Article: Less than Half of Qantas Points Are Earned from Flying

[trendwhore]

Don't think I've earnt points from flying for years.. business AMEX for all the points

 

[elanshin]

To be honest I am surprised that figure is as high as it is. Arguably it is higher than most major airlines out there where I would reckon 80% of frequent flyer miles are earned on the ground. Which I suppose begs the question, why is that figure so high?

Because FF is the most ludicrous profits for any airlines? Pseudo currency that the company controls and can sell whilst also can print to infinity. Literally printing money.

 

[RichardMEL]

Seems pretty easy to figure out why it would be so in a place like Australia tbh.

Consider, QFF has a very big footprint in the on ground earnings game from Woolies to Hoyts, from Kogan to a metric coughload of brands and retailers through QF shopping - then there's services like Optus, Latrobe Financial, Red Energy and so on and the huge big massive one - the banks - either direct earn CC's (inc things like Amex), transaction accounts with links (I think BankWest still has a tie in?) and so on.

Add in things like the hotel affiliations (most notably ALL douple dip tie in)

all of this, plus the myriad of QF branded things - QF hotels, QF wine, QF wellbeing, QF marketplace, QF insurance, QF money, QF golf, QF cruises and so on...

the ecosystem is designed actually very well to have options for most everything in one way or another.

Now VA has a large piece of the pie too, starting with Coles and the many otherVelocity partners - pretty much things QF hasn't scopped up, are probably aligned to VA in one way or another.

And in Australia as opposed to say the United States, is that given the small number of "big schemes" for most people to choose from that means people's overall spend likely will focus in one or the other ecosystem (vs somewhere like the US where I'd argue that this would be diluted to a degree by the huge number of competing schemes, brands and the like) - although the move to maximising card revenue with those programs will change things for sure in terms of ratios.

Anyway my point being that because we can, should we choose, to basically do just about anything and earn points in probably our preferred ecosystem, then we will earn more points from non flying. Perhaps not for the higjher level FF's of course, but remember that QFF hass something like 15m members (out of a country of 26m is VERY impressive!)... and a vast majority of these members are not flying much, but still racking up points on the ground through shopping, paying their bills, utlities and other things.

So I'm not at all surprised by this at all tbh.

And again, QF Loyalty have engineered this so very well to create these ecosystems and that's why they're super profitible. Love or hate them, they've done it pretty well imo.

 

[VeniVidiVici]

I'd be about 70/30 ground/air.

I wonder what the ration of points spent on "ground" vs air is?

 

[Lynda2475]

Not really surprising given points are much easier to earn on the ground even if you fly on QF metal heaps.

Take a SYD-MEL in Y, on a red-e deal it costs $150 earns 800 points irrespective of status.

If you pay for it on our Amex Ultimate and you get another 338 points, then if you are SG or above you get another 75 points from Accor, add 100 points from Ubers (home to SYD, MEL to your hotel) and you are already 65% of the flight earn before you even think about the points you will earn from a hotel (both credit card and hotel award), meals etc.

WRT the 70% of QFFs redemptions being on QF/JQ metal flights I suspect there are a lot of domestic Y flights and domestic upgrades in that mix. Not everyone is as engaged in the program as your AFF member.

 

[RichardMEL]

I wonder what the ration of points spent on "ground" vs air is?

A very interesting question I think.

nothing to back this up on, more suppisition, but I would think the ground burn is probably higher than we think. We joke endlessly about toasters and the like (and it's a good joke ) and QFF love the ground burn as the value is far less, but I tend to think of the vast majority of non status folks who may find getting flight rewards difficult and they may also have relatively small balances of points too so probably see value in getting a gift card for a store they use, or the infamous toaster, or even spend on things like QF Hotels.

Many of us in the AFF "bubble" of higher points earn, often elite status, who play the game and can find some very nice points redemption opportunities on flights - specially premium cabin - are possibly insulated for the reality for the average punter looking to get something from the points they have earned - specially if they've "saved up" for something that doesn't seem attainable (eg: that school holidays trip to Gold Coast or Bali). I certainly know of people who have redeemed on ground to use them rather than lose them.

And that brings another related question - I wonder what the wastage is on points - ie points earned, then expired without use?

 

[PeterK59]

I feel linking credit cards etc to flying programs has destroyed the foundation of why these programs were originally formed .
QFF now means ......I am a doe doe (flightless bird) with lots of cards.......it's a bloody joke.

 

[Lynda2475]

I would think the ground burn is probably higher than we think.

Well the article states "According to Qantas’ pre-COVID figures, around 70% of redemptions are on Qantas Group flights." what is unclear is whether that is 70% of flight redemptions, or 70% of redemptions overall.

 

[Lynda2475]

I feel linking credit cards etc to flying programs has destroyed the foundation of why these programs were originally formed .

To use a marketing term it actually made customers more sticky.

Status Credits still provide exclusive benefits for those actually flying (i.e. premium lounge access, extra luggage, higher points earn) but getting them to also channel spend through a Points earning card makes QF more money.

In fact QFFP makes more profit selling points than QF does selling flights.

I like the ground earning opportunities, provided SCs stay in place and the churners do not get more privileges when flying than those who earned their status by actually flying.

 

[Mattg]

Well the article states "According to Qantas’ pre-COVID figures, around 70% of redemptions are on Qantas Group flights." what is unclear is whether that is 70% of flight redemptions, or 70% of redemptions overall.

It's overall.

 

[Lynda2475]

It's overall.

So assuming at least another 5% of redemptions on partner airlines; it is likely 25% or less is burnt on toasters, gift cards and hotels.

As stated earlier I reckon there are an awful lot of domestic Y and domestic upgrades in that 70%.

 

[RichardMEL]

I like the ground earning opportunities, provided SCs stay in place and the churners do not get more privileges when flying than those who earned their status by actually flying.

This is where the US programs (look at DL's latest "enhancements" for example) have twisted this. One can, in theory, reach near top status through spend on linked CC's alone.

I fully understand WHY - and QF's version of this is Points Club - rewarding those who give a bunch of revenue to the airline through that spend because it works out a lot of mullah. However, I'm with you - the flying rewards and perks side should be reserved, in the main, for those who actually fly - and specially a lot of BIS miles.

It's an interesting study in how some programs have reacted to all of this. on the one hand you have the DL's of this world which will reward the high spend with status earning MQD's (and lets not forget that AA's million mile program had for a long time also included miles earned from spend - I am unsure if that is still a thing?) - so essentially saying we treat the frequent spenders club the same as road warriors in the air (who would also be frequent spenders - on airfares at least). OTOH, you have QF devising Points Club (and PLus) which is not granting specific status benefits in the air (unless one counts 100 SC rollover or SC's earn on reward flights) but providing other benefits.

However we can tell QF is likely thinking about what airlines like DL are doing - noting the anecdotes about the focus groups asking about giving P1 status for 1m points earn (or was it $1m spend) and the like.

 

[RichardMEL]

Interesting re 70% overall figure. OK. Then the question begs - is that 70% figure based on total points redeemed or numbers of redemptions then? ie: your average toaster price in points is far less than a J redemption to the US or say 4 Y tix to OOL - so possibly if they're talking 70% of all points redeemed are used on flights that would make sense.

 

[stm1sydney]

And more than half of QFF points are spent buying toasters.

 

[Lynda2475]

is that 70% figure based on total points redeemed or numbers of redemptions then?

I would assume that is of total points redeemed but that does not consider the huge balance of unredeemed points at any given time.

Would be interesting to know what percentage of points earned each years are redeemed within 12 months, 24 months, longer?

And more than half of QFF points are spent buying toasters.

Well we know that isnt true, as 70% of all points redemptions are on QFF/JQ flights and there are some redemptions on partner airlines so toasters cant account for more than half.

 

[Gremlin]

According to the Investor Day preso, Airline Redemptions (incl Partners) was ~110B points in FY23, Travel was ~20B and Retail was ~17B.

By FY30, that mix is expected to be Airline 130B, Travel 40-50B and Retail 40-50B.

But forecast growth in "Earn" is very skewed towards non-flying activities. It will be an interesting dynamic to watch as most people want to redeem on flights, but the pool of reward flights is only going to shrink on a per capita basis (since that growth in flight redemptions is less than the growth in capacity). The only way those numbers hang together is if flight redemption costs are significantly 'enhanced'.

 

[MooTime]

Points Club Plus does give one flying advantage in terms of 12months lounge access.

Not direct tier status as mentioned above, but a sure fire carrot for non status punks to achieve, like me. (my SG expires end of year, received it from a QF status match)

Even though seldom fly QF to take advantage of this perk.

 

[Jean Prouvaire]

Points Club Plus does give one flying advantage in terms of 12months lounge access. Even though seldom fly QF to take advantage of this perk.

But that's the beauty (to Qantas) of granting flying-related privileges to infrequent flyers. It costs them very little (eg some free food and grog and an extra person or two in the lounge taking up space) while it makes the Points Club customer feel valued on the rare occasion that they do travel.

 

[elanshin]

I feel linking credit cards etc to flying programs has destroyed the foundation of why these programs were originally formed .
QFF now means ......I am a doe doe (flightless bird) with lots of cards.......it's a bloody joke.

It's because airlines (US mainly) figured out that selling points with the allure of redemptions is significantly more profitable than actually flying planes.

For context, wall street got a wake up call during covid when Delta put their loyalty business up as collateral and the value placed on it was more than their current market value as a whole for the company. In other words the flying portion was negative equity value.

And how can you blame any rational for-profit company for pushing for this. You're being paid for your own pseudo currency, which you control every aspect of from revenue (how much you sell to partners) to redemption values to how many points are in circulation. Oh did I mention that it's also interest free debt on hundreds of millions (if not billions)?

 

[JohnMcC]

I wish that Qantas could have two stages of FF points acquisition so that those of us that are truly frequent flyers can get access to what a previous member described as the holy Grail awards: International business/1st seats. Even allowing for the lack of availability over the last 18 post Covid months, it is beyond depressing how few international seats are truly available in business. And yes I'm flexible, and yes I try to book almost a year ahead and having lifetime gold means that I get a couple of days jump on some other people but really – congratulations to Qantas for a cash cow but us old-fashioned frequent flyers are not really benefiting from this program.