 1 cpp. And, using a QF branded CC you can earn up to 2.5x points on that underlying spend too.
Based on these examples, the RV of an ASA award is slightly better than for Classic awards if used on JASA/FASAs, but still not on par with a Zone 10 award.
4. Points Upgrades
Qantas allows you to request an upgrade to a higher cabin using your points on the basis of an eligible paid and confirmed ticket on a Qantas operated service. As expected, your QFF status has a big impact on the upgrade request success. Recent changes to the QFF program now consider every request until the cabin ahead is full, but you may not receive confirmation of the upgrade until at the gate, or several days prior (for International). The number of points required varies depending upon the booking code (eg. Discount/Flexible economy), however Discount Economy International fares classified as Red e-Deal (codes E, N, O, Q, X) cannot normally be upgraded with points. The upgrade points table is located here (Frequent Flyer - Using Points - Flight Upgrades - International Flight Upgrades).
To determine the CPP, let’s look at two examples:
- MEL-LAX. A recent search found Super Saver (upgradeable fare in Discount Economy) prices from $2,008 one-way (despite there being a return trip even cheaper on sale at various times). Applying the same principles as before:
- Airfare cost is $2,008. The cheapest business class fare is $10,364. The difference in fare value is therefore $8,356.
- Points required to upgrade from Super Saver is 72,000
- Since you’re spending 72,000 points on the fare difference between Economy and Business ($8,356), the CPP is 11.60 (8,356/72,000)
- MEL-LAX. A recent search found Flexi-Saver prices from $2,723 one-way (despite there being a return trip even cheaper on sale currently). Applying the same principles as before:
- Airfare cost is $2,723. The cheapest business class fare is $10,364. The difference in fare value is therefore $7,641.
- Points required to upgrade from Flexi-Saver is 45,000.
- Since you’re spending 45,000 points on the fare difference between Economy and Business ($7,641), the CPP is 16.98 (7,641/45,000)
That’s some seriously good CPP value! But again, is the CPP all that relevant or accurate if you were never going to spend $8K on a business fare in the first place? Applying the same principles as before, the RV can be derived as:
- MEL-LAX. Super Saver (upgradeable fare in Discount Economy) prices from $2,008 one-way (despite there being a return trip even cheaper on sale currently).
- Total Miles travelled is 7,923 miles.
- Points required to upgrade from Super Saver is 72,000
- The RV is therefore 2.57 (7,923/(72,000*0.015)+2,008)
- MEL-LAX. Flexi-Saver prices from $2,723 one-way (despite there being a return trip even cheaper on sale currently).
- Total Miles travelled is 7,923 miles.
- Points required to upgrade from Super Saver is 45,000
- The RV is therefore 2.33 (7,923/(45,000*0.015)+2,723)
Based on these two examples and assuming a valuation of 1.5 cents per QFF point, it’s clear there is a variable RV for your points. It’s also worth noting that assuming equal QFF status, your ticket booking code also plays a part in deciding whether you get an upgrade or not. Generally speaking, the more you spend on the same ticket compared to someone else in the same cabin, the more chance you have of receiving that upgrade if available (eg. Super Saver v. Flexi-Saver).
Real Value (RV) put into perspective
Of course it’s easy to determine points valuations based on numbers alone, but RV does not take into account all of the creature comforts and privileges of flying in a premium cabin. It’s hard to quantify these subjective benefits but undoubtedly these play a big part in your determination of Real Value. To contrast a couple of examples:
- A business class seat (with all the other business class benefits) on a B738 MEL-SYD leg is comfortable for the 1.5 hour trip, but certainly not a must have on everyone’s list. The points required for a business class upgrade, award or ASA for this flight might not be justifiable regardless of the RV metric.
- A fully flat horizontal business class bed (with all the other business class benefits) on an overnight A380 flight from LAX-MEL for 16 hours is highly desirable. The points required for a business class upgrade, award or ASA for this flight might be well worth saving points over some time regardless of the RV metric.
I could list endless scenarios highlighting unquantifiable but tangible benefits of premium cabins but ultimately everyone has a differing level of tolerance/desire for comfort levels and benefits for different circumstances, so it’s important to take the CPP and RV metrics with a grain of salt because after all, they only measure value that can be quantified.
Food for thought
The RV of the points used in all of the examples above must be considered in the context of what else is available; the opportunity cost. There are several considerations:
Awards
Unlike in Australia where Qantas and Virgin have a duopoly of the Frequent Flyer Programs (FFP) and can therefore set uncompetitive points earn/burn ratios, there’s plenty of competition among American based carriers. So much so that several airlines will regularly offer you the opportunity to buy points (miles) at very cheap prices and then redeem these on their partner Alliance members. For example:
- US Airways Dividend Miles (DM) offers regular 100% bonus promotions whereby after some paltry ticketing and fuel surcharges and the cost of the miles (120,000), you can fly to the USA and have a stopover in Europe (all via an Asian hub) for approximately $2,500 AUD. With US DM you can buy as many miles as you like and as often as you like as they offer the promotion throughout the year (but the 100% bonus usually only applies to the first 50,000 miles). The best things about US DM is that there’s plentiful availability across many Star Alliance carriers in premium cabins, especially Thai.
- American Airlines allows you to buy AA miles for redemption on OneWorld carriers (eg QF, CX etc) but with restrictive annual buy miles limits. They also allow one-way award tickets, unlike US DM. Long story short though, a return trip to Europe on Cathay Pacific in Business class would cost around $3,000 using AA’s frequent 25-35% bonus miles promotions (assuming accrual of miles over more than 1 year due to annual limits).
- There are other players out there with similar offerings (eg. Avianca Life Miles – if your game enough to play with a Columbian Airline with English as a second language for most agents).
If you’re not sold on the idea yet, the miles required to fly First Class are only an extra ~15-25% more than business class for most of the American based FFPs. Conversely, Qantas charges a full 50% more points (despite the revenue fare usually only costing 20-30% more).
So how do I use a US Airlines Dividend Miles award to determine the value of my QFF points? Simple – my QFF points are worth no more than the cost paid ($2,500) to achieve the same outcome with Qantas. That same trip with Qantas (North America and Europe) requires well over 280,000 points in one-way redemptions, but given that we could construct a Zone 10 Oneworld Award and achieve the same outcome with fewer points, the value of my 280,000 QFF points is therefore no more than $2,500. The value of my QFF points in this scenario is a measly 0.89 CPP. The RV in this scenario is irrelevant because Dividend Miles is offering a flat fee (120,00 miles - $2,500) for the trip – it is not distance based. But there’s 1 significant benefit of a QF zone 10 award over a US DM award: up to 5 stopovers compared to only 2 with US DM. That’s worth quite a bit to me, so undoubtedly my CPP is higher but I cannot quantify this.
Beyond Award Redemptions
From a paid revenue fare perspective, there are also plenty of options but I’ll focus on just one to keep things simple; a Oneworld Explorer Fare (Star Alliance also has a similar product). For those unfamiliar, it’s basically a Round The World Fare whereby you travel in a East or West bound direction with allowance of up to 4 (non-USA) or 6 (USA) segments per continent. The ticket cost depends on which cabin you fly, how many continents you visit, and to a lesser extent the airlines and airports you use. But most importantly, for the point of this opportunity cost comparison, the cost is determined by your country of origin (yup, Australia gets ripped off again). The major benefits of this fare include:
- Up to 16 segments (flights or surface sectors).
- Up to 16 stopovers (>24 hours in one destination).
- Surface Sectors do not count as another stopover (but they do count toward overall mileage and each are considered one segment).
- 12 months validity from commencement. This means you can break up your itinerary into several trips depending on your routing.
- You can book with AA to avoid all of the hefty fuel surcharges/taxes of other OneWorld Airlines. AA also do not charge for changes prior to and after commencement.
- You earn full cabin status credits.
- You earn base miles and cabin bonus miles (plus any status bonus miles applicable).
- Although the fare books into a discounted revenue booking code, there’s significantly more availability on all OneWorld carriers than regular awards using points.
So how do I use a OneWorld Explorer Fare to determine the RV of my QFF points? Assuming I originate my 16 segment itinerary ex South Africa and max out all routing to accrue 2600 Status Credits and earn ~90,000 QFF points on a DONE4 ticketed by AA (Mind Pearl <$1000 ticketing), I could split this trip into two separate trips by having a 10-11 month stopover in Australia. Note I have not included a US Air DM Award to get to and from South Africa ($2,500 with Thai). The current price of a DONE4 ex South Africa is roughly $6,000. Based on these circumstances:
- My total cost is $7,000 AUD (1000 + 6000).
- 90,000 QFF points earned equate to $1,350 (90,000 * .015)
- 2600 status credits earned at a value of $1.33 per SC = $3,700.
- Splitting the trip into two allows for two separate trips within a 12 month window. This is a huge benefit in itself, but it if you time it right with your qualification windows, 2600 status credits will allow you to qualify for Platinum in the first year (1400) and also requalify for Platinum in the second year (1200). There are plentiful benefits of Platinum status for 3+ years including Qantas Business Lounge access (~$600/year?), First Class Lounge access, plus all the other goodies that you can read on Qantas’ Loyalty section.
If I assume there are two trips in it for me, and to be fair to the previous comparisons of a Zone 10 Award where I also had two trips (but with fewer stopovers and non-earning), each one of these paid fares would cost me $3,500 (7,000/2). And that does not include the points and Status credit tangible gain of $5,000 (1350+3700). But since I’ve not used any points for this ticket, I cannot calculate the RV.
So given all the best possible points redemptions, how then do I value my QFF points at approximately 1.5 cents per point? The scenarios that I would use include:
- a Zone 10 split over two trips, ~$2,800 (each trip),
- the opportunity cost of a US DM Award redemption (simple return trip to two destinations) ~$2,500, and,
- the cost of a fully maxed DONE4 split over two trips ~$3,500 (each trip),
At this point its finger in the air science... I look at each of these different options and compare the pros/cons with respect to price and benefits and call it somewhere between all three options which happens to work out at roughly 1.5 cents per point. That said, I also 'waste' my QFF points on domestic upgrades to business as the cramped conditions in economy and the indignification of row 5 behind higher status pax (P1s) in row 4 just does my head in
. So the valuation of my points is really mixed among several uses and is highly subjective.In conclusion, I believe the three scenarios listed above are among the best possible ways to compare the true value of QFF points.
Revisiting the four scenarios I prsented at the begining of this post, in order of best value I believe we have:
1. Zone 10 classic award (assuming maxed mileage up to 35,000 and multiple trips spread across the 12 month ticket validity)
2. Long haul FASA/JASA
3. Long haul points upgrade to Business
4. Long Haul Partner/Classic Business award
I suspect many who are redeeming their QFF points for short haul, economy and God forbid QFF store purchases are getting the raw end of the deal. But to each their own, we all have different motivations for the use of our ‘precious’ QFF points so once again, my determination of 1.5 cpp is personally subjective to my circumstances alone.
Confused yet?
Tell me how you value your QFF points!
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*scurries off to look at DONE4 from South Africa*
