What does an ASA really cost.

[medhead]

I'm fed up with continually being branded a petulant child, who was cheating on ASA to abuse the status system. So i thought it was time to put up some real numbers.

Over the last few years, I've taken 429 flights with vast one world airlines. 418 flights on QF, for an average of 19 SC per QF flight. The grand total is 8435 SC credit to my QFF account.

I've taken 28 flights that were JASA, those flights cost 606,591 points and $3127.60 in cash. Those are net points after removing the points earned on the flights.

The cost of a point is the next issue. QF will give the customer a cash value of about $0.007 per point - That is they'll reduce a cash price by about that much per point that you/we give up. That that sure as hell isn't the cash value that QFF are receiving per point. Just like currency conversion there is a margin, QFF sell points at a higher cost then the price they provide in redeeming a point. I've heard prices upto $0.035 for business to buy points. I've decided on a conservative figure $0.015 per point.

That means QF has got $12226 out of me for the JASA I've taken. That works out at a cost of $7.19/SC on the JASA flights.

On all my flights on QF I've paid $7.27/SC. For QFF SC earning across all airlines $7.31/SC.

Oh gee look at that, I've paid Qantas about the same for JASA as I have for normal cash flight.

The next person who calls me a petulant child or a cheat don't be surprised if I think you're delusional.

 

[opusman]

Nice analysis, and knocks the "shortcut to status" argument well and truly on the head.

 

[RooFlyer]

You've obviously paid your way.

Where is this earlier discussion, though? I did a search of "petulant child" and only brought up a few threads , including the grounding of the Qantas fleet and about seat reclining.

 

[medhead]

You've obviously paid your way.

I'm not sure this is about paying of the way. More that JASA were not excessively cheap, in my experience. Certainly, not as cheap as some flights in the USA, where QF doesn't get much cash at all and also don't have the option to set the price. Not as cheap as flying around Asia to a dozen stops either, I guess. The numbers I've achieved with MH, for example, are saving me a bit of money. But only 270 odd SC. Still something that I would not have discovered if MASA were still around.

Where is this earlier discussion, though? I did a search of "petulant child" and only brought up a few threads , including the grounding of the Qantas fleet and about seat reclining.

I'm unable to provide a link to the that particular thing. It is in a very recent thread on a related topic. But is also something that has been repeatedly mentioned about JASA.

 

[Jack_OC]

Just like currency conversion there is a margin, QFF sell points at a higher cost then the price they provide in redeeming a point. I've heard prices upto $0.035 for business to buy points. I've decided on a conservative figure $0.015 per point.

I had no part in the other thread, but a couple of genuine questions:

1. Is 1.5c per point really a conservative estimate? It seems high to me. For example, I recently got the CBA Platinum card, which came with 40,000 QF bonus points, with no fee. If CBA have to pay QF 1.5c per point, it's costing them $600 in QF points for each new customer who takes out that card. That seems unlikely to me.

2. On the cash cost of an SC - that's highly variable obviously, but an average of $7.27 per SC seems pretty low. Do you think your figures are broadly representative? For example, with a MEL-SYD or ADL rtn in Y the cost per SC would be at least $10 and often much higher. Towards the other end of the scale, I've just booked a J return on QF to Japan, and the cost per SC on that trip will be $17.50. Even if I'd booked those flights during the recent sale, the cost per SC would have been over $13.

 

[basso]

Nice analysis, and knocks the "shortcut to status" argument well and truly on the head.

Goodo. So classics are still available, and its wasn;t a shortcut to status, so nobody has lost anything by their removal.

 

[medhead]

I had no part in the other thread, but a couple of genuine questions:

1. Is 1.5c per point really a conservative estimate? It seems high to me. For example, I recently got the CBA Platinum card, which came with 40,000 QF bonus points, with no fee. If CBA have to pay QF 1.5c per point, it's costing them $600 in QF points for each new customer who takes out that card. That seems unlikely to me.

2. On the cash cost of an SC - that's highly variable obviously, but an average of $7.27 per SC seems pretty low. Do you think your figures are broadly representative? For example, with a MEL-SYD or ADL rtn in Y the cost per SC would be at least $10 and often much higher. Towards the other end of the scale, I've just booked a J return on QF to Japan, and the cost per SC on that trip will be $17.50. Even if I'd booked those flights during the recent sale, the cost per SC would have been over $13.

I can't really say much other than I have heard that in some cases points might be sold for as much as $0.035 per point. It's anybody's guess at the overall, average sale price. Or the price that CBA can achieve. But we do know for certain the price that Qantas will pay per point when being directly converted to cash - $0.007. The wholesale price of a sold point must be higher than that level, for QFF to make money. It is also fairly easy to achieve around $0.01 per point. So I'm assuming the wholesale price is higher than that again, somewhere upto $0.035 per point. Trying to guess at the average wholesale price of a point, I think a conservative estimate is $0.015. The other issue is trying to guess at the average wholesale price of the points that arrived in my account. those points come from multiple sources. It's also fair to say that a large number of my points did come from premium cards.

As for CBA, they make a fair amount of money on interest, interchange fees and merchant fees.

2. on 400 odd flights that pretty representative of what I'm achieving. Sample size >100 is pretty good. The number will, of course, increase following simpler and fairer. But then MASA cost was from before simpler and fairer as well. My more recent domestic flights are around $15 to $20/SC. JQ flights are around $8.40/SC, Points plus pay around $11/SC. One off promos of SC on classic awards is about $20/SC.

I also had 30 flights at the old earning rates post implementation of simpler and fairer, so there would be a fair lag on seeing the current average $/SC.

Goodo. So classics are still available, and its wasn;t a shortcut to status, so nobody has lost anything by their removal.

Well, Qantas has lost income, and the ability to make extra money on those classic awards. As I said upfront, I reject the accusation of being a petulant child for wanting to discuss such issues. But that's off topic to this thread.

 

[opusman]

Goodo. So classics are still available, and its wasn;t a shortcut to status, so nobody has lost anything by their removal.

It seems you have misunderstood the point. QF do not lose any money from ASAs, but for the customer it is obviously better value to use some points rather than all cash.

 

[basso]

It seems you have misunderstood the point. QF do not lose any money from ASAs, but for the customer it is obviously better value to use some points rather than all cash.

You misunderstand my point. People keep banging on about it not being a shortcut to status, it was explicitly stated that the analysis knocks the argument on the head. So why are they complaining so much about it? You can still use points - take a classic.

 

[Jack_OC]

But we do know for certain the price that Qantas will pay per point when being directly converted to cash - $0.007. The wholesale price of a sold point must be higher than that level, for QFF to make money.

You're probably right that the wholesale price of a point is higher than 0.7c, but that wouldn't necessarily have to be the case for QFF to make money - when you factor in the people who redeem for toasters or never redeem at all. I would guess QFF assumes that will the fate of a certain proportion of points. Anyway, as I said, I agree it seems reasonable to assume the cost is higher than 0.7c. But you have assumed that that the cost is 115% higher than 0.7c - that's a huge margin. It's perfectly plausible that QF could sell points at 0.9c, or 1c etc, and if so, it would completely change the results of your analysis.

As for CBA, they make a fair amount of money on interest, interchange fees and merchant fees.

But they give me 1.5 more QF points for every $ I spend, which by your estimate would cost them 2.25c for every $ I spend (on top of the $600 I have cost them by signing up). I can't see that being the case, to be honest.

2. on 400 odd flights that pretty representative of what I'm achieving. Sample size >100 is pretty good. The number will, of course, increase following simpler and fairer. But then MASA cost was from before simpler and fairer as well. My more recent domestic flights are around $15 to $20/SC. JQ flights are around $8.40/SC, Points plus pay around $11/SC. One off promos of SC on classic awards is about $20/SC.

I also had 30 flights at the old earning rates post implementation of simpler and fairer, so there would be a fair lag on seeing the current average $/SC.

I'm not disputing your figures, just questioning whether that would be representative of QF's customers in general (which of course is the only thing QF would be interested in). It's certainly way lower than my average cost per SC. Even before simpler and fairer, short domestic Y returns still earned 20 SCs, and I can't remember a time when you could expect a typical QF MEL-SYD return flight to cost $145. I can only assume you took a lot of flights where the SC earn was higher than MEL-SYD, etc, but the fares were not proportionally higher.

Anyway, my point is just that the outcome of your analysis could be completely turned on its head if the cost of a point is lower and/or the cost of an SC with a cash fare is higher. For example, if you assume a point costs 1c and an SC with a cash fare costs $10, I think it would mean your ASA SCs cost only half of the normal price of an SC.

 

[opusman]

You misunderstand my point. People keep banging on about it not being a shortcut to status, it was explicitly stated that the analysis knocks the argument on the head. So why are they complaining so much about it? You can still use points - take a classic.

Obviously earning SCs is better than not. The point is it's not a shortcut.

 

[trixydoza]

Based on hard figures for another of our partners:

$4,417.11 + 439,944 points earned P1.

So around $11,000 at medhead's valuation of points (which strikes me as a little on the high side, if anything). That particular case was clearly a "shortcut". Whether that was inherently evil or not is a separate issue.

 

[Isochronous]

The point is they have devalued QFF points and removed a competitive advantage against other programmes.

 

[amaroo]

I've purchased millions of points from banks for $0.0097/point ... surely, their cost to purchase those points from QFF is a truckload lower.

 

[JohnK]

As I said earlier I would be surprised if they were worth much more than $0.007/point. If they were then credit card companies are giving away an awful lot of money to people who have a history of churning over credit cards with very little return. In fact the market at the moment is flooded with points which to me would suggest Qantas is giving them away even cheaper. Amex won't even give me a balance transfer at the moment which would make them a lot more money than a credit card churner.

Just to give you an idea ~10 years ago Coles (or Kmart more specifically) were selling Flybuys points for ~$0.002-$0.003/point. Not sure what sort of value you could get out of Flybuys points in those days but let's just say that Bob Jane were offering you 3,000 Flybuys points when you purchased 4 tyres it would cost them at the most $9 to buy those points. Think about it. I know you cannot compare Flybuys and QFF points but Everyday Rewards is also around and I don't think they would be giving away too much with their bonus points offers.

And yes off topic in this thread but personally I do not want to see anyone earning status off free Bankwest or ATO points. It is bad enough they make redemptions a lot more difficult for others. You may disagree. That's fine. It does not mean my opinion is wrong or laughable.

 

[amaroo]

As I said earlier I would be surprised if they were worth much more than $0.007/point.

I tend to agree with this.

yes off topic in this thread but personally I do not want to see anyone earning status off free Bankwest or ATO points. It is bad enough they make redemptions a lot more difficult for others. You may disagree. That's fine. It does not mean my opinion is wrong or laughable.

On the flip side - the exodus of members fleeing post MASA is good for me

 

[medhead]

I didn't say anything about the value of a point.

There is a whole thread for you lot to discuss all the off topic discussion. Not interested in your continuing accusations of being a cheat.

 

[medhead]

You're probably right that the wholesale price of a point is higher than 0.7c, but that wouldn't necessarily have to be the case for QFF to make money - when you factor in the people who redeem for toasters or never redeem at all. I would guess QFF assumes that will the fate of a certain proportion of points. Anyway, as I said, I agree it seems reasonable to assume the cost is higher than 0.7c. But you have assumed that that the cost is 115% higher than 0.7c - that's a huge margin. It's perfectly plausible that QF could sell points at 0.9c, or 1c etc, and if so, it would completely change the results of your analysis.

But they give me 1.5 more QF points for every $ I spend, which by your estimate would cost them 2.25c for every $ I spend (on top of the $600 I have cost them by signing up). I can't see that being the case, to be honest.

Yet Qantas points are a monopoly currency. Many others here seem to think qantas with return cash to me per point at the same price that they seek them into the market. I think that is wishful thinking. Spillage from unredeemed points is just the cream. Also I'm talking about the average cost of a wholesale point across all partners, not just CBA. I'm certainly not making a claim about what it cost CBA to give you a point. But the cost to CBA does not tell us the cost to a multitude of other businesses. I've already mentioned other numbers which need to be balanced against the low price that CBA might pay. How much were my qantas restaurant points, how much per Woolies fuel point? How many points do people get at 0.5/$ spend on cards?

At a cost of $0.01 per point, $0.015 is only 50% higher.

I also did not get any points from CBA.

I'm not disputing your figures, just questioning whether that would be representative of QF's customers in general (which of course is the only thing QF would be interested in). It's certainly way lower than my average cost per SC. Even before simpler and fairer, short domestic Y returns still earned 20 SCs, and I can't remember a time when you could expect a typical QF MEL-SYD return flight to cost $145. I can only assume you took a lot of flights where the SC earn was higher than MEL-SYD, etc, but the fares were not proportionally higher.

This thread has started as being about my travel with respect to the accusation that I'm a status cheat. I don't think I made any claims about QF customers in general. I'm sure other QF customers will share their numbers if they wish.

I would suggest looking at red-e-deal earning. As I pay for all of my flights, that is my earning region. It is certainly possible to get $79/$89/$99 airfares, even now on short domestic routes earning 10SC per flight. I was fairly consistently averaging $120 on a route earning 15SC just by forward planning and booking.

Anyway, my point is just that the outcome of your analysis could be completely turned on its head if the cost of a point is lower and/or the cost of an SC with a cash fare is higher. For example, if you assume a point costs 1c and an SC with a cash fare costs $10, I think it would mean your ASA SCs cost only half of the normal price of an SC.

I don't get what you're saying here, an SC costs $10. So on that MEL-SYD flight for $145, the 20 SC cost $200. :?: That doesn't seem correct.

What does an SC cost anyway. Gold is an easy comparison point. 600 SC to retain (lowest potential cost point). 30 flights x 20SC = 30x$145=$4350. Qantas club is roughly $400 at full cost - so $13 per flight, $0.66/SC. :?:

My next JQ bundle is getting me 90SC and 8650 points for about $140. take out meals, points, seat selection (but not luggage) that doesn't leave much to pay for SC.

 

[medhead]

As I said earlier I would be surprised if they were worth much more than $0.007/point. If they were then credit card companies are giving away an awful lot of money to people who have a history of churning over credit cards with very little return.

But if they are as you suggest then QFF is making no margin on points. We know that is not the case. You opinion is limited to credit card providers and a small group of consumers who churn credit cards. It is laughable to suggest that opinion represents the entire market. I'd say it's worse that wrong, it's misleading.

Just like you, again, trying to pretend this has anything to do bringing back MASA. Misleading, irrelevant and wrong.

Please take the rest of your off-topic ramblings back to a thread that is already discussing those matters..

 

[trippin_the_rift]

I've taken 28 flights that were JASA, those flights cost 606,591 points and $3127.60 in cash. Those are net points after removing the points earned on the flights.
.....
Oh gee look at that, I've paid Qantas about the same for JASA as I have for normal cash flight.

The cost of a point isn't only about what QFF charge their customers but also what type of customer YOU are, how you use/don't use points etc..
Kind of like a Value In and Value Out figure and QFF arbitrages on the difference potentially each day before you ever have a chance to use them. Once a point is 'created' into the QFF system - that same point has influence over many other factors in a way that that exact point can go up and down in value as it sits in your account.

For example let's say you have 72K points laying around you want to burn on your next SYD-LAX flight. You intentionally buy a higher class fare to get yourself into the system. In theory - part of the increased fare you purchased should be attributed to the points balance in your account and thus increasing their value to QFF.

As your status increases; the value of your points to QFF technically would decrease as you become more savvy on how to use them and you're much less likely to have them expire. On the flipside you likely become more valuable as a customer because you're flying more and earning more points (even though they're at lower value than a Bronze member).

Obviously there's likely hundreds if not thousands of possible combinations to this riddle as every financial institution's customers are different, the customers FF account they go into are different, as are spending, flying and overall influential values.

So how much is a point really worth/What does a ASA really cost?
I'm sure I could come up with a formula to show these metrics but we're talking super-geeky analyst territory now

The simple answer is that it's subjective!.